Proof-of-stake blockchain platform Cardano and blockchain payment platform Coti will launch an algorithmic stablecoin Djed in January 2023, according to a Monday press release.
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- The algorithmic stablecoin is undergoing audit and stress tests, said the press release.
- Djed, backed by two tokens – Cardano (ADA) and SHEN, will launch across 40 partners and decentralized exchanges.
- If Cardano experiences significant downside volatility, the model could collapse, resulting in Djed no longer having full backing. Therefore, SHEN will cover Cardano’s price fluctuations and ensure price stability, according to an explanatory video.
- Terra had sought to design an algorithmic stablecoin without centralized issuers. But the collapse of LUNA and its reserve coin UST in May has made the industry and regulators wary of similar models.
- The three largest stablecoins by market capitalization – USDT, USDC, and BUSD – are all backed by cash and U.S. Treasury bills, according to their reports.
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