Cardano bets on RealFi in conjunction with Bitcoin to break the $270 million TVL stagnation dilemma.

Charles Hoskinson, the founder of Cardano, admitted that the core issue of Cardano (ADA) in the DeFi space lies in coordination and governance, rather than technology. Despite Cardano having over 1.3 million active users participating in staking and governance, most users have yet to activate DeFi liquidity, resulting in a TVL of only $271 million. To break this “chicken-and-egg” stagnation cycle, Hoskinson is pushing for a new strategy: connecting Cardano with Bitcoin and real-world lending through the Midnight and RealFi initiatives, aiming to bring in billions of dollars in liquidity from external sources.

Hoskinson Reveals: The DeFi Dilemma of Cardano is a “Coordination Problem”

Cardano has a solid technical foundation, but the lack of coordination among users and the community has resulted in its large user base not being able to translate into actual liquidity for Decentralized Finance.

• Non-technical Issues: Hoskinson clearly stated that the root cause of the Cardano DeFi digital slump is not a technical issue, nor is it a problem of execution or creativity. He believes that the main challenges lie in governance, coordination, and ultimately accountability and responsibility, which are lacking compared to competitors like Ethereum or Solana.
• User Activation Dilemma: Cardano has a vast user base of over 1.3 million participating in ADA stake and governance, but most users have not engaged in DeFi protocols.
• Liquidity cycle stagnation: This lack of on-chain activity has formed a “chicken and egg” cycle: low activity rates deter liquidity and partners, further suppressing growth.

Strategic Breakthrough: Linking Bitcoin with Real World Lending, Introducing External Liquidity

In order to bypass the internal coordination bottleneck, Cardano is seeking to unlock billions of dollars in liquidity through external capital and cross-chain integration.

• Core Pillars: Midnight and RealFi: Hoskinson proposed solutions centered around Midnight and RealFi. These projects aim to connect ADA with Bitcoin and real-world lending systems.
• External capital inflow: Through this link, capital will be able to flow in from outside the cryptocurrency. Hoskinson estimates that once ADA and Bitcoin can be lent, converted to stablecoins, and used in real credit markets, it could unlock “tens of billions” of funds.
• The TVL gap is enormous: As of the time of writing, Cardano's DeFi TVL is only $271 million, far behind Ethereum ($85.5 billion) and Solana ($11.29 billion).

Data Contradiction: Strong Developer Momentum Under Low TVL

Despite Cardano's poor TVL numbers, indicators such as developer activity show a continued momentum of development, confirming Hoskinson's view on the “activation issue.”

• Developer activity surpasses ETH/SOL: Santiment data shows that Cardano's development activity index surpassed Ethereum and Solana in late October, demonstrating sustained building momentum.
• Core contradiction: This is exactly the contradiction that Hoskinson is trying to explain: Cardano does not have a demand problem, but an activation problem - how to convert a large number of coin holders into on-chain Decentralized Finance participants.

ADA Price and Market Sentiment: Short-Term Trend Weakness

Against the backdrop of a lack of strong Decentralized Finance traction, the market momentum of ADA still appears weak.

• Price Trend: As of the time of writing, the trading price of ADA is approximately $0.60, and the trend remains weak. The price is below all major EMAs (20 EMA is close to $0.65, 50 EMA is around $0.71, and 200 EMA is close to $0.74).
• Technical indicators: RSI (Relative Strength Index) shows weak momentum; CMF (Chaikin Money Flow) is slightly below zero, indicating that capital inflows have not yet returned.

Conclusion

The candid revelations of Cardano founder Hoskinson exposed the deep structural challenges that ADA faces in the DeFi competition. Blaming technical issues on governance and coordination, and hoping to introduce external liquidity through collaboration with Bitcoin and RealFi, represents a bold strategic shift for Cardano. Ongoing developer activity suggests that Cardano still has potential, but investors need to observe whether Midnight and RealFi can successfully break the “activation dilemma” and convert the large user base into substantial on-chain value.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make decisions with caution.