Hoskinson wants to introduce Bitcoin funds to Cardano, with the following plans.

$1.6 trillion in idle bitcoin: Can Charles Hoskinson's plan save Cardano?

There are approximately US$1.6 trillion worth of idle bitcoins on the market that do not generate any revenue or create any value. The core requirement of Charles Hoskinson's plan to make these bitcoins work on the Cardano network is that each transaction consumes a small amount of ADA. Whether this plan will save Cardano or expose its core problems is a key point.

Summary

Cardano founder Charles Hoskinsen has proposed a strategy to introduce Bitcoin into Cardano's decentralized financial (DeFi) ecosystem through a platform called Pogun, targeting the estimated $1.6 trillion in idle Bitcoin.

The Pogun platform will be launched in three phases in 2026: the launch of the non-leveraged credit market in the second quarter, the launch of revenue applications in the third quarter, and the launch of a BitVM-based bridge to minimize trust in the fourth quarter.

The key mechanism for ADA holders is that every transaction in the system requires ADA as a fee, which is inadvertently paid by Bitcoin users, thereby creating demand drivers for Cardano's tokens that they have always lacked.

The plan relies on Cardano's privacy partner chain Midnight to enable confidential transactions and relies on Cardano's EUTXO architecture, which is in line with Bitcoin's own UTxO model in design.

The Cardano community itself has raised a sharp question: If Bitcoin can be lent out, generate revenue, and settled without being detected by users, what is the point of owning ADA? The plan may be hostile to its own tokens.

The proposition of idle Bitcoin

Cardano has a problem that has not been solved for many years, and this is not a technical issue. ADA prices are down about 94% from their 2021 highs, and the network's DeFi activities are far from reaching its ambitions, with its founder spending a lot of time denying rumors that he is about to leave the project. Cardano never lacked engineering skills and creativity.

What it really lacks is the reason for capital inflows. The solution proposed by Charles Hoskinson in 2026 is bold: no longer trying to attract crypto capital into Cardano, but instead directly acquiring Bitcoin capital. About $1.6 trillion in bitcoin sits idle in wallets and does not generate any revenue. Hoskinson hopes to bring some of this into Cardano's infrastructure, with each transaction quietly paying for processing fees using ADA. This is the most specific and clear theory of needs that Cardano has proposed in years, but it also contains a contradiction that his community has discovered.

This premise is based on a real and huge number. About $1.6 trillion in bitcoin sits idle in wallets without generating any substantial gain. Bitcoin performs well as a store of value, but it does poorly as a financial instrument: it cannot lend, generate income, or access decentralized finance by itself unless encapsulated, bridged, or entrusted assets with intermediaries. This huge gap in idle capital that cannot produce benefits is the goal of all "Bitcoin DeFi" projects, and Hoskinsen decided to let Cardano catch up with all his might.

His point, which he publicly stated in May 2026 and reiterated throughout the year, was that Bitcoin holders would be able to obtain lending, income and privacy tools through Cardano without having to give up control of their assets. A dedicated team (reportedly about 19 people) is working hard to achieve this. The promotion to Bitcoin holders is straightforward: Keep your Bitcoin, but let it create value for you by not trusting the infrastructure of a centralized custodian.

The publicity for Cardano holders is different, and the investment value of ADA is more critical. Hoskinson made it clear that the entire system is running on top of ADA. In his own words, every transaction requires ADA to complete; Bitcoin users use ADA to pay fees but do not realize it. The idea is to make ADA an invisible fuel in the Bitcoin DeFi economy, creating sustained, usage-based demand for tokens, whether or not people are speculating on ADA itself. For a token whose core weakness is the lack of demand-driven force, this is the key.

What exactly is Pogun

Pogun is the platform that enables the above theories to be implemented, and its structure is more specific than Cardano's usual roadmap.

It will be launched in three phases in 2026. The first phase (targeted in the second quarter) is an unleveraged credit market: providing loans to bitcoin avoids the risk of liquidation cascading that leveraged borrowing can bring. The second phase (targeted in the third quarter) is a revenue-focused application that allows Bitcoin holders to make a return. The third phase (targeted in the fourth quarter) is a BitVM-driven bridge, a way to minimize trust and move Bitcoin to Cardano infrastructure, avoiding the custody risks that plague packaging Bitcoin products. Input Output Group applied for treasury funds for this project, in the amount of approximately 12.3 million ADA. As part of a larger proposal, the proposal also provided funds for Leios expansion and upgrades.

The architecture relies on two components unique to Cardano. The first is Midnight, Cardano's privacy-focused partner chain, which launched the Mainnet in early 2026 as a confidential coordination layer, allowing Bitcoin holders to not disclose their positions when using DeFi tools. Hoskinson sees Midnight as proof of the Cardano Partner Chain model: specialized chains operate in parallel with the main network while leveraging the security of the main network. The second is Cardano's EUTXO accounting model, which is in line with Bitcoin's own UTxO model in design. This common inheritance is no accident; it is part of the argument that Cardano is technically better suited to developing Bitcoin DeFi than account-based chains such as Ethereum, because the two systems process transactions in a similar way.

This sequencing is carefully thought out. The team said it would first establish credit markets and liquidity so that when consumer-facing products are launched, there is already a fully functional market at the bottom, rather than an empty shell waiting to be filled by users.

Bullish logic

The most powerful version of this argument is that Cardano has finally found the right goal and built a credible and differentiated path to achieve it.

The demand mechanism is indeed very clever. Cardano's problem has never been a capacity issue, but rather the ADA's lack of structural needs in addition to speculation and pledges. Making ADA a mandatory fee layer in the Bitcoin DeFi economy creates a demand based on usage that speculation cannot provide and that will not disappear as market sentiment shifts. If Bitcoin DeFi on Cardano generates real transaction volume, ADA's demand will mechanically increase accordingly. For every transaction, demand will increase by one point, regardless of whether people are optimistic about ADA's transaction value. This is much healthier than the "memecoin + narrative" cycle that drives other chains.

The goal is also correct. Every weighty chain is chasing Bitcoin DeFi because its rewards-a small fraction of the $1.6 trillion in idle capital-are the largest pool of untapped money in the crypto space. Cardano joined the chase with his "brokerage-grade" patience, privacy layer and UTxO compatibility, which is indeed a differentiator compared to encapsulated bitcoin solutions that dominate the market but repeatedly fail on custody and trust issues. A BitVM bridge that reduces custody risks just solves the pain point that previously sealed Bitcoin users suffered losses due to hackers or insolvency of the custodian.

Moreover, this is in line with Cardano's identity rather than deviating from it. Cardano's overall brand is: methodical, research-driven, safety-first engineering, although it is often criticized for being too slow. Bitcoin holders, as a group, are the most conservative and security-oriented group in the encryption field. As a result, a cautious, peer-reviewed approach to Bitcoin DeFi that minimizes custody risk may be more suitable for Bitcoin holders than the "fast-action" culture of other DeFi ecosystems. This time, Cardano's "slowness" could become a selling point for a specific audience that values this value.

Bear logic

The skeptics 'view begins with a shockingly simple question posed directly to Hoskinson by a member of the Cardano community: What is the point of owning ADA versus owning Bitcoin? Are we building a system that is hostile to our own core tokens?

This concern is real and structural. If the system is designed to allow Bitcoin users to pay ADA fees without knowing it, then the design goal is to explicitly make ADA "invisible." A Bitcoin holder who uses Pogun holds Bitcoin, earns income in the form of Bitcoin, and never needs to buy, hold or consider ADA. Fees have been abstracted. If ADA successfully hides it from users, then ADA is just a backend utility token that end users have no reason to hold as an investment, which means that demand will be limited to the floating amount needed to operate the protocol, rather than a broad range of holder needs to support token prices.

Using ADA as an invisible "conduit" is good for usage, but may not be conducive to ADA becoming an asset that people want to have. Hoskinson responded that transactions require ADA anyway, which solves the mechanical need but fails to answer the deeper question: Why should people hold ADA instead of holding the Bitcoin it is helping to activate?

The second issue is implementation and timetable. Cardano has a long history of ambitious roadmap not being delivered on time or falling short of expectations. Pogun's various phases are set for 2026, while Cardano's governance mechanisms are clearly deadlocked and a treasury vote on such plans faces resistance, and Hoskinson warned that rejecting research funding could force engineers to leave. A plan that relies on on-time delivery and smooth integration of multiple new components (Midnight, BitVM Bridge, Credit and Revenue Layer) faces huge execution risks in an ecosystem that previously had difficulty translating the roadmap into actual adoption rates.

The third issue is competition. Cardano is not the only player chasing Bitcoin DeFi; it has fallen behind on a crowded track. Bitcoin Layer-2, the encapsulated Bitcoin protocol on Ethereum, and Bitcoin native DeFi projects are all pursuing the same idle capital, some of which have more liquidity, more developers, and more existing integrations than Cardano. Cardano's DeFi Total Locked Value (TVL) is sometimes around $1.1 billion, a fraction of Ethereum or Solana, which raises the question: Why would Bitcoin holders introduce capital into an ecosystem that would initially be difficult to attract capital? If liquidity and developers are elsewhere, it doesn't help if you claim to be the natural technological home of Bitcoin DeFi.

Core token issues

Everything about this plan boils down to an unresolved contradiction that deserves to be pointed out bluntly, as it is the key to judging whether Pogun is helping ADA or just helping Bitcoin.

Cardano is trying to address its needs by making ADA "essential" but "invisible." These two attributes are contradictory. "Essential" means that ADA is required for every transaction, creating mechanical demand proportional to usage. "Invisible" means that users will never proactively hold or value ADA, which suppresses the need for discretion that can truly push token prices beyond their purely utility bottom line. The transaction price of an "essential but invisible" token is often close to its utility value-the minimum floating amount needed for the system to operate, rather than the premium that people want to own it. Ethereum resolves this contradiction through pledges,"ultrasonic" narratives, and making it a reserve asset in its own economic system, making ETH itself visible and desirable. Cardano's Pogun design points in the other direction, positioning ADA as a back-end infrastructure.

The optimistic outcome is that the demand for sufficient usage, even if only utility value, can become large. If Bitcoin DeFi on Cardano handles huge transaction volume, even if no one holds the ADA out of love, its mechanical demand may be considerable. The pessimistic outcome is that Cardano will build a successful Bitcoin infrastructure whose value will be attributed to Bitcoin holders and Pogun's operators, while ADA can only capture meager utility profits. This is not what ADA holders expected when cheering the Bitcoin DeFi announcement.

Which outcome will win depends on numbers that do not yet exist, as the product is still being launched. The credit markets in the second quarter and the application of earnings in the third quarter were the first real tests. If they generate significant bitcoin trading volume and ADA demand increases significantly, then the theory holds. If they were quietly launched into the same low-liquidity environment as Cardano DeFi, Pogun would become another well-designed Cardano project that failed to drive the value of the token, and the answer to the question posed by community members would be self-evident.

Why Cardano needs this plan to succeed

To understand why Hoskinson made such a big bet on Bitcoin DeFi, you must understand how much pressure Cardano is under, because Pogun is not an opportunistic add-on, but a response to a survival question that the market continues to ask.

This pressure is evident in the numbers and the noise surrounding them. ADA's price is down about 94% from its 2021 high, mired in the ranks of high-value tokens that led the previous cycle but never recovered. Although Cardano has been online since 2017 and has one of the most loyal communities in the crypto space, its total DeFi lockdown value (approximately $1.1 billion) is only a fraction of that of Ethereum or Solana. Hoskinson spent much of 2026 denying rumors that he was about to leave the project and calling them fiction, something that well-developed web founders usually don't need to do. And, with the governance mechanism-Cardano's proud CIP-1694 on-chain system-stalled over treasury proposals, Hoskinson warned that rejecting research funding could force engineers to leave.

Underlying all this is a criticism that Hoskinson himself acknowledges in his statement: Cardano's problem is not a technical one. He made it clear that this is not a node issue, not an imagination, or execution ability, but a matter of governance, coordination and ultimately involving capital and users. It was a remarkable admission by the founder that redefined Pogun. Bitcoin DeFi is not just a product; it is Hoskinsen's response to accusations that "Cardano built impressive but no one uses technology." If he could channel Bitcoin's huge spare capital through Cardano, he would solve both the adoption problem and the demand problem, and would not have to win over crypto-native DeFi users who have always chosen other chains.

And that's why the stakes are so much higher on this than on a regular road map project. Cardano has tried various narratives before: smart contracts, then DeFi, then real-world assets, but none has produced the adoption inflection point that the community has been waiting for. Bitcoin DeFi is by far the largest attempt to target the largest market, and it comes at a time when patience with the project's "slow work" philosophy is clearly waning. If Pogun succeeds, it will prove that the whole methodical approach works. If it was implemented quietly, like previous projects, it would be much more difficult to argue that the next project would be different. Hoskinson has effectively staked the credibility of Cardano's entire strategy on attracting an audience that has never been Cardano's, either the boldest move or a sign that there are not many options left.

What to Focus on

Three specific signs will tell you how things will develop.

The first question is whether Pogun's phases will really be delivered according to the 2026 schedule. Credit markets are targeted in the second quarter and earnings should be applied in the third quarter; in an ecosystem already criticized for slow delivery, a postponement of these dates would be an early negative sign. Given Cardano's historical record, delivery on time and product operation will be a real, somewhat unexpected, positive sign.

The second is the volume of Bitcoin transactions in the system, not the ADA price. The whole theory relies on attracting idle bitcoins, so an important indicator is how much bitcoins will actually flow into Pogun's credit and income products once they go online. ADA prices are influenced by noise and the broader market; and the Bitcoin TVL on Cardano is a clear indicator of whether the "idle Bitcoin theory" is valid.

The third is whether ADA demand will become visible in the data as usage grows. This is the core issue that is measurable. If Bitcoin transaction volume increases and ADA demand on the chain increases in an identifiable manner, then "essential and invisible" design is effective as a demand driver. If bitcoin trading volumes rise and the ADA does nothing, then the community is right to worry that Cardano will build valuable infrastructure for other people's assets. Hoskinson made the riskiest and most concrete bet in Cardano's recent history. The next two quarters will begin to determine whether the bet is aimed at the right target or at your own token.