Crypto analyst Linda recently expressed doubts about Cardano's ambitious $19.2 million PRIME program, designed to boost DeFi liquidity and nearly double the platform's total value locked (TVL) from about $90 million to $200 million. She highlighted that incentives alone might not address deeper systemic issues limiting Cardano's DeFi growth despite the large budget allocation.
The PRIME plan, proposed by Alpha Growth, outlines a 12-month strategy to enhance DeFi liquidity on Cardano through staged audits, gap analyses, and conditional incentive spending. The initiative includes an initial audit of 20 to 25 DeFi categories, followed by a public report before any funds are deployed. The final execution phase requires approval from a governance group composed of representatives from Blink Labs, CoinseLion, Midgard Labs, Input Output, and Tweag.
Linda praised this governance safeguard, noting that if the third phase is rejected, approximately 90 million ADA, or around $14 million, would remain untouched in the treasury. The budget breaks down to $5.6 million for ecosystem grants, $4.3 million for liquidity incentives, and $2.4 million for marketing and partnerships. Alpha Growth stands to receive a $1.7 million fixed fee plus up to $4.6 million contingent on performance, with additional funds allocated to audits and legal compliance. However, to finance the plan, Cardano’s Net Change Limit on treasury spending would need to increase from 350 million ADA to 500 million ADA, a point Linda flagged as a current bottleneck.
Despite these plans, concerns persist that liquidity incentives may not resolve Cardano's fundamental challenges in scaling DeFi adoption. The platform currently holds about $90 million in DeFi TVL and $45 million in stablecoins, figures that shows the modest size of its ecosystem compared to competitors. This initiative seeks to attract and retain capital even after typical reward programs end, a persistent hurdle for Cardano. The outcome of this proposal will be closely watched by stakeholders aiming to assess whether liquidity incentives can spark sustained growth.
