Home Altcoins News Cardano Targets Bitcoin DeFi Growth with Treasury Strategy

Cardano Targets Bitcoin DeFi Growth with Treasury Strategy

Cardano Treasury

Cardano is preparing to make a strategic shift in how it utilizes its vast on-chain treasury, aiming to play a pivotal role in the growing Bitcoin DeFi landscape. With over 1.7 billion ADA held in its treasury, Cardano is exploring ways to convert a portion of these funds into stablecoins and Bitcoin (BTC) to build deep liquidity pools that could supercharge its decentralized finance (DeFi) ecosystem.

At the center of this vision is a research proposal from Andrew Throuvalas, a Bitcoin advocate and Cardano researcher, who believes the blockchain is uniquely positioned to lead a new wave of Bitcoin-enabled DeFi. He emphasizes that while Cardano’s technical framework aligns closely with Bitcoin in terms of security and decentralization, the current missing piece is liquidity—particularly in stablecoins and Bitcoin-pegged assets.

Cardano has long prided itself on its secure, methodical development and strong community foundation. Over 110 million transactions have been processed on the network, and nearly 22 billion ADA is staked across 3,000 staking pools, highlighting the blockchain’s strong user participation and decentralization. However, in the face of growing competition from ecosystems like Arbitrum, Base, and Ethereum Layer-2 solutions, Cardano needs to bolster its liquidity infrastructure to remain relevant in the fast-paced DeFi sector.

The recent proposal seeks to change that by putting the platform’s substantial treasury to productive use. Instead of letting ADA sit idle in governance reserves, the idea is to reallocate part of it into stablecoins and Bitcoin to create robust, yield-generating liquidity pools on leading Cardano DeFi protocols such as Minswap, Indigo Protocol, and Liqwid Finance.

One of the key ideas in the proposal is to provide Bitcoin holders with financial incentives to deploy their BTC on Cardano. This would involve converting a portion of ADA into Bitcoin and using it to directly pay yields in BTC to those who supply liquidity or collateralize assets. This structure aims to make Cardano an attractive alternative for Bitcoin holders who are seeking yield without needing to bridge to centralized or less secure ecosystems.

This concept is not unprecedented. Babylon, a DeFi protocol on another chain, has already attracted over $4.5 billion in BTC using a similar incentive system, although its yields are paid in tokens rather than BTC. Throuvalas argues that paying yields in actual Bitcoin could set Cardano apart and build strong user trust while generating long-term value for the ADA ecosystem.

In addition, Cardano’s slow but deliberate development of “bridgeless” Bitcoin integration through projects like Charms and BitcoinOS ensures that Bitcoin on Cardano doesn’t require risky cross-chain bridges. This puts Cardano in a favorable position to offer secure and scalable Bitcoin DeFi functionality, which is increasingly important as the DeFi industry matures and seeks more robust infrastructure.

Yet, there are challenges. Cardano still lacks deep stablecoin liquidity, which is essential for larger institutional investors and DeFi users who require efficient capital movement without significant price slippage. Without this, it’s difficult for Cardano to compete with other networks where stablecoin volumes are high and capital can flow more freely. The proposed treasury conversion into stablecoins could help solve this issue and bring the much-needed depth to Cardano’s liquidity.

This strategy is about more than just expanding DeFi. It’s also a long-term positioning move. If implemented correctly, Cardano could become a foundational layer for Bitcoin liquidity across DeFi, especially as more BTC enters the decentralized finance space. With over $1 trillion in dormant Bitcoin not being utilized in DeFi, tapping even a fraction of this capital could be transformative for Cardano’s adoption and ADA’s value.

In conclusion, the combination of Cardano’s secure infrastructure, a sizable treasury, and a clear path to integrating Bitcoin in a bridgeless and user-friendly manner creates a compelling opportunity. If the community and governance approve these strategic treasury changes, Cardano could finally close its liquidity gap and stake its claim in the rapidly expanding Bitcoin DeFi market—bringing with it new demand, increased activity, and long-term value creation.

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dan saada

Dan hold a master of finance from the ISEG (France) , Dan is also a Fan of cryptocurrencies and mining. Send a tip to: 0x4C6D67705aF449f0C0102D4C7C693ad4A64926e9

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