- Cardano (ADA) stablecoin Djed is expected to launch today and aims to provide stability and rewards for holders through its overcollateralized structure and fee allocation system.
- Djed is expected to provide multiple use cases, such as alternative banking, lending, and remittance, and eventually become the token for paying Cardano gas fees.
- The new Djed feature is expected to bring increased rewards and benefits to $SHEN holders on the Cardano network.
The long-awaited Djed stablecoin is expected to launch today following an announcement on Twitter confirming a January release.
This new stablecoin is expected to provide stability and rewards for holders through its overcollateralized structure and fee allocation system.
Here’s everything we know about Djed so far.
Economics
Djed will be backed by the $Shen Reserve Coin, which IOG describes as “a unique mechanism that will maintain the efficient pegging of stablecoins (like USD) while providing an incentive to token holders in the long term.” By holding $SHEN, users can earn a share of transaction fees in the reserve pool after collecting all minting and burning fees for DJED and SHEN.
Users will reportedly be able to profit from short-mid term price fluctuations, as Djed’s reserve ratio is designed to remain overcollateralized with enough reserve in the contract even if the price of ADA decreases.
According to the official $Coti Telegram chat, “ALL SHEN holders get delegation rewards and there’s NO distinction between those who minted their SHEN on the DJED platform and those who bought it from a DEX/CEX.”
As explained by Tomer Menuchin, COTI’s business development manager and Defi researcher, Shen is an incentive to make the Cardano ecosystem overcollateralized between 400% and 800%. Menuchin further explains that:
“$SHEN holders provide liquidity to the reserve pool in the form of $ADA by minting $SHEN on the platform.”
Whenever $SHEN or $DJED is minted or burned by a user on the platform, the associated fees are distributed to $SHEN holders as rewards, and $SHEN holders are also projected to receive the rewards from the $ADA in the reserve pool.
Use Cases
Djed, the dollar-pegged stablecoin for Cardano, is foreseen to be a decentralized bank with multiple use cases, including alternative banking, lending, and remittance. It will be integrated across the Cardano ecosystem, including DEXs and NFT marketplaces.
Djed will eventually become the token for paying Cardano gas fees, providing a predictable transaction cost.
Staking $SHEN
The $ADA deposited to the reserve for minting $SHEN will be delegated to a public staking pool operated by Wave Financial, a reputable stake pool operator on the Cardano network.
Djed 1.1.1 is set to include rewards for SHEN holders from launch day. The delegation rewards will be calculated based on a snapshot taken during each epoch and automatically distributed to eligible $SHEN holders every 20 days directly to their wallets. $SHEN holders can track the status and amount of their rewards on djed.xyz.
Djed announced on January 30th, 2023, that, for the platform to successfully bootstrap its liquidity, there will be a greater focus on substantial transactions to “minimize any bottlenecks at launch.” Therefore, the transaction minimums will reportedly be 5,000 DJED / 5,000 SHEN for minting and 1,000 DJED / 2,500 SHEN for burning.
On the Flipside
- Despite a series of events in the Cardano ecosystem, including the eTukTuk sustainable transport initiative, the price trajectory of ADA has not changed. ADA is trading at $0.37 USD at the time of writing.
- The efficacy of the Djed stablecoin will be determined by the adoption of the new platform and the volume of minting, staking, and burning that holders will execute on the Cardano platform.
- The high minimum mint requirement could be a deterrent.
Why You Should Care
The launch of Djed is predicted to significantly bolster the Cardano ecosystem with increased scalability, testability, and compatibility.
Read more about the Cardano node outage on January 22nd, 2023:
Cardano Founder Addresses Momentary “Blip” of Cardano Nodes
Read more about Charles Hoskinson:
Charles Hoskinson: The Founder of Cardano