ADA backed Djed stablecoin is here and promises more stability and transparency as the Cardano ecosystem leveled up with the introduction of the stablecoin as we are reading more in our latest Cardano news today.
Earlier this week, the developers at Input-Output Global teased the Djed stablecoin which they described as an algorithmic token for the proven price stability. Djed is algorithmically controlled to be stable and CEO Charles Hoskinson spoke about it in a video he posted, saying that IOG has been experimenting with the concept of stablecoins for the past three years and this includes investigating different types like algorithmically backed assets and CBDCs.
It wasn’t until this year that the senior figures decided to compile the experiments to develop the algorithmic stablecoin for deployment on the network:
“Earlier this year, there was an idea of taking some of the experiments that were conducted on Ergo and actually shooting for the fences and going for an algorithmic stablecoin that we could deploy on Cardano.”
It is described as a “crypto-backed” algorithmic stablecoin contract that acts as an autonomous bank which means that the smart contract controls a reserve of coins and mints and burnes stablecoins and reserves coins to hold the peg stable. This process includes charging fees that accumulate in the reserve and the holders of reserve coins assume the risks of price fluctuations but benefit from the fees collected.
“This approach provides a stable means of exchange. But Djed is not limited to being pegged to the dollar. It can work with other currencies, as long as there are oracles providing the contract with the corresponding pricing index.”
In line with Cardano’s philosophy of formal verification and the scientific method Djed is the first formally verified stablecoin on the market. IOG stated that the features that include upper and lower bound maintenance, innovative design in the event of market crashes, no insolvency, and no reserve drain possible, can only be a proven mathematical theorem. As the underlying assets are seen on the blockchain, the project claims to be transparent. If you add to the smart contract controlled method of automating the stabilization process, ADA-backed DJED presents a refreshing alternative to others. In the early hours, ADA hit $2.56 which is a new ATH and this came off the back of the amazing run this past week with Cardano growing 23% and surpassing Binance.
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