Cardano’s Djed Stablecoin to Launch Next Week

One of Cardano’s highly anticipated stablecoins, Djed, is set to launch next week.

Cardano’s Djed Stablecoin to Launch Next Week

According to recent updates, Cardano’s DEX platforms, MuesliSwap and MinSwap, will be launching liquidity pools for the Djed (DJED) stablecoin and its reserve token, Shen (SHEN), next week.

Djed (DJED) is an algorithmic stablecoin pegged to the USD, developed for Cardano in collaboration with IOG and the layer-1 blockchain platform COTI. DJED will be collateralized by ADA, requiring a minimum reserve ratio of 400% to mitigate the risk of losing its peg.

Collateral Requirements for Minting and Burning DJED and SHEN

The team behind the project asserts that Djed will be more secure than other algorithmic stablecoins due to its high collateralization ratio and its reduced dependence on ADA compared to the collapsed LUNA-UST model, where the two tokens were completely interdependent.

Meanwhile, Shen (SHEN) will act as the “reserve currency” for DJED. Users will be able to deposit ADA into the Djed protocol and mint SHEN at a reserve ratio of 400-800%. The ADA collected will be used as a reserve fund and to provide liquidity for the stablecoin. In return, the project will offer financial incentives for holding SHEN, including:

• Receiving all mint/burn fees for DJED and SHEN;
• Earning delegation rewards;
• Receiving rewards for providing liquidity for SHEN on DEX platforms.

Supply and Price Details of DJED and SHEN on Testnet

As of January 27, 2023, Djed’s testnet has issued over 406,000 DJED and nearly 1.97 million SHEN tokens. With ADA priced at $0.38 at the time of the update, 1 DJED is valued at 2.69 ADA ($1.022), and 1 SHEN is valued at 3.37 ADA ($1.28).

Djed is expected to launch on over 40 decentralized applications (dApps) on Cardano, but so far, only MuesliSwap and Minswap have announced support. These DEX platforms have yet to disclose APR rates for providing liquidity for DJED/SHEN. According to DefiLlama, MuesliSwap and Minswap have TVLs of $6.5 million and $30 million, respectively, accounting for nearly half of Cardano’s total TVL of $75 million.

Other Stablecoin Developments

In addition to Djed, another stablecoin, USDA, is also anticipated to launch in early 2023, though detailed information is still pending.

Aside from the collapsed LUNA-UST model, the crypto market in the latter half of 2022 also saw the NEAR Protocol’s USN stablecoin stop accepting NEAR as collateral, leading to its “sunset” in October. Waves transitioned its depegged USDN stablecoin into an index, paving the way for a new stablecoin launch.

Despite these setbacks, several DeFi projects continue to introduce new stablecoin initiatives, including USDD by TRON, CUSD by Coin98, crvUSD by Curve (upcoming), and GHO by Aave (upcoming).