This stablecoin will make it easy for developers to launch DeFi projects on the Cardano network, given that it launched smart contracts this month. Moreover, Djed will facilitate cheaper transactions on the Cardano network.
First Stablecoin on Cardano
COTI, a software development company, will be behind the issuance of e Djed stablecoin that will run on the Cardano network. The issuance of this stablecoin will enable the growth of the Cardano blockchain and make it easy for developers to launch DeFi projects on the network, which since launching smart contracts has been labeled the “Ethereum killer.”
The value of Djed will be kept stable through an algorithmic design that will leverage the Cardano smart contract design and ensure the value of Djed is equivalent to one USD or as close as possible to one USD. To achieve this value, Djed will have a reserve of base coins that will deal with the coin’s fluctuations.
The Djed whitepaper also states that there will be two versions of the stablecoin. A minimal Djed will be used as a medium of exchange, while the extended Djed will have smart contracts that will develop a continuous pricing model and fees. The second version of the stablecoin will also offer enhanced security when running complex operations. This will be very effective when it comes to DeFi protocols and transactions.
According to Shahaf Bar-Geffen, the chief executive at COTI Group, the development of the Djed stablecoin will enable users to have more control over their transactions because it will offer stable values and lower fees.
How Stablecoins Work
Stablecoins are cryptocurrencies that maintain a stable value in reference to a pegged fiat currency. Some of the most common stablecoins are Tether (USDT) and USD Coin (USDC). Stablecoins are usually pegged on fiat currencies such as the USD or the Euro. However, some stablecoins can be pegged on the values of other commodities like gold.
Stablecoins have become popular in the crypto space because they facilitate cheaper and easier transactions. Because of their stable value, stablecoins make the process of settling transactions easier and faster, which is a major benefit that Cardano users will reap from launching the Djed stablecoin.
Cardano’s founder, Charles Hoskinson, has shown much optimism when launching this stablecoin. The Djed stablecoin will be an ambitious project that will strengthen the stability and adoption of the Cardano network and inch this network closer towards being a leader in decentralized finance.
The launch of this stablecoin also comes at a time when the crypto space is enjoying massive growth. With DeFi projects making headlines in the crypto space, the development of the Cardano stablecoin will be instrumental to boosting popularity surrounding the network.
Cardano and COTI have been long-time partners. When news of this recent partnership was made public, the value of the COTI token spiked by around 50% to reach an all-time high of $0.60 in several hours.
The launch of the Djed stablecoin also comes at a critical time, given that the US Treasury and other US regulators recently held discussions around stablecoins. During these discussions, these regulators looked into the effects of stablecoins on financial stability; hence strict regulations regarding stablecoins could be introduced.
