Proof-of-stake blockchain platform, Cardano, has partnered with COTI, a DAG-based Layer 1 protocol, to launch what it refers to as an over-collateralized algorithmic stablecoin. The project said in an announcement provided to Cointelegraph that the stablecoin will be backed by excess collateral in the form of cryptocurrency stored in a reserve.
It’s official! $Djed will launch on the Cardano Mainnet in January 2023! $Coti $Ada #Djed pic.twitter.com/cu8ryW6Lo7
— Djed Stablecoin (@DjedStablecoin) November 21, 2022
According to the release, Djed is set to go live on the mainnet in Jan. 2023, pending a successful audit and a series of rigorous stress testing. According to the developers, Djed will be pegged to the US Dollar, backed by Cardano ($ADA), and will use $SHEN as its reserve coin.
The algorithmic stablecoin will be integrated with selected partners and Decentralized Exchanges (DEXs), who will reward users for providing liquidity using Djed. In a bid to grow at a sustainably healthy pace, the developers plan to adopt a gradual and slow approach to providing $ADA liquidity to the Djed smart contract.
Shahaf Bar-Geffen, the CEO of COTI shared at the official announcement at the Cardano Summit:
“Recent market events have proven again that we need a safe haven from volatility, and Djed will serve as this safe haven in the Cardano network. Not only do we need a stablecoin, but we need one that is decentralized, and has on chain proof of reserves.”
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Despite Cardano’s lackluster price action, the blockchain continues to build and innovate within the ecosystem. On Sept. 22, Cardano’s long-awaited Vasil upgrade finally went live. The hard fork was designed to help improve the ecosystem’s scalability and general transaction throughput capacity, as well as advance Cardano’s decentralized applications (DApps) development capacity. At the time of publication, Cardano was trading at $0.30.