Proof-of-stake blockchain platform Cardano has partnered with Coti, a DAG-based layer-1 protocol, to launch an overcollateralized algorithmic stablecoin. The project told Cointelegraph that the stablecoin will be backed by excess collateral in the form of cryptocurrency stored in a reserve.
According to the release, Djed is set to go live on the mainnet in January 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’s ADA (ADA), and will use a token called $SHEN as its reserve coin.
The algorithmic stablecoin will be integrated with selected partners and decentralized exchanges (DEXs), which 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.
Coti CEO Shahaf Bar-Geffen 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.”
Despite ADA’s lackluster price action, Cardano’s developers continue to build and innovate. 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 application development capacity. At the time of publication, ADA was trading at $0.30.