Alchemy by Sundial x Charms: Cardano-Native Bitcoin Treasury Protocol

Alchemy is a Cardano-native Bitcoin treasury protocol and BTCfi infrastructure layer proposed by a collaboration between Sundial Protocol and Charms. It gives Cardano reusable infrastructure for transparent, on-chain Bitcoin-backed structured exposure: reserve architecture, composable FIRE (BTC+) and ICE (BTC-) assets, public dashboards, integration adapters, monthly reporting, and staged launch liquidity.

The proposal requests 10,000,000 ada, using a reference value of approximately USD 0.20 per ada for a total planning budget of approximately USD 2.0 million. The request is split into two separated pools. Pool 1, approximately USD 1.0 million, supports protocol infrastructure and staged launch liquidity. This pool is treasury-supported, kept separate from operating spend, deployed in tranches, and designed so that profits, yield, and returns generated by the launch liquidity position are returned to the Cardano Treasury quarterly. Pool 2, approximately USD 1.0 million, funds delivery, audit, integrations, dashboards, governance reporting, legal/compliance work, and go-to-market execution.

The withdrawal is self-contained, denominated in ada, independent of any Budget Information Action, and designed to comply with the current Cardano Constitution and the prevailing Net Change Limit. Intersect is proposed as interim fund administrator, subject to confirmation and final agreement. Any administrator-held ada will be kept in auditable accounts and delegated to auto-abstain, not to a Stake Pool Operator. Sundial and Charms also commit to a rollover clause: if external investment funds Alchemy development, the development portion of this treasury request rolls into additional treasury-supported launch liquidity instead. The Treasury funds additional Cardano BTCfi depth, not duplicate compensation.

Cardano has the architecture, governance maturity, and community ambition to compete for Bitcoin liquidity, but it still lacks a production BTCfi infrastructure layer. Bitcoin is the reserve asset of the digital asset economy, yet Cardano does not currently offer a credible, transparent, Cardano-native way for users, wallets, DEXs, and DeFi protocols to hold, deploy, compose, and report on Bitcoin-backed financial primitives at ecosystem scale.

The result is a strategic gap. Bitcoin liquidity is becoming one of the most important inputs in decentralized finance, structured products, and institutional digital asset strategy, but most of that activity is consolidating elsewhere. Ethereum, BNB, Solana, and Bitcoin-adjacent ecosystems are building products around BTC-backed yield, tokenized treasury instruments, synthetic stability, and structured exposure. Cardano risks being treated as a governance and staking ecosystem rather than a home for Bitcoin-native capital.

This is not a theoretical market. Public-market Bitcoin treasury products have shown that there is meaningful demand for senior and junior Bitcoin-backed exposure. Strategy's common and preferred equity products, Strive's Bitcoin-backed preferred stock, and newer on-chain products such as Apyx, Saturn, and related yield markets show that investors want structured access to Bitcoin's upside, stability, and yield characteristics. These instruments are not identical to Alchemy, but they validate the category: Bitcoin-backed financial exposure is a real and growing market.

The numbers confirm it. As of mid-June 2026, Strategy (formerly MicroStrategy) reports 846,842 BTC acquired for approximately USD 64.1 billion. Strategy also reported USD 5.6 billion in year-to-date STRC gross proceeds and STRC daily trading volume of approximately USD 375 million in its Q1 2026 results. MSTR remains one of the most liquid public-market Bitcoin proxy equities. Together, these figures demonstrate enormous institutional and retail demand for BTC-backed structured products.

Strive, a direct competitor in the Bitcoin treasury preferred stock category, accumulated over 4,600 BTC in the last week of May 2026 alone using its SATA preferred stock, and announced a move to business-day dividends beginning June 16, 2026. Public market trading volumes around SATA further show that demand is not limited to Strategy; there is room to compete in this product category, and demand for structured Bitcoin exposure continues to accelerate.

On-chain, the same trend is growing fast. Apyx and Saturn have attracted significant TVL by translating Bitcoin-treasury preferred equity exposure into stablecoin and yield products, while Pendle shows how yield markets can amplify demand for structured exposure. These on-chain products validate that Bitcoin-backed structured exposure can translate directly into DeFi demand, not just traditional market interest.

The total addressable market for Bitcoin-backed structured exposure on-chain is still early and growing rapidly. Cardano has little-to-no BTCfi infrastructure today. Every day without it, that market consolidates on Ethereum, BNB, and Solana instead.

Cardano should not merely watch that market form elsewhere. Cardano's extended UTXO architecture, governance model, and emphasis on formal methods make it a strong natural environment for transparent reserve systems, auditable constraints, and composable Bitcoin-backed assets. Cardano already has a conceptual precedent in DJED's senior/junior two-token model. Alchemy adapts that logic to a Bitcoin-backed system with different economic goals: FIRE absorbs volatility and captures residual BTC upside; ICE provides lower-volatility, USD-denominated BTC-backed exposure with growth potential.

The immediate problem is infrastructure. Cardano does not just need a single BTCfi product. It needs the reserve architecture, asset primitives, safety mechanisms, dashboards, reporting standards, integration adapters, and launch liquidity that let an ecosystem form around Bitcoin-backed finance. Without that base layer, wallets have nothing to integrate, DEXs have no reliable FIRE/ICE liquidity to route, developers have no standard reserve data to build around, and DReps have no transparent BTCfi reporting framework to evaluate. Alchemy solves that by building the infrastructure first and delivering FIRE/ICE as the reference product that proves the system works. The reference product matters because infrastructure without live liquidity is abstract; but the core treasury benefit is broader than one application. Cardano receives an open, auditable BTCfi layer that can be integrated across Cardano DeFi and extended by other builders.

This proposal is also timed for Cardano governance's current phase. The Constitution now gives treasury withdrawals a clearer framework. DReps are actively evaluating large ecosystem investments. The community is demanding stronger accountability, transparent milestones, auditability, and constitutional compliance. Alchemy is designed for that environment: separated funding pools, staged deployment, independent administration, public dashboards, monthly reporting, audit allocation, ADA price protection, milestone gating, pause rules, refund conditions, and a no-double-dipping rollover commitment.

What happens if this proposal does not pass is straightforward: Cardano remains without a serious BTCfi infrastructure layer, and Bitcoin-backed structured exposure continues to consolidate on other chains and in off-chain capital markets. That weakens Cardano's ability to attract net new Bitcoin-aligned capital, reduces DeFi composability, and leaves one of the fastest-growing categories in digital assets outside Cardano's ecosystem.

The purpose of this withdrawal is therefore not to subsidize a private company or fund a broad operating grant. It is to make a targeted, milestone-gated investment in Cardano's Bitcoin infrastructure: a live BTC reserve system, composable FIRE and ICE assets, public reporting, ecosystem integration, treasury-supported launch liquidity, and institutional go-to-market execution designed to bring net new Bitcoin capital and attention into Cardano.

Sundial and Charms are positioned to deliver this work. Sundial brings Bitcoin-native product architecture, treasury accountability, institutional capital formation, governance reporting, and go-to-market execution. Charms brings the Bitcoin meta-protocol layer, live Bitcoin/Cardano compatibility infrastructure, and the technical foundation for issuing Bitcoin-native assets that can circulate as Cardano-native assets. Together, they give Cardano a credible path to compete in BTCfi now, before the category becomes permanently associated with other ecosystems.

This treasury withdrawal solves the stated problem by funding a complete Cardano BTCfi infrastructure package: protocol mechanics, launch liquidity, safety controls, integrations, reporting, administration, audits, and go-to-market execution. The on-chain change withdraws 10,000,000 ada from the Treasury to fund that package under defined restrictions and oversight. The result is a deployed infrastructure layer with visible liquidity, public accountability, and ecosystem utility.

Alchemy has three core infrastructure components.

First, Alchemy creates a shared BTC reserve architecture with transparent safety mechanisms. FIRE and ICE are backed by the same BTC reserve. The reserve ratio measures BTC reserve value against outstanding ICE liabilities: (V x P) / L, where V is BTC in the vault, P is the BTC/USD price, and L is total ICE liability in USD. FIRE price is calculated from residual reserve value after ICE liabilities: ((V x P) - L) / N+, where N+ is total FIRE supply. The initial target reserve ratio is 5.0x. The system launches with substantial overcollateralization rather than thin backing. Safety zones constrain behavior as reserve conditions change. Above 4.0x, normal FIRE and ICE minting and redemption are enabled and ICE growth continues under formula. Between 2.0x and 4.0x, new ICE minting and FIRE redemption are constrained while the system dynamically balances incentives. Below 2.0x, FIRE and ICE minting and redemption are constrained and new risky activity pauses to protect reserve integrity. These rules are designed to prevent overleveraging that puts ICE holders at risk and prevent value-destructive dilution for FIRE holders during stress.

Second, Alchemy issues two composable Cardano-native assets. FIRE is high-temperature Bitcoin: the volatility-absorbing residual claim that receives upside from the shared reserve after ICE commitments are met and takes first-loss downside when BTC falls. It creates amplified BTC exposure without liquidation mechanics or margin calls. ICE is low-temperature Bitcoin: a USD-denominated BTC-backed asset designed for lower-volatility exposure with growth potential. FIRE and ICE are primitives, not isolated app tokens. Wallets, DEXs, dashboards, and future DeFi protocols can integrate them.

Third, Alchemy delivers public infrastructure around the assets: open-source SDKs and adapters for wallets, DEXs, and DeFi protocols; always-on dashboards showing reserve ratio, asset supply, liquidity health, fee flows, and deployment status; monthly governance reports; and reporting standards that future BTCfi projects can adopt. These pieces turn Alchemy from a product into reusable Cardano infrastructure.

Alchemy is built with Charms as technical partner. Charms provides the foundation for FIRE and ICE to be issued with Bitcoin-native logic and circulate into Cardano wallets, DEXs, and DeFi tooling. This proposal acknowledges Charms protocol-layer risk directly. Any bridge, oracle, asset-accounting, or protocol vulnerability could impair reserve health. Mitigation includes independent security review, economic modeling, staged deployment, dashboard reporting, and deployment pause rules.

The requested withdrawal is 10,000,000 ada. Using a reference rate of approximately USD 0.20 per ada, this creates a planning budget of approximately USD 2.0 million. The request is split into two separated pools.

Pool 1 is approximately USD 1.0 million for protocol infrastructure and staged launch liquidity. This pool is treasury-supported and kept separate from operating expenses. It seeds the shared BTC reserve, demonstrates FIRE and ICE with real liquidity depth, and makes the infrastructure credible for wallets, DEXs, and users at launch. Deployment is staged over three months. Month 1 releases approximately USD 250,000 after audit and launch-readiness review. Month 2 releases approximately USD 250,000 after public reporting, operational review, and a 30-day grace period. Month 3 releases approximately USD 500,000 after mint/redeem thresholds, reserve-ratio tracking, growth-rate monitoring, and dashboard performance are confirmed.

The initial reserve target is approximately USD 800,000 FIRE-side liquidity and approximately USD 200,000 ICE-side liquidity, subject to final optimization based on economic modeling, audit feedback, and launch conditions. Each tranche is expected to be purchased at an approximate 4:1 FIRE-to-ICE ratio to move the system toward a 5.0x reserve ratio. Launch liquidity will be treasury-supported and treasury-owned. All profits, yield, and returns generated by the launch liquidity position will be returned to the Cardano Treasury quarterly, converted into ada through Cardano-native DEXs at commercially reasonable rates, with conversion timing and methodology disclosed in monthly reports.

The principal can be returned to the Treasury after Alchemy reaches a 30-day time-weighted average TVL of at least USD 60 million, subject to a formal governance proposal for DRep and Constitutional Committee review. If that action does not pass, the principal remains in the liquidity position and the return proposal may be resubmitted later. This gives the Treasury upside participation while avoiding a forced unwind.

Pool 2 is approximately USD 1.0 million for delivery, audit, integrations, and go-to-market. The planned allocation is: USD 250,000 for protocol infrastructure; USD 300,000 for engineering, platform, delivery, monitoring, reporting, and capital-formation support; USD 200,000 for independent security review, audit, and economic modeling; USD 100,000 for public dashboards, wallet flows, DEX adapters, documentation, and composability guides; USD 75,000 for legal, compliance, disclosures, treasury reporting, risk documentation, and launch-readiness review; USD 50,000 for ecosystem education, DRep communications, partner activation, and launch coordination; and USD 25,000 for fund administration and accounting.

These are planning allocations inside a fixed delivery budget. Funds may be reallocated between delivery categories as requirements are finalized, but total delivery spend may not exceed the approved delivery budget. The infrastructure and launch liquidity pool remains separate and cannot be used for implementation overruns, general operating expenses, personal compensation, or any purpose outside approved deployment. Material reallocations will be disclosed.

This proposal includes several treasury protections.

There are no DRep funds or personal compensation to Sundial or Charms principals. Funding is directed toward protocol infrastructure, security review, launch liquidity, ecosystem integration, governance reporting, and related delivery costs.

There is a rollover commitment. If Sundial or Charms receives external investment for Alchemy development, the development portion of this treasury request will roll into additional treasury-supported launch liquidity instead of duplicating compensation. The delivery work still gets done, but development is paid by external investment while the Treasury receives more liquidity depth at no additional cost.

There is ADA price protection. The maximum acceptable ADA reference rate is USD 0.35. If ADA appreciates above that level before or during delivery, future milestone withdrawals will be reduced or excess ada will be returned. The Treasury funds the work and infrastructure depth, not a windfall caused by ADA appreciation.

There are deployment pause rules. If milestones are missed, reporting lapses, liquidity-health thresholds are breached, or material risks emerge, further deployment pauses until the issue is resolved or governance provides direction.

There are refund and return conditions. Unused delivery funds, excess ada resulting from price protection, and profits/yield/returns generated by launch liquidity will be returned to the Treasury under the reporting process. Launch liquidity principal may be returned after the TVL threshold is met and governance approves the return action.

The proposal also includes administration and constitutional controls.

Intersect is proposed as interim fund administrator, subject to confirmation and final agreement. If Intersect does not confirm within 30 days of enactment, the proposer will nominate an alternative independent administrator, subject to community notice and appropriate constitutional review. The administrator will support accounting, fund separation, milestone verification, reporting, and custody controls. Any ada held by the administrator will be kept in auditable accounts and delegated to auto-abstain, not to a Stake Pool Operator.

Sundial remains accountable for controlled deployment of treasury-linked funds, compliance with use restrictions, reporting, coordination with Charms, and delivery of the funded scope. Sundial will disclose related-party relationships and material commercial arrangements involving Sundial, Charms, or third parties connected to this proposal.

This proposal is designed to comply with the current Cardano Constitution and treasury withdrawal requirements. It provides the title, abstract, motivation, rationale, and supporting context expected for governance action metadata. It states the purpose of the withdrawal: building and launching Cardano BTCfi infrastructure. It states the period and method of delivery: staged deployment after enactment, with three-month liquidity deployment and monthly reporting. It provides costs through the two-pool budget and itemized delivery allocation. It includes audit and oversight funding. It specifies an administrator and custody expectations. It is denominated in ada. It is designed not to exceed the prevailing Net Change Limit. It describes circumstances under which funds, profits, yield, or excess ada may be returned to the Treasury.

The main risks are known and manageable. BTC volatility can affect reserve health; mitigation is a 5.0x target reserve ratio, hard safety zones, and staged deployment. Oracle, bridge, and Charms protocol-layer risk can affect accounting or redemption; mitigation is independent security review, economic modeling, staged launch, dashboards, and pause rules. Novel asset risk can affect user understanding and regulatory treatment; mitigation is legal/compliance work, clear disclosures, and avoiding risk-free claims. Delivery risk is mitigated by milestone gating, fund separation, reporting, and administrator oversight. Adoption risk is mitigated by staged launch liquidity, integrations, go-to-market execution, and the rollover commitment.

The reason this on-chain change is the right solution is that Alchemy needs more than a grant for code. BTCfi infrastructure requires audited mechanics, reserve capital, public reporting, liquidity, integrations, and governance-visible controls. A smaller or purely off-chain funding path would likely produce a product without enough liquidity or accountability to become ecosystem infrastructure. A treasury withdrawal is appropriate because the benefits are ecosystem-level: reusable Cardano BTCfi primitives, transparent reserve reporting, treasury-owned launch liquidity, DRep-visible oversight, and a chance to attract net new Bitcoin capital into Cardano. Cardano has the architecture. Bitcoin has the liquidity. The market has shown demand for structured Bitcoin exposure. Alchemy connects those three pieces with a concrete, milestone-gated infrastructure proposal. Passing this withdrawal gives Cardano a credible BTCfi layer before the category settles elsewhere.