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Cardano (ADA): the DJED stablecoin will make its debut next week

Designed and developed by fintech COTI, the algorithmic stablecoin DJED should see the light of day next week on the Cardano (ADA) blockchain. The DJED will be anchored to the US dollar, and will be insured by both ADA and SHEN, a token available for staking which will allow you to receive part of the costs incurred in the mint and burn processes of the stablecoin.

DJED is coming soon to Cardano

The DJED stablecoin will therefore be the first stablecoin developed specifically for the Cardano (ADA) blockchain, since it should be available next week.

Designed and developed by the fintech COTI, specialized in the digitization of devices and in the creation of digital payment solutions, the DJED will be an algorithmic stablecoin whose over-collateralisation should be maintained between 400 and 800%according to the available documentation.

“We are happy to share a new update on the progress of Djed and let you know that the launch is scheduled for next week! »

This very substantial over-collateralisation should theoretically allow to avoid a scenario similar to that of Terra (LUNA) that we were able to observe in May 2022, which resulted from a simultaneous decline in LUNA and UST, the 2 cryptocurrencies being closely linked before their collapse.

For simplicity, an algorithmic stablecoin is structured to self-regulate to ensure parity with its reference asset, often the US dollar. The algorithm must make it possible to buy stablecoins when the price is down, and, on the contrary, to sell them when the price is up.

Note, however, that it is not the “official” stablecoin of Cardano, since the blockchain should issue its own via Emurgo during the first quarter of the year as part of the launch of its Azens product line. USDA baptizedit should be fully backed by a US dollar reserve, unlike the DJED which will be backed by the ADA.

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What will be the specificities of the DJED?

In order to receive DJED, Cardano users will need to send ADA to the corresponding smart contract. The price of the DJED will be based on that of the US dollar, which means that 1 DJED = 1 US dollar. On the contrary, to resell DJED for ADA, users will have to exchange their DJED for ADA.

According to the documentation provided by COTI, the DJED will also be insured thanks to a second cryptocurrency, the SHEN, which will act as a reserve currency. A choice that aims to ward off possible sudden fluctuations in the price of ADA or to deal with possible massive DJED mints that could cause a lack of ADA tokens in the smart contract.

SHEN holders, who will therefore participate in the DJED price security mechanism, will be rewarded through a liquidity pool system. In order to ensure this mechanism, SHEN holders will not be able to burn their tokens if the collateralization ratio is below the 400% threshold.

On the contrary, if the collateralization ratio exceeds 800%, which is considered as the maximum ratio by the smart contract, the latter made buying SHEN impossible until the reserve returns to a healthier ratio.

At last, SHEN holders will be rewarded in the form of COTI tokenswill result from costs inherent during the inherent processes of mint and of burn SHEN and DJED tokens.

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Source : Djed

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