Cardano is facing challenges in the DeFi space as concerns rise over its stablecoin liquidity. Despite positive on-chain metrics, ADA's recent 7.58% price drop has raised eyebrows among investors.

Charles Hoskinson, the co-founder of Cardano, recently proposed converting 140 million ADA to stablecoins to enhance DeFi liquidity. However, critics warn that this move could further impact ADA's price amidst the current market weakness.

Hoskinson highlighted the need to address Cardano's stablecoin shortfall, pointing out the significant gap in stablecoin market cap relative to DeFi TVL. He believes this strategy could generate non-inflationary revenue for the treasury and strengthen the DeFi economy.

While some community members support Hoskinson's plan, others express concerns about potential selling pressure and market timing. Suggestions have been made to mint a crypto-backed stablecoin using ADA to boost liquidity without causing significant sell pressure.

Despite the debate, Cardano's recent inclusion in Nasdaq's Crypto US Settlement Price Index indicates growing institutional recognition, showcasing resilience amid ecosystem challenges.