Cardano Shifts Strategy: Hoskinson Dumps Bitcoin Reserve for ADA and Native Tokens – What It Means for Investors
- Why Is Cardano Abandoning Bitcoin for Its Treasury?
- How Has ADA’s Price Reacted to the Announcement?
- What Are the Risks of a Native-Token Treasury?
- Could This Make Cardano More Competitive?
- What’s Next for Cardano’s Treasury Plan?
- FAQ: Cardano’s Treasury Overhaul
In a bold move, Cardano founder Charles Hoskinson has announced the abandonment of bitcoin as a reserve asset in favor of a treasury system built on ADA and select native Cardano tokens. This strategic pivot aims to strengthen Cardano’s internal economy, boost developer incentives, and reduce reliance on external assets like Bitcoin. While the community is divided on the risks, the plan could redefine Cardano’s long-term stability and growth. Below, we break down the implications, market reactions, and expert insights.
Why Is Cardano Abandoning Bitcoin for Its Treasury?
Cardano’s decision to replace Bitcoin with ADA and native tokens marks a significant shift in its economic strategy. Hoskinson argues that this move will create a self-sustaining ecosystem where value circulates internally rather than leaking to external assets like BTC. The proposed treasury would include:
- ADA as the foundational store of value.
- Midnight, a privacy-focused token for confidential transactions.
- The top 50 native Cardano tokens, such as Minswap (MIN) and World Mobile Token (WMTYX), to reflect the network’s economic activity.
This approach mirrors Ethereum’s focus on native assets but with stricter curation. Projects must meet criteria like market capitalization, decentralization, and trading volume to qualify—a MOVE praised for fostering quality but criticized for potential centralization.
How Has ADA’s Price Reacted to the Announcement?
Cardano’s market performance has been mixed. While ADA is up 67% year-over-year, it saw a 12% drop in June 2025, trading between $0.54 and $0.60 amid volatility (Source:). The treasury news sparked a brief rally, but skepticism persists. Analysts atnote that the plan’s success hinges on execution—transparent governance and risk management are critical to avoid amplifying volatility.
What Are the Risks of a Native-Token Treasury?
Community feedback highlights key concerns:
- Volatility: Many native tokens (CNTs) are high-risk; some have lost 90% of their value historically.
- Centralization: Critics fear the "top 50" selection could favor insiders.
- Liquidity: Thin markets for smaller CNTs might complicate treasury operations.
Proposals like a risk-weighted vault system or direct grants to builders (as suggested by community member) aim to mitigate these issues. Hoskinson has yet to address these specifics, leaving room for debate.
Could This Make Cardano More Competitive?
If successful, the treasury could:
- Boost Developer Activity: Projects like Minswap and World Mobile Token would gain direct funding avenues.
- Enhance Network Value: By locking liquidity internally, Cardano might reduce sell pressure on ADA.
- Attract Institutional Interest: A structured reserve could appeal to risk-averse investors.
However, comparisons to Ethereum’s struggles with similar models (the DAO hack) serve as cautionary tales. Cardano’s emphasis on peer-reviewed research could give it an edge in implementation.
What’s Next for Cardano’s Treasury Plan?
Hoskinson’s vision is ambitious but untested. Key milestones include:
- Governance Framework: How will token selection be decentralized?
- Risk Controls: Will there be mechanisms to prevent "rug pulls" or crashes?
- Community Buy-In: A vote via Cardano’s on-chain governance is likely.
The BTCC research team notes that while the plan aligns with Cardano’s long-term goals, "execution risks could overshadow the benefits if not managed transparently."
FAQ: Cardano’s Treasury Overhaul
Why did Cardano drop Bitcoin from its reserves?
To prioritize internal economic growth and reduce dependency on external assets like BTC.
Which tokens will be included in the treasury?
ADA, Midnight, and the top 50 native cardano tokens by market cap and liquidity.
How will this affect ADA’s price?
Short-term volatility is likely, but long-term stability could improve if the treasury attracts ecosystem investment.
What are the main criticisms?
Risks include centralization, volatility of small-cap tokens, and lack of clear governance.
When will the treasury launch?
No official timeline yet, but community votes and pilot programs are expected in late 2025.
