Cardano, a leading blockchain project, announced plans to transition part of its treasury into Bitcoin and stablecoins. This strategy aims to strengthen the network's position in decentralized finance (DeFi).
New Strategy for Cardano in DeFi
Cardano plans to reallocate 5-10% of its $1.2 billion treasury into Bitcoin and stablecoins. This step involves using more secure assets to improve the financial base, allowing for increased treasury returns. The transition is expected to be conducted using OTC and TWAP strategies to minimize price shocks.
Reasons for Choosing Bitcoin and Stablecoins
Stablecoins such as USDT and USDC provide stability and high yields due to their ties to government bonds. In contrast, Bitcoin is seen as a decentralized store of fixed supply. This conversion will allow Cardano to protect against inflation and improve the financial landscape within the network.
Current Limitations of Cardano in DeFi
Despite the potential, Cardano faces challenges in performance and DeFi integration. With a current ranking of 34th in the world in terms of transactions per second, the network struggles to compete with faster blockchains. To enhance its position, Cardano needs to attract more liquidity and develop its DeFi protocols.
Cardano's plan to convert part of its treasury into Bitcoin and stablecoins may represent a crucial step toward attracting new investors and enhancing activity in the DeFi space. Despite current limitations, this strategy aims to improve financial stability and the overall position of the network in the market.
