On Tuesday (31 January 2023), the COTI team made the announcement that many in the Cardano community had long been waiting to hear.
On 26 September 2021, day two of the two-day Cardano Summit 2021, IO Global (IOG), the blockchain technology firm responsible for the research and development of Cardano ($ADA), and FinTech startup COTI Group, unveiled Djed, a formally verified crypto-backed pegged algorithmic stablecoin for Cardano that was designed by the former and is issued by the latter.
On the same day, COTI published a blog post (titled: “Why Being the Issuer of Djed, Cardano’s Official Stablecoin, is a Game Changer for COTI”), which had this to say:
“Djed isn’t just a stablecoin built upon Cardano’s chain, it is also designed to become the ultimate coin with which Cardano’s entire network transaction fees will be paid. It makes more sense for a chain to have predictability in how much transaction costs, rather than have volatile gas fees, and Djed will do just that…
“While our main goal is to issue stablecoin for enterprises and merchants on COTI’s Trustchain, we also plan on being involved with stablecoin issued on other chains. Our long relationship with Cardano, leading to an equity investment by their ecosystem fund, has created the opportunity for COTI to become the official issuer for Djed, Cardano’s stablecoin.
“As part of COTI’s role, COTI is in charge of developing the user interface system and will operate the integration between users to the smart contracts for the stablecoin. COTI will partner with enterprises, developers, and others parties who wish to mint both the stablecoin and the reserve coin used as part of the pegging algorithm.
“$DJED and its reserve coin’s mint and burn fees will be charged in $ADA and will be entered into the equity pool of the protocol. The reserve coin holders get a share of this pool as an incentive for their participation in maintaining the $DJED peg ratio.
“As the provider of this service, users will be subject to operating fees that will be paid in $ADA and deducted from the initial deposit and operational costs. We plan on converting such $ADA fees to $COTI coins, initially by buying $COTI directly in the market and supporting the demand for $COTI, then by depositing such $COTI in COTI’s Treasury, for the benefit of the Treasury users. It’s a real win-win and a great opportunity for the COTI ecosystem.“
Here is some information from Djed’s website that explains how Djed’s stability mechanism works:
“$DJED is an overcollateralized stablecoin that uses exogenous collateral ($ADA) to ensure stability. The protocol is backed by 400-800% overcollateralization and is guaranteed by its reserve coin, $SHEN.
“The stability of $DJED is based on overcollateralization, which eliminates the need for trust in a governance token as seen in algorithmic stablecoins. The platform is also fully decentralized and community-driven, allowing for open-source development and community involvement in minting and burning $DJED and $SHEN.“
Anyway, at 12:02 p.m. UTC on 31 January 2023, the COTI team announced that Djed had gone live on the Cardano mainnet:
Several Cardano-powered decentralized exchanges (DEXes), such as MuesliSwap, Minswap, and WingRiders, as well as several major exchanges, such as Bitrue, have already promised support for Djed:
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