Cardano has built a reputation as a thoughtful blockchain platform. It focuses on research-driven development and sustainability. Yet, in the fast-moving world of cryptocurrencies, it faces challenges in keeping up with rivals like Ethereum and Solana. One key area where Cardano lags is the lack of a widely adopted, reliable stablecoin. Stablecoins are cryptocurrencies pegged to stable assets like the US dollar. They provide a bridge between volatile crypto markets and everyday financial needs. This article explores the benefits of introducing a strong stablecoin to Cardano. It also looks at the downsides of continuing without one.
The Current State of Stablecoins on Cardano
Cardano does have some stablecoins in its ecosystem, such as DJED and iUSD. These are native options designed to maintain a steady value. However, they have faced issues like depegging, where their value drifts away from the intended peg. This has led to problems for protocols like Liqwid Finance in the past. As of 2025, Cardano’s total value locked in DeFi sits much lower than competitors. For example, its DEX volume is around $1 million daily, compared to billions on Ethereum or Solana. Discussions in the community highlight a need for a “tier 1” stablecoin, something like USDT or USDC, to boost liquidity and trust.
Recent developments, like the GENIUS Act passed in July 2025, add pressure. This US legislation requires stablecoin issuers to comply with federal rules, such as being insured or holding reserves in approved assets. Compliant options like USDM could help Cardano meet these standards and attract more users. Without a solid strategy here, Cardano risks falling further behind.
The Benefits of Stablecoins
A well-integrated stablecoin could transform Cardano’s ecosystem. It would address core issues in usability and growth. Here are some key advantages.
First, stablecoins offer price stability. Cryptocurrencies like ADA fluctuate wildly, which deters everyday use. A stablecoin lets users hold value without worrying about sudden drops. This makes it easier for payments, remittances, and savings. For instance, in DeFi, users can lend or borrow without the risk of their collateral crashing in value. On Cardano, this could encourage more people to participate in staking or yield farming, knowing their assets are protected from volatility.
Second, it boosts liquidity. Cardano’s DeFi TVL has been dropping since late 2024. A stablecoin with deep liquidity, say over $100 million, would allow larger trades without big slippage. Slippage happens when a trade moves the price too much due to thin markets. Better liquidity attracts traders and institutions, increasing overall activity. Community proposals, like the Stablecoin DeFi Liquidity Budget, aim to fund this directly. With more liquidity, DEX volumes could rise, drawing in developers and users from other chains.
Third, it drives adoption and growth. Stablecoins act as an on-ramp for new users. People unfamiliar with crypto prefer something tied to familiar currencies. This could expand Cardano’s reach into real-world assets, or RWAs, like tokenized bonds or real estate. Charles Hoskinson, Cardano’s founder, has spoken about entering trillion-dollar markets through such tools. Partnerships with banks or firms like those in the new unified stablecoin initiative could integrate Cardano into global finance. Plus, it aligns with regulatory trends, making the platform more appealing to compliant investors.
Finally, stablecoins enable advanced features. They support complex DeFi products, like perpetual futures or options, which need stable bases. On Cardano, this could leverage its strengths in scalability and low fees, once upgrades like Hydra are fully in place. Overall, a stablecoin would make the network more versatile and user-friendly.
Disadvantages of Not Having a Stablecoin
Without a robust stablecoin, Cardano faces several hurdles. These could hinder its progress in a competitive space.
One major drawback is exposure to volatility. Users and developers shy away from platforms where assets swing dramatically. This leads to lower engagement. For example, active users and on-chain volume have been declining on Cardano. Without stability, it’s hard to build trust for long-term projects.
Another issue is limited liquidity and growth. Cardano’s stablecoin supply is only about 10.7% of its DeFi TVL, far below Ethereum’s over 100%. This creates a cycle: low liquidity discourages big players, which keeps liquidity low. Memecoins dominate activity, but they don’t sustain real DeFi depth. Competitors pull ahead, with Solana and others boasting much higher volumes.
Regulatory risks also loom. The GENIUS Act demands compliance, and non-compliant stablecoins could face restrictions. If Cardano sticks with underperforming options, it might miss out on US markets or institutional money. This could stunt global expansion.
Stablecoins aren’t perfect, though. They can have vulnerabilities, like smart contract exploits that allow unauthorized minting. But the risks of not having one seem greater for Cardano right now. Community voices stress the need for change to avoid stagnation.
Looking Ahead
Cardano has strong foundations in proof-of-stake and peer-reviewed tech. A stablecoin could unlock its full potential. By providing stability, liquidity, and compliance, it would help the platform compete and grow. Without it, Cardano risks being overshadowed. Community efforts, like budget proposals and partnerships, show steps in the right direction. As the crypto landscape evolves, prioritizing a stablecoin strategy seems essential for Cardano’s long-term success.
