COTI introduced a new algorithmic stablecoin called Djed for Cardano this weekend in an effort to expand decentralized finance (DeFi) on the network.
The Djed stablecoin was announced at a Cardano Summit in Wyoming on Sept 26 by IOHK founder Charles Hoskinson.
The enterprise-grade fintech platform COTI will be the official issuer of Djed which will use the new Cardano smart contracts to ensure price stability, the announcement added.
Djed will be entering an already crowded stablecoin market that is dominated by Tether and USD Coin, however, its target market is projects developing on Cardano.
DeFi coming to Cardano
The new stablecoin will be backed by a “reserve of base coins” though the release did not specify which ones or what proportions. It maintains its peg by acting like a bank and buying and selling crypto assets and stablecoins while maintaining its reserve coins according to the whitepaper. There was also no mention of supply, but being algorithmic, it is likely to dynamically adjust to demand.
The whitepaper also stated:
“To the best of our knowledge, this is the first stablecoin protocol where stability claims are precisely and mathematically stated and proven.”
Shahaf Bar-Geffen, chief executive of COTI Group, said that the new stablecoin will make Cardano transaction fees much more predictable:
“I believe that adding the Djed stablecoin to the Cardano blockchain will significantly improve how transactions are settled on the platform.”
Charles Hoskinson labeled Djed as a “game-changer in the crypto space,” appealing to an entirely new audience. There was no mention of the launch date though.
Cardano’s native token, ADA, has remained flat on the day trading at around $2.25 according to CoinGecko. It hasn’t followed in the footsteps of DeFi tokens which are surging at the moment.
ADA has lost around 14% over the past fortnight and is down 27% from its Sept 2 all-time high.
Stablecoin ecosystem update
The stablecoin sector is still dominated by Tether which has a market share of 55% according to CoinGecko. Tether’s own transparency report states that there are currently 69.5 billion USDT in circulation. Just over 51% of these are on the TRON network with most of the rest on Ethereum.
Circle’s USDC is second place with a market share of just under 25% and 29.7 billion in circulation according to the company. Binance USD is the third-largest stablecoin with a share of 11% and 13.6 billion circulating.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.