COTI, a software development company, announced the issuance of the first stablecoin that can be used on Cardano just a few hours earlier.
This news was first announced by Charles Hoskinson (leader of Cardano) and Shahaf Bar-Geffen (CEO of COTI Group), at the Cardano Summit in Laramie.
The Djed stablecoin, which will be issued on Cardano, will encourage the growth of the ecosystem’s nascent ecosystem. This is especially important now that smart contracts are being supported by the blockchain. Markets have high expectations about possible DeFi platforms developed on the blockchain that has been called the future Ethereum Killer.
What is Djed? Why does Cardano need a stablecoin?
A stablecoin can be described as a cryptocurrency that has a fixed value relative to a reference. Stasis and USDT are two of the most well-known stablecoins. They are pegged to fiat currencies like the Euro or the dollar. There are also cryptocurrencies whose values can be pegged 1:1 to other commodities like gold (such as Digix), or to other cryptocurrencies, or to baskets of cryptocurrency.
This relationship can be achieved in many ways, some more successful than others. The most common method is to hold or block an amount of the reference asset which supports the issuance a proportional amount the correspondent stablecoin. Circle has $3,677.063,935 in collateral and there are 3,677.063,935 USDC tokens.
Djed’s value is maintained stable through an algorithmic design that leverages smart contract design on Cardano blockchain. This allows for a price as close to $1. Djed keeps a reserve of base currencies and mines other stable assets to offset fluctuations.
A visual representation of Djed’s algorithmic design on Cardano. Source: IOHK
According to the whitepaper, there will two types of Djed. One is a basic one that serves as a medium for exchange and one that uses dynamic fees and a continuous pricing model. The smart contract uses dynamic fees and a continuous pricing model to respond faster to external events and ensure optimal reserves. It also provides greater security when performing complex operations, such as DeFi protocol transactions.
Shahaf Bar-Geffen (CEO of COTI Group) stated at the conference that Djed, a stablecoin like it, will give users greater control over transactions due to its low fees and stable value.
Stablecoins are being used by blockchain participants to transact everyday transactions. They allow monetary value, regardless of where it is sent and received, to be transferred in an effortless manner. The Cardano blockchain should include the Djed stablecoin. This will make it easier to settle transactions.
Charles Hoskinson, for his part, was excited about the new project because it would be one the most ambitious implementations aimed to strengthen the Cardano ecosystem.
The Djed stablecoin may be a game changer in crypto, appealing to a new audience at an industry that is experiencing incredible growth. COTI has been an integral part of the Cardano ecosystem for many years. It is great to have them aboard for this new venture.
This seems like a significant move by COTI. COTI’s token jumped 50% when it was first announced with Cardano, reaching an all-time high of $0.60 within a matter of hours.
Marla Brooks – Financial Analysis
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