Cardano’s ADA Drops 6% Amid Treasury Debate and DeFi Push

Cardano's ADA token fell 6.01% to $0.6412, driven by market volatility and community division over a proposed $100 million treasury allocation aimed at boosting the DeFi ecosystem. The proposal, spearheaded by TapTools, suggests deploying 140 million ADA to provide liquidity for stablecoins like USDM and strengthen Cardano’s DeFi infrastructure.

The idea has sparked heated debate. Prominent Cardano supporter @cardano_whale warned that introducing such large sell pressure, especially at ADA’s current levels, could trigger a price collapse. He argued that governance proposals are often front-run by traders, making any public plan to sell ADA at $0.70 risky. He proposed instead the minting of crypto-backed stablecoins like ObyUSD to preserve token value.

Cardano founder Charles Hoskinson responded by dismissing the concerns as a “false narrative.” He explained that the treasury could convert ADA gradually using over-the-counter deals or algorithmic strategies like TWAP to minimize market impact. Hoskinson stressed that Cardano’s DeFi growth is constrained by the lack of deep stablecoin liquidity and that this initiative could provide long-term benefits without inflation.

Market reactions were swift. ADA dropped from $0.688 to $0.625 before recovering to $0.641. A volume spike during the breakdown at 01:00–02:00 UTC helped establish support at $0.622. Despite a 58% bounce from the lows, resistance remains strong at $0.645. Notable volume peaks at 13:50 and 14:00 UTC—2.6M and 5.7M ADA respectively—indicate renewed buying interest but weak momentum.

The Cardano community is now at a crossroads, weighing short-term price stability against bold strategic moves to solidify its DeFi presence. As the debate continues, ADA’s performance remains a barometer of sentiment and conviction in the protocol’s direction.