Cardano with $15 billion in assets but DeFi setbacks: Charles Hoskinson reveals the logic behind this dilemma

The stark contrast between massive holdings and a dormant ecosystem

Charles Hoskinson recently commented on the current state of Cardano DeFi, revealing the core paradox facing this blockchain: over $15 billion worth of ADA assets are locked in approximately 130,000 wallets involved in staking or governance participation, yet this enormous capital has not translated into a thriving DeFi ecosystem.

Data shows that Cardano’s total value locked (TVL) remains relatively low, and DeFi activity is far below industry expectations. This is not due to a lack of technical capability or capital base but stems from a deeper structural issue: most ADA holders still play a passive role, holding tokens but rarely acting as liquidity providers in DeFi protocols.

Stablecoins are not a cure-all; the real bottleneck is user participation

Regarding the market narrative that “introducing mainstream stablecoins can save Cardano DeFi,” Hoskinson directly refutes this. The arrival of USDT or USDC will not automatically increase monthly active users or improve TVL metrics, as no one can clearly explain the specific mechanism behind such a transformation.

In fact, Cardano already supports native stablecoins like USDM and USDA, which are collateral-backed tokens that can be minted on demand within the network and maintained at peg. However, their existence has not triggered the expected ecosystem explosion—indicating that stablecoin supply is sufficient, and the fundamental issue lies on the demand side.

Hoskinson points out that many users have maintained wallets on Cardano for over five years but have never experienced any DeFi products. The huge gap between their holdings and actual engagement is the key obstacle constraining ecosystem growth.

The “chicken and egg” cycle dilemma

The founder describes the current state of Cardano DeFi as a typical “chicken and egg” problem. Low activity levels lead external partners to lack motivation to inject liquidity, while limited integration further restricts on-chain adoption and user participation—forming a self-reinforcing negative cycle.

Breaking this cycle requires action at the user behavior level. How to transform these passive asset holders into active DeFi participants is the core challenge for ecosystem growth.

Multi-year plan: Bitcoin interoperability and real-world finance integration

To address this dilemma, Hoskinson sketches a strategic blueprint spanning multiple cycles. The Midnight network will serve as a privacy-focused sidechain for the ecosystem, while the RealFi initiative targets small-scale lending needs in African markets.

Both initiatives revolve around a core goal: achieving Bitcoin DeFi integration. Users will be able to lend and borrow ADA and BTC on Cardano, converting tokens into stablecoins for real-world financial products. Hoskinson expects this cross-chain, cross-sector capital flow will attract billions of new liquidity into the ecosystem.

As the world’s largest crypto asset, if Bitcoin’s capital base connects with Cardano DeFi protocols, it will significantly boost Cardano’s adoption and competitiveness. This integration is not only a technological breakthrough but also a redefinition of the ecosystem’s value proposition.

Governance deficiency is the fundamental obstacle

Hoskinson admits that the problem with Cardano is not technical or talent-related. The network has strong development capabilities and creative resources but lacks a clear organizational structure and accountability mechanisms. Without a single entity responsible for planning and executing ecosystem expansion strategies, coordination efforts and ecosystem mobilization are highly inefficient.

This governance vacuum results in: even if the network has execution capacity, these capabilities are dispersed throughout the community and cannot be unified. Core tasks like software development and event operations are ongoing, but there is a lack of top-level strategic guidance and responsibility assignment.

Organizational reform plan for 2026

Hoskinson proposes that the 2026 plan should focus on assigning clear responsibilities for ecosystem development. Key points include targeted marketing efforts—transforming passive ADA holders into active DeFi users—and establishing a clear leadership structure and decision-making mechanisms.

These organizational reforms are seen as necessary conditions to break the current growth bottleneck. The technology is in place, capital is ready, and what is missing is a governance framework capable of coordinating resources and inspiring community potential.