Coti, a DAG-based Layer 1 protocol, in partnership with Cardano, the Proof-of-Stake Blockchain platform, is set to launch DJED, an over-collateralized algorithmic stablecoin, in January 2023. This announcement was made by Shahaf Ber-Geffenat, CEO of the payment network, at the just concluded Cardano summit held in Lausanne, Switzerland.
The stablecoin is designed to be over-collateralized. This means it will be backed by excess collateral in the form of crypto stored in reserve, a process similar to Dai, a decentralized stablecoin on the Ethereum network.
The firm noted that the stablecoin has been in development for over a year and will go live on the Cardano mainnet upon a thorough and successful audit.
The Djed is pegged to the US Dollar, backed by the base coin $ADA, and will use $SHEN as its reserve. The company’s algorithm is based on a collateral ratio of 400%-800% for DJED and SHEN to ensure enough $ADA in the pool.
Shahaf Bar-Geffen, Coti’s CEO, stated, “Recent market events have proven again that we need a haven from volatility, and Djed will serve as that haven in the Cardano Network. Not only do we need a stablecoin, but we need one that is decentralized and has on-chain proof of reserves.”
Proof of reserves has been gaining popularity since the aftermath of FTX’s collapse, where the exchange could not fulfill client withdrawals due to the alleged misappropriation of depositors’ funds. It is the expectation that stablecoin providers disclose the number of reserve assets it claims to have to cover potential client withdrawals at all times.
Partnerships and Participations
According to the press release, Djed currently has about 40 partners signed to it to drive adoption. Upon its launch on the Cardano mainnet, the project will be integrated with selected top partners and decentralized exchanges (DEXs) from the 40 partners to ensure proper utilization. In addition, the chosen exchanges will offer increased rewards to users who provide liquidity using Djed.
To grow at a healthy pace, the developers intend to adopt a gradual and slow approach to providing Ada liquidity to the Djed smart contract. The company plans to roll out more partnerships and integration in 2023 to grow the stablecoin to the “top stablecoin on the Cardano Network.”
Participants of the Coti ecosystem will also have a chance to share operating fees from Djed’s mint and burn transactions, which will be sent to the Coti treasury and distributed to participants of the treasury.
Milestones for 2023
The firm stated it had lots of development and improvements for Djed, noting that its team will continue to work tirelessly to ensure the achievement of planned improvements to the future of the stablecoin. In addition, the company set the following developmental milestones for 2023.
- Djed 1.1.1 version, dubbed “minimal Djed,” will be launched in January and will feature a Vasil hard fork compatibility and the oracle upgrade to support six external sources for the $ADA price. This version will first be launched as a beta version with limited liquidity. Its liquidity will be increased in future versions.
- Version 1.2 will be released next, and by then, Djed will be using Vasil features, including a reference script which will increase its scalability.
- Djed 1.3 is an extended Djed version of the stablecoin that will introduce dynamic fees and prices. In addition, this version will support other features, including staking, which will, in turn, result in the provision of significant liquidity.
The company also announced the development of Djed Pay, a crypto gateway and payment app which will allow e-commerce platforms, non-profit organizations, and other merchants to accept Djed as a form of payment.