Cardano Holds $15B But DeFi Lags: Charles Hoskinson Explains the Paradox

TLDR

• Charles Hoskinson responded to criticism about Cardano’s low total value locked and slow DeFi growth on October 31.
• Hoskinson rejected claims that major stablecoins, such as USDT or USDC, would automatically solve Cardano DeFi challenges.
• Cardano has approximately 1.3 million users who stake or participate in governance and hold over $15 billion in ADA.
• Most ADA holders remain passive participants rather than active liquidity providers in DeFi protocols.
• Hoskinson described the situation as a chicken-and-egg problem where low activity deters partnerships and liquidity.

Charles Hoskinson addressed criticism about Cardano’s low total value locked and slow decentralized finance growth on October 31. The Cardano founder explained why major stablecoins alone will not fix the network’s DeFi challenges. He outlined a multi-year plan involving Bitcoin interoperability and real-world finance initiatives to boost adoption.

Charles Hoskinson Challenges Stablecoin Narrative

Charles Hoskinson rejected claims that major stablecoins would automatically transform Cardano DeFi performance. He questioned how USDT or USDC would improve monthly active users and TVL metrics. The founder stated that no one has explained the mechanism behind this expected transformation.

Cardano already supports native stablecoins, such as USDM and USDA, which maintain their pegs consistently. These asset-backed options can be minted as needed within the network. However, their presence has not triggered the anticipated DeFi boom.

User Behavior Limits Cardano DeFi Activity

Hoskinson identified user behavior as the primary obstacle to Cardano DeFi growth. The network hosts approximately 1.3 million users who stake or participate in governance activities. These participants collectively hold more than $15 billion worth of ADA tokens.

Yet these figures do not contribute to TVL measurements used to assess DeFi ecosystems. Most ADA holders remain passive participants rather than active liquidity providers. This gap between token ownership and DeFi engagement creates measurement challenges.

He noted many users have maintained Cardano wallets for over five years but have not embraced DeFi protocols.

The founder described this situation as a “chicken-and-egg” problem for the ecosystem. Low activity discourages partnerships and the provision of liquidity from external sources. Meanwhile, limited integrations further restrict on-chain adoption and user engagement.

Bitcoin Integration and Real-World Finance Strategy

Charles Hoskinson outlined a strategy connecting Cardano DeFi to Bitcoin and real-world financial applications. The Midnight network will serve as a privacy-focused sidechain for the ecosystem. RealFi targets African markets through microfinance services.

Both initiatives will enable Bitcoin DeFi integration, allowing ADA and BTC lending operations. Users will convert tokens into stablecoins for real-world lending products. Hoskinson expects this approach to generate billions in new liquidity.

The founder cited Leios and other protocol developments as evidence of continued technical progress. He believes Bitcoin’s capital base will boost Cardano adoption rates. This integration strategy aims to break the current cycle of low participation.

Governance Issues Identified as Core Problem

Hoskinson stated that Cardano’s challenges stem from governance rather than technology limitations.

The network possesses technical capabilities and creative talent but lacks a clear organizational structure. No single entity holds responsibility for conceiving and executing ecosystem expansion strategies. This absence of accountability prevents coordinated marketing and mobilization efforts.

Hoskinson proposed assigning clear responsibility for ecosystem development moving forward. He called for targeted marketing campaigns to convert passive ADA holders into active DeFi users. These organizational changes will form the focus for 2026 planning.

The founder emphasized that execution ability exists within the Cardano community. Software development and campaign creation remain feasible tasks for the network. However, without designated leadership and accountability structures, these capabilities remain underutilized across the ecosystem.

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