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𝗣𝗟𝗘𝗔𝗦𝗘 𝗥𝗘𝗔𝗗 𝗜𝗻𝗱𝗶𝗴𝗼’𝘀 𝗣𝘂𝗯𝗹𝗶𝗰 𝗦𝘁𝗮𝗻𝗰𝗲 𝗼𝗻 𝗣𝗿𝗼𝗽𝗼𝘀𝗮𝗹 𝟮𝟮𝟯 We at @Indigo_Protocol have respectfully declined but are grateful for the invitation to the Stablecoin Roundtable to discuss Proposal 223 (gov.tools/proposal_discussio…). We would like to take the opportunity to publicly share our perspective to ensure clarity and transparency with the Cardano community as to why we are not in favor of this proposal. As builders in Cardano’s DeFi ecosystem and as a whole since early 2021, Indigo has navigated significant market volatility, along with uncertainty on the trajectory of the ecosystem, and gained deep insights into Cardano's challenges. We believe this proposal will not deliver the growth our ecosystem needs, as it misdiagnoses the core issue. The primary barrier to Cardano’s DeFi success is not a lack of liquidity but a lack of users. Cardano has historically been siloed, disconnected from the broader DeFi landscape due to limited interoperability. This proposal, in its current state, emphasizes boosting liquidity for native fiat-backed stablecoins and deployment of that liquidity into various DeFi protocols over a 12/mo period, but this approach overlooks the urgent need to open doors for new user acquisition. Liquidity alone cannot solve our challenges when the ecosystem struggles to attract new users from other chains. 𝗛𝗲𝗿𝗲’𝘀 𝘄𝗵𝘆 𝗣𝗿𝗼𝗽𝗼𝘀𝗮𝗹 𝟮𝟮𝟯 𝗳𝗮𝗹𝗹𝘀 𝘀𝗵𝗼𝗿𝘁: 𝗜𝘀𝗼𝗹𝗮𝘁𝗶𝗼𝗻 𝗟𝗶𝗺𝗶𝘁𝘀 𝗚𝗿𝗼𝘄𝘁𝗵: Cardano’s absence of mainstream stablecoins like USDC/USDT creates a barrier to entry. These assets are critical for drawing users from other DeFi ecosystems. Native stablecoins, while promising, lack the accessibility and trust of their mainstream counterparts and often suffer from 2-4% depegs, despite already increased liquidity. 𝗟𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗜𝘀𝗻’𝘁 𝘁𝗵𝗲 𝗕𝗼𝘁𝘁𝗹𝗲𝗻𝗲𝗰𝗸: Increasing native stablecoin supply, as past efforts with USDA show, hasn’t resolved depegs or driven adoption. Liquidity without a clear user acquisition strategy is like filling a pool no one swims in—it’s ineffective and misallocates resources. 𝗛𝗶𝗴𝗵 𝗕𝗼𝗿𝗿𝗼𝘄𝗶𝗻𝗴 𝗥𝗮𝘁𝗲𝘀 𝗥𝗲𝗳𝗹𝗲𝗰𝘁 𝗗𝗲𝗺𝗮𝗻𝗱: Persistently high borrow rates signal strong demand for leverage and a caution toward holding spot stablecoins. This is not indicative of insufficient liquidity, but strong demand to borrow stables rather than holding them. Proposal 223 fails to address the core issue, missing the chance to unlock DeFi use cases by making borrowing more affordable and stable. Between November 5th to December 7th of 2024, Cardano’s DeFi TVL exploded from ~236 million dollars to ~876 million. While this increase was significant, a further look into the details actually indicates a decline in total ADA deployed in the ecosystem, as during this time, total ADA deployed shrank by nearly 10%, leading to the assumption that the user base also shrank. Proposal 223 does not address the core issue of growing DeFi in the Cardano ecosystem, but it is a solution that benefits parties with special interests/access and facilitates ecosystem arbitrage-driven value extraction. Please engage with this post and share your opinion. We need to focus on connecting Cardano to the DeFi world, improving interoperability rather than deepening liquidity for a limited user base.