Cardano, a proof-of-stake blockchain platform, has teamed with COTI, a DAG-based Layer 1 protocol, to produce an over-collateralized algorithmic stablecoin. The stablecoin would be backed by surplus collateral in the form of cryptocurrency placed in a reserve. “Djed”, as the coin will be called, is expected to be live on the mainnet in January 2023, assuming a successful audit and a series of rigorous stress tests.
Djed will be tied to the US dollar, backed by Cardano (ADA), and will utilize SHEN as its reserve token. The algorithmic stablecoin will relate to chosen partners and Decentralized Exchanges (DEXs), which will reward Djed users for providing liquidity. To expand at a sustainable and healthy rate, the developers want to provide ADA liquidity to the Djed smart contract gradually.
Despite Cardano's poor market performance, the blockchain industry continues to grow and develop. Cardano's long-awaited Vasil update went live on 22nd of September. The hard fork was intended to increase the ecosystem's scalability and general transaction throughput capacity, as well as to promote Cardano's decentralized apps (DApps) development capability. CEO of COTI said, that the decision came after recent market events have demonstrated the necessity for a haven from volatility, and Djed will provide this haven on the Cardano network. He added that we need a stablecoin that is not just decentralized but also includes on-chain proof of reserves.
Movement of Cardano since coming to the market. (Source: Trading Economics)
Sources:
https://tradingeconomics.com/adausd:cur
https://cointelegraph.com/news/cardano-to-launch-new-algorithmic-stablecoin-in-2023