Key Points

• Toto Finance seeks 22 million ADA for copper investment
• Copper prices need to increase by about 49% to break even.
• This proposal may consume half of the remaining treasury expenditure quota.

Cardano The community treasury is facing an unusual investment decision: to first spend about 5 million US dollars on purchasing physical copper, with the hope that the price of the metal will rise by nearly 50% in order to recoup the initial funds.

According to its official governance proposal, Toto Finance has applied for 22 million ADA to establish a strategic copper reserve known as Cardano.

The proposed investment will involve purchasing physical copper, representing it through blockchain tokens, and ultimately returning the proceeds from the sale to the Cardano treasury. Voting will continue until November 15th, and no withdrawals have been approved yet.

Why does this copper investment require a 49% increase?

The core issue is how this proposed budget of $5 million will be allocated.

Of the 22 million ADA coins applied for, approximately 14.72 million ADA coins, which is 66.9%, will be used to purchase COMEX grade one copper cathodes. The remaining funds will be used for warehousing, insurance, auditing, technology development, supervision, and administrative management.

According to the full budget model of Toto, the purchase price of copper is approximately $6.73 per pound, and the selling price is about $10.06 per pound.

This means that if the dollar value of ADA remains unchanged, the price of copper would need to rise by about 49.4% in order to cover all the expenses of the vault.

If the actual expenditure is less, the threshold may be lowered; however, if ADA appreciates relative to the US dollar, it will become more difficult to recover the amount of the original tokens.

Toto founder Monty Metzger told CoinDesk that if the copper price rises by 30% annually, it could lead to a growth of about 69% within two years.

However, this is just a hypothetical scenario; the price of copper could also fall.

Toto Finance will retain the commercial rights of its tokenization business

The proposal will store copper in an approved American warehouse near New Orleans, and each pound of verified copper will be represented by a token named CuTT.

Toto plans to hold these metals for 18 to 24 months, then gradually sell them off, and return the net profits and unused funds within 36 months.

However, Toto will retain the legal ownership of the copper, but it will be subject to the proposed mortgage protection and will also retain its commercial rights regarding its independently funded tokenization business.

The company can obtain up to approximately 3.36 million ADA through project management payments, execution fees, and permitted operating profits.

This raises an important governance issue: Cardano will provide funding for the physical reserves and bear the risk of commodity prices, while Toto may benefit separately from developing its tokenization platform.

This proposal reflects the broader trend of tokenization of real-world assets, but unlike many tokenized investment products, it relies heavily on the appreciation of a physical commodity.

Cardano has previously explored institutional investment plans and blockchain interoperability as potential ways to expand its financial ecosystem.

Copper investment voting may consume half of the remaining expenditure capacity of Cardano.

At the time this proposal was submitted, the treasury budget was also in a tight state.

Cardano The current withdrawal limit allows for the use of up to 500 million ADA before around July 2027. As of October 16, it was reported that 457.4 million ADA had already been used.

If another 22 million ADA are approved, it will consume approximately 51.6% of the remaining quota of 42.6 million ADA.

This makes this decision particularly crucial for other projects seeking community funding.

Cardano has previously vetoed important proposals, including the budget proposal for the 2026 Cardano summit, which, despite receiving 65.21% support, still did not pass.

Founder Charles Hoskinson also emphasized the importance of ecosystem development supported by the treasury.

At the same time, institutions' interest in tokenized financial assets continues to grow, but this does not guarantee that there will be demand for tokenized assets in the market.