A Cardano-powered algorithmic stablecoin called Djed ($DJED) is set to launch early next year on the smart contract platform’s mainnet, according to an announcement developers made at the Cardano Summit in Lausanne, Switzerland.
Djed, as CryptoGlobe previously reported, is an algorithmic stablecoin issued by fintech startup COTI Group. It’s a crypto-backed pegged algorithmic stablecoin for Cardano that uses smart contracts to ensure price stabilization.
Djed can be useful in decentralized finance (DeFi). It works by “keeping a reserve of base coins, and minting and burning stablecoins and reserve coins.” According to Input Output’s white paper on the cryptocurrency it “behaves like an autonomous bank that buys and sells stablecoins for a price in a range that is pegged to a target price.” The paper adds:
It is crypto-backed in the sense that the bank keeps a volatile cryptocurrency in its reserve. The reserve is used to buy stablecoins from users that want to sell them. And revenue from sales of stablecoins to users are stored in the reserve. Besides stablecoins, the bank also trades reservecoins in order to capitalize itself and maintain a reserve ratio significantly greater than one.
Djed was developed in collaboration with Cardano lead developer Input Output for more than a year, and once launched will allow users to stake the native token of the Cardano network, $ADA, as collateral to mind $DJED.
While the cryptocurrency’s design is similar to the one used by Ethereum-based decentralized stablecoin DAI, each DJED will require more than 400% in collateral value to be minted. Ahead of its launch early next year, the cryptocurrency will undergo an audit and a series of rigorous stress testing.
Once launched, the algorithmic stablecoin is set to be integrated with selected partners on the smart contract platform’s ecosystem, including decentralized exchanges. These exchanges will reward users for providing liquidity using the stablecoin.
The COTI team has in the past made it clear it believes that “stablecoins are a ‘killer app’ that will be adopted by a large number of crypto users for settling payments and covering fees.”
Shahaf Bar-Geffen, the CEO of COTI Group, has said that the stablecoin ecosystem has “matured tremendously over the past few years,” and that “blockchain participants are using stablecoins to engage in everyday transactions because they allow monetary value to be exchanged in a seamless manner, regardless of the sender and recipient’s location. I believe that adding the Djed stablecoin to the Cardano blockchain will significantly improve how transactions are settled on the platform.“
As reported, in the wake of FTX’s collapse crypto users seemingly moved funds to wallets they control on-chain. Cardano wallets have, as a result, seen their growth accelerate. According to data from Cardano Blockchain Insights, the number of Cardano wallets has recently grown by well over 30,000 in a week, going from around 3.638 million to 3.671 million in just a few days.
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