Resource: Cryptopotato.com
5 months ago
Date: 21 Nov 2022 - 18:12

Shahaf BarGeffen CEO of COTI a stablecoin development company revealed the launch date for Cardanos new algorithmic stablecoin at Cardano Summit on Monday.After a successful audit the overcollateralized DJED token will go live in January 2023.What is DJEDDJED is Cardanos attempt to create a pricestable digital asset backed by ADA the networks native cryptocurrency.By sending ADA to a given smart contract address on Cardano users will receive the same dollar value worth of DJED in return. Likewise by sending 1 DJED back to the smart contract the sender will receive 1 worth of ADA.This model could theoretically collapse if ADA were to experience major downside volatility causing circulating DJED tokens to no longer be fully backed. As such the smart contract will also include a reserve currency SHEN to cover ADAs price fluctuations ensure price stability and guarantee a collateralization rate of 400800.SHEN holders will be rewarded with fees every time someone exchanges DJED or SHEN for ADA or vice versa creating an incentive to hold the token and help maintain the stablecoin peg ratio.Unlike DJED Shen will not be pricepegged leaving it open to volatility just like ADA. However the smart contract will prevent anyone from minting new SHEN tokens once the smart contract reaches a maximum threshold in order not to dilute existing holders.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 said Shahaf BarGeffen. Not only do we need a stablecoin but we need one that is decentralized and has onchain proof of reserves.Proof of ReservesProof of reserves is a growing trend among crypto industry giants in the aftermath of FTXs fallout in which the exchange went bankrupt after allegedly misappropriating depositors funds for lending activity. This left the exchange unable to satisfy client withdrawals following a bank run earlier this month.Rival exchanges including Binance and Bitstamp have agreed to provide blockchainbased proof of reserves to ensure customers that their funds remain safe at all times. Grayscale however the owner of the worlds largest Bitcoin fund GBTC refused to provide such transparency this weekend citing security concerns.Reserve transparency is a longtime expectation for stablecoin providers which rely on adequate reserves to satisfy token redemptions at all times. Tether the issuer of USDT has faced years of scrutiny over the legitimacy of its 60 billion reservesbut has thus far managed to satisfy redemptions when under stress.Organizations like Terra have attempted to design algorithmic stablecoins that remove the requirement for trust in a centralized issuer. However the ecosystems UST and LUNA tokens both collapsed to zero in May making industry participants and regulators wary of similar models.The three top stablecoins USDT USDC and BUSD are all backed solely by cash and US Treasury bills per their latest attestation reports.The post Cardanos Algorithmic Stablecoin DJED to Launch in January 2023 appeared first on CryptoPotato.

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