Sundial X Charms Proposal: Building the First Bitcoin Treasury Protocol for Cardano
6/3/2026
Today we’re introducing Alchemy: the first Bitcoin treasury protocol that reimagines Strategy’s digital credit model as a blockchain-native killer BTCFi app and asset pair on Cardano — and the focus of an upcoming Sundial treasury withdrawal proposal.
Bitcoin is the world’s reserve asset of the digital age. The most attractive and sustainable crypto products are now those that enhance Bitcoin’s role as a store of value, reserve collateral and provide alternative forms of exposure to the asset.
Cardano has a golden opportunity to be the first in crypto to adapt to this new reality by adopting a rapidly emerging, proven product category that is already exploding in the securities market.
This proposal seeks initial funding and liquidity for Alchemy, a Bitcoin treasury protocol that turns a shared BTC reserve into two complementary Cardano-native assets: FIRE (BTC+), amplified Bitcoin exposure without liquidation mechanics; and ICE (BTC-), designed as a USD-denominated, BTC-backed asset with gradual, predictable redemption-value growth.
At its core, Alchemy takes Bitcoin’s unmatched strength as a reserve asset and makes it accessible through two different forms of exposure: one optimized for greater BTC upside, and one optimized for stability and predictable value growth.
This architecture mimics that of Strategy’s MSTR and STRC preferred stocks, which have become among the most actively traded instruments in public equities by doing something simple: structuring Bitcoin exposure into financial instruments investors actually want.
What doesn’t exist yet is the on-chain version: one where these instruments become open, and globally accessible — with an inspectable reserve, self-operating mechanics, and minting/redemption is possible by anyone with a Bitcoin wallet. Charms, the newly emerged Bitcoin + Cardano UTXO-based meta-protocol standard, enables smart contracts and cross-chain programmable assets, making this system possible.
This proposal is a lean, milestone-gated initiative that deploys capital efficiently to position Cardano as a leader in the next generation of Bitcoin finance — digital credit — before the category is settled elsewhere.
What’s the ask?
$2.0M USD (~9,300,000 ADA), split into two clearly separated pools:
- $1.0M to build and launch Alchemy — covering protocol implementation, security audits, economic modeling, DEX integrations, monitoring infrastructure, legal, and go-to-market execution.
- $1.0M in treasury-supported launch liquidity to bootstrap Alchemy’s initial BTC reserve and accelerate adoption. This capital is deployed in staged tranches, remains separate from development funding, and stays owned by the Cardano Treasury.
All yield generated by the liquidity position flows back to the Treasury quarterly. Once Alchemy grows beyond $60M TVL, the principal can be returned through a formal governance vote.
What does it build? (Alchemy Explained)
Alchemy is built around two realities shaping Bitcoin’s future.
- Bitcoin will continue growing in value over the long term.
- Bitcoin holders already demand financial products that put BTC to work and create new ways to earn.
Alchemy is a Bitcoin refinery protocol. It takes users’ BTC, deposits it into a shared on-chain reserve, and transforms it into two complementary assets that filter Bitcoin’s volatility to those who want it and away from those who don’t.
FIRE is high-temperature Bitcoin. It makes Bitcoin productive and designed for holders who want greater exposure to Bitcoin’s long-term upside. FIRE receives the extra gains from the shared BTC reserve after ICE commitments are met, creating amplified BTC exposure without liquidation mechanics or margin calls. In exchange, FIRE holders take on more short-term volatility.
ICE is low-temperature Bitcoin. It makes Bitcoin predictable and designed for holders who want Bitcoin-backed earning potential with more stability. ICE is a USD-denominated, BTC-backed asset whose redemption value grows gradually over time, with downside protection provided by FIRE holders. ICE is for users who want to benefit from Bitcoin’s long-term growth without holding a highly volatile asset.
Both FIRE and ICE are backed by the same shared BTC reserve. FIRE minters provide the excess reserve capital that provides the buffer/downside coverage for all ICE holders. When BTC rises, FIRE holders can redeem their holdings for more BTC; when it falls, they can redeem for less. ICE holders can redeem their holdings for a stable, gradually appreciating USD claim, regardless of Bitcoin’s movements.
A reserve ratio governs all protocol activity, minting, redemption, and growth mechanics — with automatic safety thresholds that tighten when collateralization weakens. ICE minting is not possible if the reserve ratio falls below 4.0x, meaning the total Bitcoin in the protocol must exceed ICE obligations by 4x.
Alchemy’s architecture is highly reminiscent of Cardano’s DJED stablecoin: FIRE, like SHEN, provides the volatility-absorbing claim, while ICE, like DJED, provides value stability in USD terms.
There are just two core, crucial differences:
- ICE grows in value past $1, while DJED always remains redeemable for just $1.
- DJED is backed by ADA. Alchemy is entirely backed by BTC.
These aspects give the product far more appeal, virality, and staying power, reminiscent of Strategy’s explosive STRC preferred stock.
For Cardano, Alchemy is not just another DeFi application — it is infrastructure to bring Bitcoin capital into the ecosystem. Every BTC deposited into Alchemy creates Cardano-native assets that can circulate across wallets, DEXs, lending markets, and future financial applications.
Instead of competing for existing crypto liquidity, Cardano can become a home for the world’s largest digital asset and the financial layer built around it.
The protocol is being built by Charms Inc. on the Charms protocol — a newly launched zero knowledge meta-protocol standard that enables Bitcoin apps and assets to be natively compatible with Cardano. Charms will allow FIRE and ICE to be issued on Bitcoin and to circulate as Cardano-native assets from day one, plugging directly into Cardano wallets, DEXs, and DeFi tooling.
Why now? (The Digital Credit Opportunity)
Structured Bitcoin exposure is one of the fastest-growing categories in finance. Strategy’s MSTR and STRC products — leveraged equity and USD-denominated yield instruments backed by a Bitcoin treasury — have become some of the most actively traded instruments in public markets.
MSTR trades for $2.6 billion in volume per day, while STRC trades $350M per day at just 11 months old. Through these instruments, Strategy has accumulated over 843,000 BTC on its balance sheet at an acquisition cost of $63.8 billion, proving the demand for BTC-backed senior and junior financial products is real, proven, and growing.
It’s not just Strategy either. Strive, a direct competitor to Strategy, accumulated over 4,600 BTC in the last week of May using its Bitcoin-backed preferred stock, SATA, after debuting daily dividends for the first time in stock market history, outperforming Strategy. With over $100M in trading volume, Strive proves there is room to compete with Saylor in this product category (in fact, Saylor often provides free mass marketing for his competitors just to advance the mission!).
Yet none of that activity is happening on Cardano, despite Cardano’s UTXO architecture making it one of the most natural ecosystems for Bitcoin-native finance.
If anything, this leg of BTCfi is already expanding rapidly on Ethereum. Apyx is a protocol that issues stablecoins on Ethereum, backed by off-chain corporate dividends from Bitcoin Treasury Company preferred equities, and has already gathered $530M TVL. Saturn, a rival protocol on Ethereum and BNB, has a $246M TVL. Pendle, a complementary yield-trading marketplace that lets users separate and speculate on future yields of these stocks, holds most of Apyx’s TVL, whose assets are the most popular on its platform.
If Cardano wants Bitcoin liquidity to become a real DeFi input rather than a narrative, it needs credible on-chain infrastructure now, before the category is settled elsewhere.
Alchemy takes this product category, which already works in public markets, and rebuilds it to be better: on-chain, transparent, directly redeemable for BTC, and integrated with Cardano DeFi. This is the first entirely crypto-native take on the idea, without a centralized securities layer in the middle, appealing to and expanding into markets that competitors cannot.
The economics and demand are validated by Strategy and its tokenization layers. The on-chain reserve architecture is validated by Cardano’s own DJED stablecoin, which has run with formally verified safety properties for years using the same senior/junior two-token model.
The opportunity for Cardano is to host the transparent, programmable version of this product category before it consolidates elsewhere and to give the broader ecosystem, wallets, DEXs, dashboards, and lending protocols a reusable BTC-backed asset pair to build around. There is immense room to compete, and we must seize the opportunity.
How Are Treasury Funds Spent?
The $2.0M proposal consists of two independent pools with different purposes and controls:
1) $1.0M delivery budget — building Alchemy
This funds protocol development, integrations, audits, economic modeling, launch operations, and ecosystem growth. Funds unlock only as Alchemy reaches defined milestones:
| Milestone | Unlock | Condition |
|---|---|---|
| M1 | 15% (~$150K) | Design, economic modeling, and audit scope finalized |
| M2 | 30% (~$300K) | Testnet live; FIRE/ICE functional; dashboards operational |
| M3 | 20% (~$200K) | Security audit passed; reserve thresholds confirmed |
| M4 | 17.5% (~$175K) | Mainnet launch; DEX integrations live; governance reporting operational |
| M5 | 17.5% (~$175K) | 30-day public report; all internal benchmarks passed |
The delivery budget is allocated across the following workstreams:
| Allocation | Workstream |
|---|---|
| $250,000 | Alchemy protocol implementation and integrations/upgrades |
| $300,000 | Marketing, capital formation, protocol delivery |
| $200,000 | Security review, audit, and economic modeling |
| $100,000 | Product, UX, dashboards, and Cardano DeFi integrations |
| $75,000 | Legal, compliance, disclosures, and risk documentation |
| $50,000 | Ecosystem education, governance reporting, and launch operations |
| $25,000 | Fund administration and accounting |
2) $1.0M Treasury-owned launch liquidity — bootstrapping the BTC reserve
This is not discretionary operating capital and cannot be spent by Sundial. It remains Treasury-owned capital deployed to seed Alchemy liquidity, with releases tied to protocol readiness, audits, reporting, and reserve performance.
After mint/redeem thresholds, reserve ratio tracking, growth rate monitoring, and dashboard performance are confirmed, all liquidity deployment is staged with third-party administration through Intersect (pending confirmation). Yield generated from this position returns to the Cardano Treasury.
There is also an ADA price protection mechanism. While the budget is calculated at a ~$0.215 ADA reference price, our maximum acceptable ADA threshold is $0.35 ADA. If ADA appreciates above this before or during delivery, future milestone withdrawals will be reduced or excess ADA will be returned. The Treasury funds the work, not a windfall.
If milestones are missed, reporting lapses, or liquidity-health thresholds are breached, further deployment pauses until issues are resolved or governance provides direction.
What does Cardano actually get?
- Live BTCfi flagship product built natively for Cardano first. FIRE and ICE as Cardano-native assets with on-chain reserves and public reporting from day one, bringing new net liquidity from Bitcoin holders into the Cardano ecosystem.
- Reusable asset pair that any Cardano wallet, DEX, or protocol can integrate. FIRE and ICE are designed as DeFi primitives, not one-off proposal artifacts. Every BTC deposited into Alchemy creates new Cardano-native liquidity that can flow through the entire ecosystem.
- Treasury yield. All returns generated by the $1.0M liquidity position belong to the Cardano Treasury.
- DRep-visible reporting. Always-on dashboards and monthly governance reports covering reserve ratio, asset supply, liquidity health, fee flows, integrations, and milestone status. The community can inspect the system at any time without waiting for narrative updates.
- Matching capital. Sundial plans to source institutional and ecosystem-aligned capital alongside the Treasury allocation, so treasury support catalyzes a larger BTCfi liquidity base rather than carrying the market alone.
Who’s building it?
Sundial Protocol is the lead proposer. Sundial is a Bitcoin-native credit and derivatives platform with a Hacken-audited BTC platform already live in testnet. Sundial brings product architecture, institutional capital formation, go-to-market execution, and accountability for treasury-linked funds. Sundial is currently completing its Fund 13 Catalyst scope, where it has already delivered core Bitcoin-on-Cardano infrastructure, including architecture design, protocol development, security validation, and institutional DeFi components — the same expertise required to bring Alchemy from concept to production.
Charms is the core technical partner. Charms is a Bitcoin meta-protocol specialist backed by Draper Associates, with an open-source protocol, a Bitcoin-native DEX, a live Cardano ↔ Bitcoin bridge (eBTC), and 3,000+ wallet users. Charms designs the Alchemy protocol layer and core FIRE/ICE mechanics.
What are the risks?
Treasury-supported launch liquidity is exposed to BTC price risk once deployed into the reserve. This is expected and disclosed. The protocol’s automatic reserve thresholds are designed to limit cascading drawdowns, but they do not eliminate market systemic risks.
Oracle and bridge dependencies introduce technical risk. The independent security audit funded by this proposal will cover these components, and Sundial’s existing Hacken-audited infrastructure will serve as a starting point.
FIRE and ICE are novel instruments. Sundial will undertake legal and regulatory analysis before mainnet launch and will adapt the structure as regulation develops. No launch communication will describe ICE as risk-free or as equivalent to a regulated investment product until the legal structure supports such a description.
Delivery risk is mitigated by the milestone structure. Treasury exposure scales with demonstrated delivery.
The Bottom Line
BTC-backed structured products represent the future of Bitcoin finance. Cardano can host the leading, transparent, on-chain version with a reserve that anyone can inspect and that Bitcoin holders worldwide can access and use.
This proposal asks for a targeted, milestone-gated investment: a fixed delivery budget and a staged liquidity allocation, governed by audit gates, public reporting, and third-party administration to kickstart this activity.
It’s a specific programme of work to establish Cardano-native Bitcoin reserve infrastructure before the “digital credit” category consolidates elsewhere.
The full proposal will be published on-chain in June 2026. Before submission, we invite the Cardano community to review the approach, challenge assumptions, raise concerns, and suggest improvements so Alchemy can deliver the greatest possible value to Cardano.
If you are building something that can contribute to this vision — from DeFi integrations to infrastructure, tooling, or new use cases — we invite you to reach out and help bring Bitcoin-native finance to Cardano.
Sundial Protocol — sheldon@sundialprotocol.com
Charms — andrew@charms.dev
Originally published on Medium.