Cardano plans to inject 70 million ADA to save liquidity, aiming for a lock-up position of 500 million dollars by 2026.

Cardano is entering a very important phase of its development as its founding organization attempts to provide the core infrastructure that every major blockchain has come to regard as standard. The new proposal from Cardano seeks community approval to allocate 70 million ADA tokens (worth about 30 million USD) to first-tier stablecoins, custodial providers, cross-chain bridges, pricing oracle machines, and institutional analytics platforms.

5 Major Infrastructure Enhancement Plans of 70 Million ADA

On November 27, a new proposal seeks community approval to allocate 70 million ADA tokens (worth approximately 30 million USD) to first-tier stablecoins, custody providers, cross-chain bridges, pricing oracle machines, and institutional analytics platforms. This effort is jointly supported by Input Output, EMURGO, the Cardano Foundation, Intersect, and the Midnight Foundation, and represents an unusually coordinated alliance for a network that has often faced criticism for slow adjustments and decentralization drift.

The core message behind this collaboration is very clear: Cardano aims to have the economic foundation it has lacked for many years by 2026. This $30 million in funding will be systematically allocated to five key areas, each of which is an essential component of a mature DeFi ecosystem.

Five Major Allocation Areas of the 30 Million USD Fund for Cardano

Level 1 stablecoin: Introduces mainstream stablecoins such as USDC and USDT, providing a stable value medium and liquidity foundation.

Custodian Provider: Institutional-grade asset custody services that meet the security and compliance needs of large investors.

cross-chain bridges: Connect Ethereum, Solana, and other Blockchains to achieve asset cross-chain transfer and liquidity sharing.

Pricing Oracle Machine: Provides reliable external price data for DeFi protocols, supporting applications such as lending and derivatives.

Institutional Analysis Platform: Provides on-chain data analysis, risk monitoring, and compliance reporting tools

The budget formulated for integration aims to systematize the onboarding process of top suppliers, including milestones, audits, service level agreements, and transparent delivery tracking. Therefore, supporters state that the fund will establish a formal and accountable pipeline for introducing the infrastructure that Cardano has long lacked, rather than engaging in one-off transactions or ad-hoc negotiations. Tim Harrison, director of Input Output, stated: “This unity and focus will accelerate the development of DeFi, DePIN, and RWA.”

This kind of unusually coordinated alliance is extremely rare in Cardano's history. Cardano has long been praised for its decentralized governance structure, but this decentralization has also led to slow decision-making and dispersed execution. The ability of the five core institutions to reach a consensus and jointly promote this proposal demonstrates the urgency of the issue and the consensus on the solution.

The awkward state and huge gap of Cardano DeFi

(Source: DefiLlama)

The integration promotion comes at a time when Cardano's economic foundation is still relatively shallow. According to data from DefiLlama, Cardano has a TVL of about 248 million USD and about 40 million USD in stablecoins, along with limited funding pools for lending, liquidity provision, and RWA issuance, while other ecosystems treat these assets as fundamental public infrastructure. In contrast, Ethereum alone has over 170 billion USD in stablecoins, reflecting the scale gap that Cardano is trying to bridge.

The TVL of 248 million USD ranks extremely low among mainstream Layer-1 blockchains. Solana's TVL exceeds 10 billion USD, Avalanche is around 1 billion USD, and even some newer chains like Sui have already reached hundreds of millions USD in scale. Cardano's TVL is even lower than some second-tier DeFi protocols, creating a stark contrast with its market capitalization ranking (usually in the top 10).

The supply of 40 million dollars in stablecoins has further exposed the fragility of the Cardano DeFi ecosystem. Stablecoins are the lifeblood of DeFi, with almost all DeFi activities requiring stablecoins: collateral and borrowed assets in lending protocols, trading pairs in DEXs, and liquidity provision in yield farms. Without sufficient stablecoins, the DeFi ecosystem simply cannot function. Ethereum's 170 billion dollars in stablecoins is equivalent to 4,250 times that of Cardano, and this gap is not just a simple quantitative difference, but a qualitative chasm.

Therefore, without a strong stablecoin reserve, liquidity channels, or institutional tools, Cardano will continue to struggle to generate network effects that make the blockchain economically relevant. Network effects are key to the success of a blockchain: developers come because there are users, users come because there are applications, and liquidity comes because there are transactions. Cardano is currently caught in a vicious cycle: lack of infrastructure leads to no users, no users lead to no developers, and no developers lead to even more outdated infrastructure.

At the beginning of this month, the vulnerabilities of the network were fully exposed when it experienced a brief chain split. Although the interruption was quickly resolved, it intensified scrutiny on the operational maturity of Cardano, especially regarding its lack of real-time analytics, monitoring, and other safeguards that should be in place in an institutional-grade environment. This technical incident occurred at the worst possible time, as Cardano was trying to attract institutional investors, and the network failure was undoubtedly a significant blow.

Hoskinson's Chicken and Egg Problem and Behavioral Bottlenecks

After Hoskinson talked about the factors truly limiting the growth of Cardano DeFi, the integration movement emerged. Last month, the founder of Cardano acknowledged the network's gap in DeFi, but he refuted the notion that obtaining stablecoins backed by USDC, USDT, or other fiat currencies would “magically” change its level of adoption.

According to him, “No one has ever raised such a point and explained how the existence of these larger stablecoins magically solves the entire DeFi problem of Cardano, leading to price increases and significantly boosting our monthly active users, total locked value, and all other metrics.”

On the contrary, he believes the problem lies in behavioral bottlenecks, with millions of ADA holders participating in staking and governance, but only a few truly engaging in the DeFi space. He also added that the network faces challenges in coordination and accountability. Hoskinson believes this creates a classic chicken-or-egg problem, where the current low liquidity of the network hinders integration, while the lack of integration leads to continued low liquidity.

Hoskinson's diagnosis is extremely accurate. Cardano has a large community of ADA holders who are highly involved in staking (with Cardano's staking rate exceeding 70%, far higher than Ethereum) and on-chain governance voting. However, this participation is limited to “passive” activities—staking can earn rewards without doing anything, and voting only requires a click of a button. In contrast, DeFi participation requires “active” operations: providing liquidity involves taking on the risk of impermanent loss, borrowing requires understanding the over-collateralization mechanism, and using complex DeFi protocols incurs a learning cost.

This bottleneck in behavior cannot be simply resolved by introducing stablecoins. Even if USDC and USDT land on Cardano, if user habits and application scenarios do not change, these stablecoins may just lie quietly in wallets and will not flow into DeFi protocols to generate actual economic activity. This is also the reason why Hoskinson opposes the “stablecoin universal theory.”

2026's $500 million TVL target and stress test

Next year will test whether Cardano's governance and new vendor pipelines can translate their integrated budget into measurable economic growth. Therefore, even if only one major fiat-backed stablecoin emerges, and has sufficient market maker depth, Cardano's $40 million stablecoin base could expand to hundreds of millions, a range consistent with the early adoption phase of other L1 stablecoins.

In addition, if the Cardano network can obtain a reliable custody and analytics platform, its $248 million total value locked (TVL) in DeFi is expected to reach $500 million. Notably, at this level, lending, risk-weighted assets (RWA), and liquidity routing will begin to accelerate growth instead of stagnating. The increase from $248 million to $500 million signifies a doubling growth target. Although this target is aggressive, it is not impossible, provided that the five major infrastructures can be successfully deployed and attract actual usage.

In addition, bridges, pricing oracle machines, and institutional wallets are still essential integrations for the development of the network. Without them, liquidity will continue to flow elsewhere. With them, Cardano will have the minimum infrastructure needed for participation in regulated DeFi pilot projects, RWA issuance, and the BTC-ADA liquidity flows associated with its Bitcoin interoperability roadmap by 2026.

Hoskinson's roadmap links the growth of the DeFi network with Bitcoin interoperability and the Midnight privacy network. He believes that if executed properly, these integrations could bring billions of dollars into Cardano's native stablecoin and lending protocols. While this vision is grand, the difficulty of realization is extremely high. Bitcoin interoperability requires complex cross-chain technology, and the Midnight privacy network is still under development, making it uncertain whether it will launch as planned.

This framework is crucial for the new budget. If the challenges faced by Cardano are organizational, stemming from decentralized efforts, slow vendor onboarding, and a lack of structured pathways for stablecoins and custodial providers, then the community-enforced integration plan can provide the governance mechanisms that the ecosystem lacks. However, even with a coordinated access framework, the budget will only change outcomes if it ultimately encourages passive ADA holders to actively participate in liquidity activities and attracts issuers willing to support actual trading volume.

The year 2026 will be a critical stress test year for Cardano. With a $30 million investment, the deployment of five major infrastructures, the realization of Bitcoin interoperability, and the launch of the Midnight network, if these factors can work synergistically, Cardano may achieve a transformation from an “academic chain” to an “application chain.” Conversely, if these efforts fail to translate into actual user growth and an increase in TVL, Cardano may forever miss out on this wave of blockchain adoption and become a footnote in history.