A proposal presented to the Cardano community aims to use 22 million ADA, approximately US$ 5 million, to buy physical copper and represent it in tokens on the blockchain. The project, submitted by Toto Finance on October 15, would require an increase of about 49.4% in the metal's price to recover the full value withdrawn from the treasury, considering the use of the entire planned budget.
The calculation was detailed in a CoinDesk report published this Friday (23). The difference occurs because only part of the funds would be allocated to acquiring the copper, while the rest would finance operating expenses, technological development and oversight mechanisms.
The initiative, called Cardano Strategic Copper Reserve, provides for the purchase of industrial copper stored in COMEX-approved facilities in the United States. Each unit of the CuTT token would represent one pound of verified physical metal.
Approximately one third of the budget would not be allocated to buying the metal
Of the 22 million ADA requested, 14.72 million, equivalent to 66.93% of the budget, would be used directly to acquire copper. The other 7.28 million would cover storage, insurance, audits, technological development, administration and project execution.
The distribution significantly changes the return calculation. According to the modeling presented by the proposal, if the copper were purchased for approximately US$ 6.73 per pound, it would need to be sold for about US$ 10.06 to recover the 22 million ADA originally made available.
This 49.4% increase does not constitute a forecast for the copper market. The result assumes that all expense limits are used, that the ADA price in dollars remains constant and that there are no additional sale costs beyond those considered. Lower expenses would reduce the price needed to reach break-even, while an increase in ADA could raise it.
The structure also provides for payments to Toto Finance. The company could receive 2.64 million ADA for technological development and management, in addition to 441,732 ADA for executing the purchase and up to 278,291 ADA in margins on certain outsourced services. Added together, these amounts could reach 3.36 million ADA, approximately 15% of the budget.
Another relevant aspect involves ownership of the assets. Toto would retain legal title to the copper lots, subject to the guarantees and independent controls provided for in the proposal. The company would also retain the commercial rights to its separately financed tokenized copper business. The treasury's financial return would depend on the sale of the metal and the return of unused funds.
Monty Metzger, founder and president of Toto Finance, told CoinDesk that optimistic scenarios point to potential annual appreciation of 30% for copper. He acknowledged, however, that “commodity prices can also fall”.
According to the schedule presented, the reserve would remain active for approximately 18 to 24 months, followed by a liquidation process. The return of the net proceeds obtained from the sale and of unused balances should occur by the 36th month.
The proposal still depends on approval by Cardano governance, with a voting deadline of November 15, 2026. The request would also commit more than half of the approximately 42.6 million ADA that remained available under the treasury withdrawal limit in effect until 2027.
