The Cardano Foundation has introduced a formal proposal to withdraw 50 million ADA (worth approximately $13.66 million at the time of the announcement) from the Cardano Treasury. This withdrawal is designated as the initial funding tranche for the Orion Venture Fund, a new investment vehicle to be managed by venture capital firm Draper Dragon.
The Orion Fund, proposed by Draper Dragon and Draper University, aims to invest in startups building on the Cardano network over the next six years. The fund's stated goal is to generate venture-style returns, with profits being returned to the Cardano Treasury. Its support model includes direct investments, access to tier-1 exchanges, global marketing, liquidity provision, and a growth accelerator for educational support.
The total funding plan involves the Treasury contributing $75 million, with outside investors adding $5 million. The proposal outlines a cap of 175 million ADA for total withdrawals from the Treasury. However, current market prices present a challenge, as the 175 million ADA cap is valued at only $47.8 million, significantly below the $75 million target. The first tranche of 50 million ADA also falls short of its $15 million target, valued at $13.66 million.
The Cardano Foundation has called on the community to vote on this proposal, stating, "We support this proposal, which asks the Community to vote on this first tranche." The proposal has garnered support from figures like Kris Kowalsky of Intersect, who views Draper Dragon's involvement as a positive signal of external trust in the ecosystem. However, some community members have raised questions about the selection of Draper Dragon and called for enhanced oversight and clear return metrics.
This funding initiative coincides with a broader strategic shift for Cardano, highlighted by founder Charles Hoskinson and venture arm EMURGO. Hoskinson stated that Cardano has spent excessive resources on infrastructure at the expense of utility and user experience, declaring "This is the last year where we have expensive infrastructure." He acknowledged that many Cardano dApps are struggling with low revenue, users, and TVL.
As a solution, Hoskinson proposed a new investment strategy where the Treasury would act as an investment engine, taking equity-like positions of up to 30% of token supply from select projects to form an index. EMURGO echoed this call for rebalancing, stating the network is at an "inflection point" and must pivot to building around people and experiences to survive long-term.
