ADA-backed algorithmic stablecoin Djed launched on Cardano

The algo-stablecoin Djed from DeFi service provider COTI deployed on the Cardano mainnet after its successful security audit.

Since the fall of the Terra (LUNA) algorithmic-stablecoin in mid-2022, many users in the crypto space have developed a weariness towards that particular asset class. The market for algorithmic stablecoins has dropped 10 times what it was at its all-time high prior to the Terra incident.

However, this has not stopped developers on the Cardano network pushed forward with the launch of the ecosystem’s overcollateralized stablecoin. Djed (DJED) launched on the Cardano mainnet on Jan 31. and is pegged to USD and backed by Cardano’s native coin ADA (ADA). It uses the SHEN token as its reserve coin.

According to the announcement the new token recently completed a successful security audit and was under development for over a year. DJED is a product of Coti, a decentralized financial (DeFi) solutions developer on the Cardano blockchain, as a means for new DeFi and payment opportunities.

Cointelegraph reached out to the developers for further comments on the launch. 

Prior to the launch of the new Cardano stablecoin, the idea of bringing another algorithmic stablecoin into existence caused tremors among the online crypto community.

Related: Buterin: How to create algo stablecoins that don’t turn into Ponzis or collapse

This is one of the latest in a series of recent updates coming out of the Cardano network, which included an announcement from co-founder Charles Hoskinson on Jan.12 that the ecosystem will expand via custom-built sidechains.

On Jan. 23, due to an anomaly, 50% of Cardano nodes disconnected and had to restart, which caused a network outage. This was only one week prior to the launch of the new algo stablecoin.

At the beginning of 2023, Bloomberg reported that the risk assessment firm Moody’s Corporation is developing a scoring system for stablecoins, which will include an initial analysis for up to 20 digital assets.