Cardano will soon have its first stablecoin, Djed, allowing for cheaper transactions and making DeFi projects easier to run.
A stablecoin is a cryptocurrency that is meant to keep its value constant in relation to a benchmark. The most well-known stablecoins are cryptocurrencies such as USDT and Stasis, which are tied to fiat currencies like the dollar or the Euro. There are, however, cryptocurrencies whose value is tethered 1:1 to other commodities like gold (such as Digix) or even other cryptocurrencies or cryptocurrency baskets..
The Djed stablecoin will be issued on Cardano, promoting the development of the blockchain’s nascent ecosystem, especially now that the blockchain is beginning to support smart contracts and markets have high hopes for the development of DeFi platforms on a blockchain that has been dubbed the “Ethereum Killer.” COTI, a software development company, announced the issuance of the first stablecoin designed to run on Cardano just a few hours ago.
The Djed stablecoin will be issued on Cardano and will promote the growth of its nascent ecosystem, especially now that the blockchain is beginning to support smart contracts and markets have strong expectations about the possible development of DeFi platforms on a blockchain that has been touted as the future Ethereum Killer.
The value of Djed is maintained via an algorithmic design that uses smart contract architecture on the Cardano blockchain to keep the price as near to $1 as possible. To do so, Djed keeps a reserve of base currencies while mining and burning other stable assets and reserve coins to smooth out the oscillations.
According to the whitepaper, Djed will come in two flavours: a basic version designed primarily for use as a medium of exchange, and a more advanced version whose smart contract uses a continuous pricing model and dynamic fees to react faster to external events, ensure an optimal level of reserves, and provide even more security when performing complex operations like those used in DeFi protocol.
The Djed stablecoin has the potential to be a game-changer in the crypto space, attracting a whole new set of investors at a time when the industry is already exploding. COTI has been a Cardano ecosystem partner for a long time. It’s fantastic that they’re on board with this new endeavour.