Cardano founder Charles Hoskinson said the allocation of Genesis ADA tokens to founding entities was payment for early-stage risk, rejecting community demands to redirect those funds toward current blockchain integrations. The Input Output (IO) chief addressed the issue in a Nov. 30 livestream after critics called for Genesis holdings to fund infrastructure deals instead of drawing from the network's treasury.
What Happened: Genesis Allocation Dispute
Hoskinson called the Genesis ADA debate "a closed matter" during the livestream titled "Genesis ADA," saying the original allocation represented profit for building the ecosystem under significant regulatory and technical uncertainty.
The initial funding came from a Japanese crowd sale that raised approximately $72 million, converted into Bitcoin, which established a three-part governance model comprising the Cardano Foundation, EMURGO and IO. At the time of distribution, IO's Genesis ADA allocation carried a value of around $8 million based on crowd sale pricing.
"The Genesis ADA is profit for services rendered taking a risk, doing an activity and building an ecosystem," Hoskinson said.
"It was a deal between us and the primary buyers of ADA, the Japanese who put up the initial wave of capital to get it done." He noted that Genesis ADA traded between 4 and 8 cents throughout most of Cardano's early development period.
The founder rejected arguments that IO and EMURGO should function as public utilities with balance sheets available for community initiatives. "The books of my company and the books of EMURGO as private companies are none of the concern or business of the community as a whole," he said. He pointed to an existing on-chain treasury holding more than 1 billion ADA as the appropriate funding source for new projects.
Why It Matters: Treasury Funding and Governance Structure
The dispute centers on a pending request for 70 million ADA from the network treasury to fund integrations with providers including Pyth, RedStone and Circle.
Some community members have argued that Genesis holdings should cover such partnerships instead of treasury funds. Hoskinson called that expectation retroactive and noted those companies did not exist when Genesis allocations were determined. He said the 70 million ADA "will not cover the total fee of all the integrations" and that IO, the Midnight Foundation and other entities will need to contribute additional resources.
Hoskinson framed the funding debate within a broader governance transition for 2026, moving from the original three-entity structure to what he called a "pentad" executive layer that adds the Midnight Foundation and Intersect to the existing Cardano Foundation, EMURGO and IO. He said the consolidated approach aims to coordinate negotiations with major industry players and secure infrastructure deals.
"We now have to decide, do we want to do something new and different and put a new structure for 2026 so that we can build the necessary infrastructure for the DeFi ecosystem?" he said.
The founder defended the return on the initial Genesis allocation by pointing to Cardano's current market position.
"99.9% of cryptocurrency ventures fail," Hoskinson said. "Cardano is one of only a handful like XRP and Ethereum that have survived over the last 10 years and has value greater than $10 billion." He said the network reached a peak valuation exceeding $100 billion, calling the outcome "an overwhelming success" relative to the roughly $40 million in total early funding.