About two months ago, you could read in the Cardano news that Cardano’s algorithmic stablecoin Djed would be launched in January 2023. Meanwhile, Coti, the official publisher of this new stablecoin, has announced that Djed will be launched next week.
The long-awaited stablecoin was co-developed by Input Output Global (IOG), the organization behind the development of Cardano (ADA), and Coti, a layer-1 blockchain.
Overcollaterized algorithmic stablecoin
Djed is a so-called overcollaterized algorithmic stablecoin. An algorithmic stablecoin means it will be backed with crypto assets instead of fiat money. Cardano users will be able to use ADA as collateral to mint Djed. Djed will be 400% backed with assets, which means that for every dollar of Djed there will also be $4 in collateral ready.
Tomorrow, this mechanism would ensure that the value of Djed remains stable at all costs, even if the market collapses. With this, the developers hope to prevent a repeat of the TerraUSD stablecoin. TerraUSD, along with its own LUNA token, completely collapsed in May 2022.
Djed is expected to go live on more than 40 Cardano-based decentralized applications (dApps). Developers have simultaneously developed DjedPay, a payment application that allows users to pay with Djed.
SHEN will cover ADA’s price fluctuations to ensure price stability. SHEN token holders get rewards when people put in ADA to mint Djed.
Binance USD on Cardano
According to a statement from the Strike Rocks team Binance USD (BUSD), a dollar-pegged stablecoin from the Binance ecosystem, becomes seamlessly available on the Cardano blockchain for the first time.
Finite bridge, which is now undergoing public beta testing, was created to ensure value transfer between Cardano and BNB Chain (BNB). The community has welcomed the announcement, with many of them calling the solution “interesting and promising for the advancement of the Cardano ecosystem.”