With the launch of Cardano’s first algorithmic stablecoin, DJED, ‘Will it suffer the same fate as Terra USD (UST) and similar algorithmic stablecoins?’ brought the question to mind.
Cardano enters the algorithmic stablecoin space with DJED
cryptocoin.comAs you follow on Jan. 31, layer one protocol COTI officially introduced DJED, the native stablecoin for the Cardano (ADA) network. The project team expects the release of DJED to increase the total value locked (TVL) in the Cardano ecosystem. They also claim that due to its over-collateralized nature and fee allocation method, it will offer their holders more stability and rewards.
In its official blog post, COTI stated that the ADA-backed stablecoin will go live on the main-net as soon as the Blockchain index sync process is finished. The technical process started a week ago and took about 14 days to complete, according to COTI. The report also highlighted the technologies that will be added to the stablecoin with subsequent updates, after the initial launch.
Will there be a new Terra event?
The crypto world witnessed the dramatic collapse of the Terra USD (UST) algorithmic stablecoin in May 2022. Many players in its market began to be skeptical of algorithmic stablecoins after this incident. However, this did not discourage developers working on the Cardano network to continue with the stablecoin launch for the ecosystem on January 31.
According to the recent announcement, the team working on DJED conducted extensive research into the linked vulnerabilities. The Cardano team is working on algorithmic stablecoins like Terra USD (UST), FEI, and MIM to protect them from facing a similar scenario. DJED is powered by Cardano’s original cryptocurrency, ADA. In this respect, it is similar to Terra. Meanwhile, the Shen (SHEN) token will serve as the reserve currency for this platform.
Uses for DJED are growing!
For starters, Djed will function as a decentralized bank catering to a variety of different use cases. COTI is now working on the development of Djed Pay, which will allow users to pay traders with stablecoins. Alternative banking, lending and remittance are some other use cases for Blockchain technology. Additionally, according to plans made public by the IOG, DJED will be converted into the currency that will then be used to pay all Cardano gas fees. This will make it possible to have consistent and stable transaction costs instead of having unpredictable gas prices.
In addition, COTI also confirmed that DJED will be listed on exchanges at the time of its launch. Bitrue, a centralized exchange, recently announced that both DJED and SHEN will be listed on the spot markets after the launch of the platform. In addition, COTI noted that Wingriders, a partner of DJED’s decentralized exchange (DEX), has also proposed to list the stablecoin. This is one of the latest in a series of recent updates from Cardano Blockchain. These updates include an announcement by co-founder Charles Hoskinson on January 12 that the ecosystem will expand through custom side-chains.
Meanwhile, as a result of this update, the price of Cardano (ADA) skyrocketed in line with the increase seen in the entire crypto market. In the last twenty-four hours, ADA has seen a price increase of 5.65%. ADA is currently trading at around $0.3933.
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