This proposal seeks treasury support from the Cardano Foundation to strategically bootstrap liquidity for USA, a yield-bearing synthetic dollar [digital asset mimicking USD value via algorithms or derivatives] developed by SMARDEX and collateralized by long ADA positions. Already successfully deployed as USDN on Ethereum, USA uniquely combines genuine decentralization, trustless yield generation, and market-neutral stability, appealing to an underserved, critical and growing niche in the current DeFi landscape.

This proposal is more widely available on the References and Supporting Information below, with the text here being intentionally short and concise.

USA’s innovative design eliminates reliance on centralized entities or manual interventions, utilizing fully on-chain, autonomous perpetual futures markets to deliver sustainable yield. This differentiates it sharply from existing stablecoin solutions, which either lack yield entirely (e.g., GHO, sUSD) or rely on centralized management (e.g., USDe). Its Cardano-native architecture ensures seamless integration and composability within the ecosystem, avoiding cross-chain risks and enhancing resilience. By strategically deploying protocol-owned liquidity into USA, this proposal not only resolves the classic "cold start" liquidity challenge faced by new assets but actively fosters enduring economic activity and ecosystem growth. Unlike transient incentive programs that attract short-term, mercenary capital, treasury-supported liquidity in USA establishes deep, durable market foundations. The capital provided by the treasury remains fully under Cardano's control, accessible at all times through transparent, non-custodial, and permissionless smart contracts. In short, this initiative positions Cardano at the forefront of decentralized stablecoin innovation, creating lasting value through a sustainable, yield-bearing, and entirely Cardano-native asset.

USA from SMARDEX would be a Cardano-native synthetic dollar backed by long ADA positions. Unlike traditional stablecoins, which are typically collateralized by fiat or centralized assets, USA would be an entirely non-custodial, on-chain asset [asset fully controlled by the user, stored on the blockchain] that earns yield by design. Built by SMARDEX, USA would be optimized to serve both as a desirable token to hold, a collateral and as a medium of exchange.

The protocol is designed to offer a stable unit of account [value remains consistent for pricing and transactions] with organic utility, consistent returns, and composability across decentralized applications. Its architecture is native to Cardano, meaning it operates entirely within the ecosystem without reliance on bridges—offering a unique opportunity to bootstrap liquidity in a way that strengthens the Cardano stack end-to-end.

For detailed technical explanations, mathematical models, and implementation specifics, please refer to the USDN whitepaper, the USDN documentation and the USDN Github - all available with the full proposal on the references and supporting information.

Since USA will follow the same core mechanisms, these resources provide comprehensive insights into the architecture, delta-neutral strategy, and smart contracts. RA2 TECH, the company behind SMARDEX and USDN, will self-fund the deployment costs, estimated at $3M, with the only ask being that the Treasury uses the protocol once it is deployed as outlined in this proposal..

Today, many incentive campaigns result in minimal long-term impact. They often attract mercenary capital—users motivated solely by short-term rewards—rather than catalyzing durable, protocol-aligned economic activity. This results in temporary spikes in TVL followed by sharp outflows once incentives end.

This proposal sets a precedent for active treasury engagement—where funds are used not just to incentivize but to build, seed, and scale new infrastructure. It shows how Cardano can become the architect of its own flywheel of growth. Most of the time, incentive programs alone-without protocol-owned liquidity (PoL) primarily attract so-called "mercenary capital." These are participants who come solely for the short-term rewards offered by incentives, with no intention of staying or supporting the ecosystem long-term. As soon as the incentives end, these mercenary liquidity providers rapidly withdraw their funds, causing the total value locked (TVL) to drop sharply and undermining user confidence in the chain. This pattern has been observed repeatedly with Uniswap V3 incentive campaigns on various chains such as Scroll, Linea, and Manta, where TVL surged during the incentive period but quickly vanished once rewards stopped.

In contrast, when a protocol or chain establishes a solid base of PoL and practices effective treasury management, it provides genuine, lasting liquidity. This approach fosters real user retention, as both users and builders gain confidence from knowing that the protocol is actively supporting liquidity in the ecosystem. Builders, in particular, feel more secure launching and growing their projects when they see that the chain is committed to sustaining liquidity through PoL, rather than relying solely on fleeting incentive campaigns. This creates a healthier, more resilient ecosystem where TVL reflects true engagement and long-term commitment. Gnosis Chain is a strong example of active treasury management, supporting protocols not only through incentives but also by providing protocol-owned liquidity (PoL) to projects launching on the chain. You can view the DAO’s treasury here, which includes various LP and lending positions across multiple protocols deployed on Gnosis Chain.

As shown, the Uniswap V3 incentive campaign stands out: unlike similar incentive programs on other chains, liquidity on Gnosis Chain remains relatively stable even after incentives end. There is no sharp outflow of capital, in contrast to what is typically observed elsewhere. The reason liquidity on Uniswap V3 remains stable on Gnosis Chain, even after incentives end, is because the DAO actively supports a robust liquidity base through protocol-owned liquidity (PoL) and diversified treasury positions. Unlike chains that rely solely on temporary incentives, GnosisDAO strategically allocates treasury funds to provide lasting liquidity across key protocols, including Uniswap V3. This approach ensures that, even when incentive campaigns conclude, there is a foundational pool of liquidity maintained by the DAO itself, preventing the sharp capital outflows seen on other chains that lack such active treasury management. By holding and deploying PoL and supporting lending and LP positions across an ecosystem, the DAO can create a more resilient and sticky liquidity environment, which benefits users, builders and protocols.

Unlike custodial stablecoins or centralized banking overlays, USA would be fully decentralized and capital-efficient. In this sense, it is already a new category of product that would not compete with existing ones in the ecosystem, but rather complement them. As previously stated, USA leverages long ADA positions to mint a synthetic dollar that offers stable purchasing power with relatively predictable yield. This makes it a natural base layer for DeFi collateral. Non-yielding users will borrow against it—driving protocol activity, lending fees, and TVL growth not just for USA, but also for the other similar categories of products in the ecosystem.

Every synthetic asset with price exposure generates volume by design—through arbitrage, rebalancing, and integrations. These behaviors benefit both users and the protocol—but they also increase on-chain transactions and DEX volume, creating real economic value for Cardano. Treasury-seeded liquidity in USA/ADA pairs on SMARDEX will help establish deep liquidity from Day 1 and improve user confidence.

Yield-bearing tokens tend to maintain a consistent "floor" of trading volume, even when they are primarily used as collateral and are more often minted or burned rather than swapped on secondary markets. This baseline activity is largely driven by arbitrage opportunities that arise from the “built-in” price appreciation of the token against its underlying asset, or between different versions of the token. These arbitrage dynamics ensure that there is always a minimum level of volume, independent of typical trading behavior, which serves as incentive for liquidity provision, on top of the performance of the token itself, which overall benefits Liquidity Providers.

Security is paramount to the team’s ethos. To date, RA2 TECH has invested over $3.5 million in audits just for its flagship product, USDN, with all smart contracts entirely open-sourced and formally audited prior to deployment.

To accommodate different levels of strategic engagement, the treasury can choose from three capital deployment tiers. All are paired with simultaneous minting of USA, maximizing utility from the outset: Option Deployment Impact Summary A ₳50M Moderate-risk strategy. Enables deep liquidity for USA/ADA, providing strong signal to builders and the community. B ₳75M Balanced strategy. Unlocks composability and lending across multiple DeFi protocols. Strong volume and engagement expected. C ₳100M High-conviction strategy. Positions Cardano as the leading L1 with a native synthetic dollar. Maximizes POL efficiency and cross-chain integrations.

If the initiative proves successful, the treasury can scale up its contribution and continue using this mechanism as a strategic growth tool. Alternatively, if priorities shift or the market matures, the treasury can gradually withdraw its capital—allowing organic users and protocols to step in and sustain the system.

This flexibility ensures the treasury is never locked in, and can treat this deployment as a modular, iterative experiment that aligns with Cardano’s evolving strategic goals.

In sum, this proposal is not about subsidizing temporary TVL—it’s about turning Cardano's treasury into a powerful engine for network utility, fee generation, and sustainable economic activity. It reflects a modern, intentional approach to ecosystem design—where capital doesn't just sit—it works.