Charles Hoskinson, the founder of Cardano, has shared insight into what the Cardano community should expect regarding the ecosystem’s decentralized Sovereign Wealth Fund (SWF). He gave the update in an 18-minute-long podcast on X, to members of the ecosystem.
Update on strategic Bitcoin diversification and ADA buybacks
According to Hoskinson, the team is considering several approaches to improving and growing the Cardano SWF. He maintained that the goal is to use the fund’s resources to benefit the ecosystem.
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Hoskinson explained that the decentralized Cardano SWF is similar in principle to how countries like Norway invest national wealth into assets for future benefits. He proposed investing a small portion of the Cardano treasury in different assets.
“Could we take about $100 million worth of ADA in the treasury, convert it to a blend of a collection of stablecoins … and also convert some of it to Bitcoin to prime the Bitcoin/DeFi?” he asked.
The idea is to diversify risk, generate yield over time and use that income to buy back ADA. This way, the SWF supports the Cardano ecosystem and grows ADA’s value over time.
By investing in Bitcoin, Cardano could earn profit over time without risking too much of its core treasury.
Additionally, using the profit to buy back ADA could drive demand for the coin and support its market price. Overall, Charles Hoskinson is proposing a self-sustaining financial model for the community.
Cardano community reacts to Sovereign Wealth Fund
Hoskinson acknowledged that this proposal would require patience and time to grow. He maintained that reinvesting the yield annually over five to ten years could yield massive results for Cardano.
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He insisted that diversification is critical to preserving assets’ buying power. This could boost support for the more widespread adoption of ADA in the financial space.
The update has sparked mixed reactions from community members, with one, Chad Luce, suggesting alternatives. Luce opined that a Private Equity Fund or Green Energy Fund could attract investors and perform better than the proposed SWF.
