Proof-of-stake blockchain platform Cardano has partnered with COTI, a DAG-based Layer 1 protocol, to launch what it calls 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 $ada #Djed pic.twitter.com/cu8ryW6Lo7
— Djed Stablecoin (@DjedStablecoin) November 21, 2022
According to the statement, Djed will go live on the mainnet in January 2023, pending a successful audit and a series of rigorous stress tests. According to the developers, Djed will be pegged to the US dollar, backed by Cardano ($ADA), and will use $SHEN as its reserve currency.
The algorithmic stablecoin will integrate with select partners and decentralized exchanges (DEXs), which will reward users for providing liquidity using Djed.. In an attempt to grow at a healthy and sustainable rate, the developers plan to take a slow, gradual approach to providing $ADA liquidity to the Djed smart contract.
Shahaf Bar-Geffen, the CEO of COTI shared in the official announcement at the Cardano Summit:
“Recent market events have once again shown that we need a safe haven from volatility, and Djed will serve as this safe haven on the Cardano network. We not only need a stablecoin, but we need one that is decentralized and has proof of reserves on-chain.”
Despite Cardano’s lackluster price action, the blockchain continues to build and innovate within the ecosystem. On September 22, Cardano’s long-awaited Vasil upgrade finally went live. The hard fork was designed to help improve ecosystem scalability and overall transaction throughput capabilities, as well as advance Cardano’s decentralized application (DApp) development capability.. At press time, Cardano was trading at $0.30.
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