COTI and Cardano’s Input Output Global (IOG) have collaborated to develop Djed ever since the cryptocurrency’s initial launch in 2021. This month’s launch of more than 40 partnerships will help pave the way for the effective use of the overcollateralized stablecoin.
The launch of Djed, the first algorithmic stablecoin to be issued by Cardano, is scheduled to take place on the Cardano mainnet sometime this month. It is believed that this will mark the beginning of a new age for cryptocurrencies with stabilized prices.
The overcollateralized stablecoin developers, COTI network, plans to work on elevating the project to be a leading stablecoin on the Cardano blockchain in 2023. According to the additional announcements, Djed will continue to receive technical updates, and these updates will include full Vasil support as well as staking via smart contracts.
The eventual goal of the Djed project is to issue a stablecoin in place of all other transaction fees on the Cardano network. As opposed to having gas prices that are subject to extreme
fluctuations, this will allow transaction costs to remain consistent and predictable. Therefore, Djed will be utilized in all decentralized applications (dapps) running on the Cardano network.
Will Djed become another algorithmic stablecoin similar to Terra’s UST?
Stablecoins are used to describe a type of digital currency in which the supply of new units of the coin can be pegged to pre-existing assets such as gold, government bonds, or primarily the United States dollar. The concept behind this is to ensure that the value of each individual unit does not wildly fluctuate in response to shifts in the conditions of the market.
The creation of algorithmic stablecoins is made possible by employing a mathematical algorithm that calculates the appropriate number of coins to be issued for each unit of the asset that they are pegged to. This ensures that the amount of new money being created is always equivalent to the amount of existing money that is circulating throughout the system at any given time.
Because they are not directly backed by a physical asset but are instead maintained by an algorithm, it is generally agreed that stablecoins that operate in this manner are safer than other
types, such as fiat-collateralized stablecoins. But since the depegging of Terra’s stablecoin, UST, people in the cryptocurrency space have become skeptical of algorithmic stablecoins.
However, the safety of algorithmic stablecoins depends on the specific design and implementation of the algorithm, as well as the overall security of the blockchain platform on which they are built. It is important to thoroughly research and understand the details of any algorithmic stablecoin before utilizing it.
The overcollateralized stablecoin offered by the COTI network is generally regarded as being more secure than algorithmic stablecoins like Terra’s UST. This is due to the fact that overcollateralized stablecoins are directly backed by a physical asset, such as fiat currency or other stable assets. This indicates that there is a direct and palpable link between the value of the collateral that backs the stablecoin and the value of the stablecoin itself.
On the other hand, algorithmic stablecoins such as Terra’s UST rely on intricate algorithms and smart contracts to keep their value stable in comparison to a particular fiat currency or some other form of stable asset. This method can bring about additional risks. This is due to the fact that the value of these stablecoins is not directly linked to a physical asset, but rather relies on
the capability of the algorithm to accurately maintain the value of the stablecoin. In other words, the value of Terra’s stablecoin is not backed by anything tangible.
Cardano is leading in blockchain development
On a consistent basis, between 100 and 150 developers are working on the Cardano project. These developers are responsible for approximately 700+ new contributions every week. These factors place the coin among the most active blockchain projects currently under development, which is an indication that the developers will be able to realize their high ideals for the cryptocurrency.
A significant amount of the work that went into developing Cardano can be credited to Input Output Global (IOG). Since the beginning of 2022, the company has planned a wide variety of significant improvements to the Cardano network. These include the Vasil Hardfork as well as a number of updates to network parameters that occurred before it.
According to ProofOfGitHub, the results showed that Cardano has outperformed competitors such as Polkadot.
In the form of rankings, ProofOfGitHub offers information on the dominant positions held by various cryptocurrencies. It keeps an eye on the various development activities that take place on GitHub on a daily basis.
Will ADA pump due to Djed’s release?
Even though Djed has not yet made its formal launch, we can see that ADA has been soaring throughout the course of the weekend. In the past seven days, ADA has had a price increase of 8.98%, reaching a high of $0.3852.
On the weekly time frame, we can observe a bullish pattern that is located above the 20 exponential moving average. The bullish pattern is known as the “three white soldiers.” The pattern indicates that the bears have been in control of the market, but the bulls are now starting to gain strength and push prices higher. In order for the pattern to be valid, the three consecutive candlesticks must have small or no wicks and each one must close higher than the previous one. ADA needs to close above the 20 EMA to continue the bullish momentum.
The price of ADA saw a significant increase in January 2023, reaching $0.36 from a low of $0.24 despite a bear market. This rise in price of the token is due to being oversold, therefore
an increase in consumer interest and a correlation with the rising price of Bitcoin brought the price of ADA soaring. The market is expected to continue to trend upwards as the recent surge in Bitcoin in the previous weeks is directly linked to the recent price increase.
An overcollateralized stablecoin may be advantageous for the Cardano blockchain because it may draw more investors and users to the system by offering a level of security and stability that is not offered by other stablecoin types. Overcollateralized stablecoins can also offer a steady method of value transfer on the blockchain, which can be beneficial for a number of applications, including remittances, micropayments, and more.