hash algorithm: blake2b-256
body: Cardano Treasury DeFi Liquidity Budget
  abstract: The goal of this proposal is to increase liquidity on Cardano, specifically by supporting stablecoin liquidity. 50,000,000 ADA is requested over the course of 12 months (the duration of the budget) to support the Cardano decentralized finance (DeFi) ecosystem. The majority of the funds in this budget will be disbursed to DeFi protocols including decentralized exchanges (DEXs) and lending protocols to help seed liquidity on Cardano. The funds are managed by a 7 person administrating committee composed of publicly identified individuals who are part of multi-signature (multisig) wallet from which liquidity will be managed. This budget is proposed independent of other efforts since the goal of this budget is not to pay developers or companies for ecosystem improvements, rather to increase liquidity in the system overall. Further, unlike other proposals this budget serves as a revenue stream for the Cardano treasury since yields from DeFi protocols will be sent back to the Cardano treasury.
  motivation: ### High Level Overview * **Amount** - The Cardano treasury should dedicate 3.33% of treasury funds (50 million ada) to purchasing fiat backed stablecoins, spread out over 12 monthly purchases. The committee should make every effort to help mitigate the potential price impact of converting ADA to fiat to mint as stable coins over the 12 month period. Note that up to 35% of funds may be held in ADA to pair with ADA/Stablecoin pairs on DEXs, which will help to alleviate price impact concerns. * **Administration** - A 7 person administrating committee will manage the treasury reserve using a multisig wallet (4 of 7 signature validation) to hold and deploy funds to protocols. The administrating committee will be responsible for working with stablecoin issuers to convert ADA to fiat backed stablecoins and deploying liquidity. A specific focus of the administrating committee will be analyzing approaches of deploying ADA to stablecoins in a way that minimizes ADA price impact. * **Revenue** - Deployed funds will increase in value according to the interest and fees defined by the protocols fees are disbursed to. Each month the total interest generated by the deployed liquidity will be calculated and 15% of accumulated interest from protocols will be withdrawn from the respective protocols and sent back to the treasury, while the remaining 85% of accumulated interest will remain in the protocol (e.g. analagous but not identical to compounding interest). ADA held by the committee that is not deployed will not be staked according to constitutional requirements (see Rationale for more information). * **Deployment** - DeFi protocols with at least 250,000 ADA worth of a stablecoin may apply to be recipients of minted stablecoin, and the administrating committee will review and disburse funds to protocols that have the best plans for growth and returns back to the treasury. A maximum of 2 or 3 protocols may be used per DeFi category to help minimize fragmentation. Applicants shoul…
  rationale: ### Constitutionality of the Budget **Purpose**: This proposal is for work intended to enhance the long term sustainability of Cardano by increasing stablecoin liquidity in the ecosystem. **Article III(5)**: This proposal fulfills this section of the Cardano Constitution by containing a Title, Abstract, Reason for Proposal (Motivation and Rationale), and Supporting Materials. An off-chain copy of this proposal can be found at https://raw.githubusercontent.com/theeldermillenial/2025-liquidity-budget/refs/heads/master/info.jsonld, and the document hash is attached to the transaction to fulfill the other requirements of this section. An easy to read version can be found at https://raw.githubusercontent.com/theeldermillenial/2025-liquidity-budget/refs/heads/master/README.md **Article IV(1)**: We propose that this budget span 73 epochs (roughly 1 calendar year). **Article IV(2)**: Disbursements for this budget must be made to a multi-signature (multisig) wallet composed of at least seven independent administrating members with at 4 of 7 signing policy. The process of overseeing funds then requires 4 of the 7 independent administrating members agree to disbursement of funds to DeFi protocols. The wallet must be the owner of any liquidity deposited into DeFi protocols, meaning liquidity tokens or any other assurance of liquidity must be held in the multisig wallet and should not be delegated to a third party, except as required for conversion of assets to fiat or minting of stablecoins. With this design, the committee will be the administrator of the budget funds and will directly oversee distribution of funds to protocols. **Article IV(3)**: At the time of submission, the NCL is currently at 350 million ADA and there is only one budget requesting 1.5 million ADA that has been submitted on chain through an info action. We believe that this removes a potential constitutional barrier for this proposal based on Article IV(3), since this proposal requests 50 million ADA of the…