The Cardano-based decentralized stablecoin Djed is preparing to launch next week, according to a statement from its developers, and this development creates a positive outlook for ADA, the currency of the Cardano ecosystem.
The long-awaited stablecoin, Djed, was jointly developed by the code maintainer for Cardano, IOG and by Coti, a layer-1 blockchain.
Djed will be backed by other tokens, including ADA, and requires over 400% value assurance before it can go live. This mechanism of over-collateralization will allow the value of Djed to be kept stable, especially during moments of market pressure, to prevent a repeat of the “TerraUSD” phenomenon, the formerly popular blockchain algorithmic stablecoin, Terra Luna, which lost a record 99% of its value in record time last May.
Released in 40+ apps
According to the update, Djed is expected to be released on more than 40 decentralized Cardano-based applications (dApps) from the very first day.
However, its developers have simultaneously developed DjedPay, a payment app that uses Djed for merchants and businesses.
The Cardano dApp ecosystem has locked up more than $72 million worth of tokens, according to DefiLlama data.
Read Also: A 300% increase in smart contracts on Cardano from the beginning of the year
How the ADA is affected
The central issue at hand concerns the impact on the ADA. As the base currency for the stablecoin, Djed, ADA will primarily support it. To generate the Djed currency, a corresponding amount of ADA must be sent to the related smart contract, and the reverse also holds true.
In addition, as Coti’s developers stated, holders of SHEN, a reserve token intended to support Djed stability, will receive additional rewards when holders of ADA’s cryptocurrency, Cardano, stake their coins to “create” Djed stablecoins.
“As part of our effort to stake the ADA deposited into the Djed smart contract and create additional rewards for SHEN holders, we are developing a ‘snapshot mechanism’ and UI, to be added to djed.xyz, where SHEN holders will be able to track these additional rewards,” the developers explained.
Read Also: Cardano’s Team Preparing to Unleash Sidechain Toolkit, Targeting Solana and Interoperability
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