Stablecoin Injection to Boost Cardano DeFi

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There’s a bit of chatter around at the moment about injecting 3.3 % of Cardano’s treasury, approximately 50 million ADA into Cardano stablecoin projects at the moment. I thought this was quite interesting. There was a proposal that was put out by Elder Millennial and Marco, and this goes through the reasons why it would benefit Cardano’s ecosystem overall by using those treasury funds and putting it into these.

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particular stable coins and there’s some really interesting facts here. But is this the silver bullet that we need to fix Cardano’s DeFi ecosystem? Is this the main thing that will boost it and change things for here on in? I don’t know, but we’ll look into the details here and I’d love to hear your opinions and comments down below. Don’t forget, hit that thumbs up, like, subscribe, notification bell on your way in. Let’s get into the details. So this is a tweet from BlockJock that talks about this particular proposal.

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You can find it on the Cardano forums, the latest update here. So essentially what this is going to do is inject 50 million ADA into stablecoin liquidity reserves in the Cardano ecosystem, mainly around USDM and USDA. But if we have a look here, all of this be controlled by a multi-sig committee with the Cardano Foundation, IIG, EMURGO and the community all involved. It will deploy this liquidity over a 12 month period. This is so won’t have a massive impact on the

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price of ADA as it’s being deployed because you have to remember they’re selling ADA from the treasury for USD and then deploying that back into the ecosystem via the liquidity pools, et cetera. So it’s going around back out of the ecosystem, then back in, in the form of USD. And lastly, the protocol revenue from all of this will flow back into the treasury. And I love this idea here because it will give the treasury

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Another source of revenue, another source of income in terms of stable coins, especially if the price of ADA continues to drop at the moment, which we’re seeing right now at the time of this recording, it’s got a big steep dump because of these trade tariffs. But if we see the opportunity here to mint more USD. So with these protocols, what they do is with all of this USD that is minted within their protocol, they put it into investments such as government bonds.

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And these government bonds have a small yield, but it’s guaranteed yield and it is a steady source of revenue for these particular projects. And this revenue can be flowed back to the depositors of USDM and USDA. And that will go to the protocol, in this case, the treasury. So it’s a win-win for the whole ecosystem with having more liquidity overall, but also for the treasury, because it has another source of revenue, not just ADA staking rewards.

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And it’s a good thing to offset that, especially if the ADA price is dropping. So that is the idea and premise here. And I really do like the proposal. If you want to check out more details about it, you can have a look at the forum post here and it will go in more detail in regards to how it all works, the risks and everything else around it. Now, if you have a look at our stablecoin ecosystem at the moment, currently USDM has 10.5 million

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USD within its treasury. So that’s what it’s holding at at the moment. That’s pretty much the same with USDA and other stable coins as well. But what we need to look at is, is this the silver bullet? Will this fix the problems that we’re seeing in the Cardano ecosystem? Or as Syntho points out here, is the query just the scapegoat at the moment? And is something else underlying that we really need to address and look at? So in terms of

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Injecting that liquidity into the ecosystem, we will see some small gains and initial things that will benefit overall. We’ll have more liquidity in our liquidity pools on DEXs. So that means less slippage. So if you’re doing a trade with ADA and USD for large amounts, you see less slippage and you potentially make more profit there. So that’s a good win already. We’ll also see more DeFi users come in because we have more liquidity pools against USD.

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You will see more pools open up trading various meme coins with USD or more really cool DeFi projects out there with USD. So for example, you may be a really big fan of Iagon and you may be wanting to trade that and sell and lock in some profits. And the easiest way to do that is to sell it for USD. But if there wasn’t a USD trading pair pool, then you wouldn’t be able to trade out for USD and you’d be stuck with trading IG and ADA. And in those cases,

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You may not want to do that because ADA might be dropping in price as well. And that means you’d be trading for another volatile asset and you won’t be locking those profits. So you do need that stable USD pull to trade into. Luckily in this case, the Igon team did think of that and you can trade IAG for USD if you want to lock in those profits. So it’s a really nice win-win for traders and the DeFi ecosystem overall. But will this fix Cardano DeFi overall? Will it attract more users in?

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And I kind of argue no, but I think it’s a really good catalyst to kickstart everything and get things into gear so that we can have a thriving ecosystem. So here are some other ideas and other things that we need to work on and improve to try and boost that Cardano DeFi overall. Now, one of the things I really am trying to push is the exchange listings. There’s a lot of Cardano projects out there that are trying to get Cardano native tokens listed and USDM

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USDA, they’re all Kedano native assets. And if these centralized exchanges don’t support that, then we will never see USDM being an exit token into an exchange and then interfere currency afterwards. So this is something that we really need to make sure happens. So we need to see on Coinbase, USDA, USDM on there, likely not because they’re so tied in with Circle, but also other exchanges such as Kraken.

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and of course, Binance, which is the probably the biggest one out there that we need Cardano native assets on. So if we can get our assets there, then we will see more entry and exit points, make it really frictionless for users to move in and out of various ecosystems. So exchange listings is definitely one big thing that we need to fix. Another thing we need to look into is the onboarding experience overall. The mobile experience I think needs to be really fine tuned and

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There’s a lot of projects that are doing that. There’s Tokyo, there’s Vespa, there’s Begin and Gero Wallet all doing some really cool, innovative stuff in the mobile space just to make the onboarding experience a lot easier. So if you aren’t using one of those wallets, I highly suggest that you do check them out. Links down below for you guys so you can find out how the onboarding experience is like if you aren’t on the mobile experience at the moment. Another big thing is incentives. I think

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trying to attract these users from other ecosystems such as Ethereum, Solana, where they may have and may be holding 20, 30, 40 million in USD stablecoins over there and earning yield doing so. So what’s going to attract them to come over to the Cardano ecosystem? What’s going to make them say, hey, this is really nice. This is really attractive. Let’s get over here and get some of these gains.

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And I’d argue there isn’t much there for people. We really want to see rewards in USD stable coins and not in emissions from other tokens, which are inflationary. So that’s not what we want to see or not the type incentives I’d want to see to attract users in. So really need to find ways to incentivize users to come into the Cardano ecosystem, especially the big players out there.

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Another thing we can do is ecosystem wide airdrops and incentive programs, something to onboard users in try out DeFi in general, educate the users and also hopefully attract a lot more retail in. I was really hoping midnight will be the case when midnight launches. We’ll see a massive airdrop for Midnight. So if you hold ADA, any ADA holders will also get midnight tokens. So something like that. And I really do hope.

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all these ducks line up in a row and we can see liquidity come in on boarding experience really good and then these massive ecosystem wide incentive programs attract all the users together in one flow and and we we see this massive boom within the ecosystem so hopefully we can see something like that also happen and attract the retail users in as well so overall we’ve still got a long way to go for kadano we still got a

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All these things that we have to improve. We were doing so as a community. We’re doing so with growing pains with governance at the moment. So we will get there. It’s just taking a little bit of time and so of criticism that we get a lot from other ecosystems. You’re not building fast enough. You’re not breaking things. You’re not delivering on what you’re promising and you know projects are working hard. We are trying to get there. We are trying to deliver all these things and make it all happen. So make sure guys you check out this.

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Make sure you check out what the Elder Millennial and Marco are doing for this proposal and trying to boost the ecosystem over world with that treasury injection for USD stablecoins. I really do think it be a catalyst for everything out there. And also make sure you check out USDM in general, their project, raising funds for W3I, their main parent company at the moment, may be quite interesting. Again, I’ll put links down below for all you guys to check all out.

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If you enjoyed this type of content, if you have an opinion on what we can do to try and prove Cardano DeFi and boost this stablecoin ecosystem, leave a comment down below. I’d love to hear from you guys. I’ll do follow up videos about this. I’ve also got various tutorials coming right up that will help educate people out there what you can do on Cardano right now. There’s really cool things like prediction markets, trading, all sorts of really cool things out there. I want to showcase and highlight all them for you as well so you can start participating.

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Don’t just stake it Ada, start participating as well. Hit that thumbs up, like, subscribe on your way out. I’ll see you guys in the next video.