Djed, a new algorithmic stablecoin built on the Cardano blockchain, went live on January 31st. The stablecoin is jointly developed by layer-1 blockchain protocol COTI and the blockchain company behind Cardano, Input-Output Global (IOG).
Pegged to the US Dollar and backed by Cardano’s native currency ADA, Djed aims to provide users with a digital asset that maintains a stable value while still offering the benefits of blockchain technology. It will use $SHEN as the reverse currency.
“With over 40 partnerships to enable its proper utilization and adoption, DJED will unlock opportunities for the Cardano ecosystem around Defi, Payments and more,” wrote COTI in a blog post.
According to the announcement, DJED, which recently completed a security audit, was in development for over a year and uses a mechanism of over-collateralization by 400%-800% with a transparent proof-of-reserves system.
Should the reserve ratio drop below 400%, the platform will halt the burning of SHEN and the creation of new DJED, as there won’t be sufficient collateral in the reserve. Conversely, if the ratio exceeds 800%, users will be unable to mint additional SHEN, but can continue to mint and burn DJED. Regardless of the situation, DJED will remain redeemable at all times.
The stablecoin also has an active reward system. In addition to fees for minting and burning DJED and SHEN, SHEN holders will also be eligible for LP rewards and farming rewards from DEXs Wingriders, Minswap, and MuesliSwap.
“Djed users are subject to operating fees that are paid in ADA. All these fees are converted into $COTI and streamlined into the COTI Treasury to be distributed as rewards to the Treasury’s users.”
The launch comes at a time many users have developed cautiousness towards algorithmic stablecoins, whose market share has declined significantly after the startling collapse of TerraUSD (UST) in May 2022.
