Cardano coins new name for its ADA-backed stablecoin Djed

Since the fall of the TerraUSD (UST) algorithmic stablecoin in May 2022, many users in the crypto space have developed a weariness toward that particular asset class. The market for algorithmic stablecoins has declined 10x from its all-time high before the Terra collapse.

However, this has not stopped Cardano network developers from pushing forward with the launch of the ecosystem’s overcollateralized stablecoin—a name Cardano prefers to avoid confusion with algo stablecoins— on Jan.31. Launched on the Cardano mainnet, Djed (DJED) is pegged to the U.S. dollar and backed by Cardano’s native cryptocurrency, ADA (ADA). It uses the Shen (SHEN) token as its reserve coin.

According to the announcement, the new token recently completed a successful security audit and was under development for over a year. DJED is a product of Coti, DAG layer 1 on the Cardano blockchain, as a means for new decentralized finance (DeFi)  and payment opportunities.

Shahaf Bar-Geffen,  the CEO of Coti told Cointelegraph that recent times in the market prove we need a "safe haven" from volatility. 

Not only do we need a stablecoin, but we need one that is decentralized, and has on-chain proof of reserves.

Prior to the launch of the new Cardano stablecoin, the idea of bringing another algorithmic stablecoin into existence caused tremors among the online crypto community.

Related: Buterin: How to create algo stablecoins that don’t turn into ponzis or collapse

This is one of the latest in a series of recent updates coming out of the Cardano network, which included an announcement from co-founder Charles Hoskinson on Jan.12 that the ecosystem will expand via custom-built sidechains.

On Jan. 23, due to an anomaly, 50% of Cardano nodes disconnected and had to restart, which caused a network outage. This was only one week before the launch of the new algorithmic stablecoin.

At the beginning of 2023, Bloomberg reported that the risk assessment firm Moody’s Corporation is developing a scoring system for stablecoins, including an initial analysis for up to 20 digital assets.