On Sunday (September 26), day two of the two-day Cardano Summit 2021, IO Global (IOG), the blockchain technology firm responsible for the development of Cardano ($ADA), and FinTech startup COTI Group, unveiled Djed, a new algorithmic stablecoin for Cardano that was developed by\u00a0the former\u00a0and is issued by\u00a0the latter.<\/p>\n
Djed\u2019s use of smart contracts ensures price stabilization. Djed can be useful in decentralized finance (DeFi). It works by \u201ckeeping a reserve of base coins, and minting and burning stablecoins and reserve coins.\u201d<\/p>\n
Djed\u2019s white paper states that the Djed protocol \u201cbehaves like an autonomous bank that buys and sells stablecoins for a price in a range that is pegged to a target price\u201d and that Djed is crypto-backed \u201cin the sense that the bank keeps a volatile cryptocurrency in its reserve.\u201d It also mentions that Djed is \u201cthe first stablecoin protocol where stability claims are precisely and mathematically stated and proven.\u201d<\/p>\n
In a blog post published yesterday, IOG said that Djed \u201coperates by maintaining a reserve of base coins, while minting and burning various other stable assets and reserve coins\u201d and that \u201cit is designed to be used for paying transaction fees on the Cardano network,\u201d which helps to \u201cmake transaction costs more predictable, so avoiding volatile and exorbitant gas fees for users.\u201d<\/p>\n
The COTI team believes that \u201cstablecoins are a \u2018killer app\u2019 that will be adopted by a large number of crypto users for settling payments and covering fees.\u201d<\/p>\n
Shahaf Bar-Geffen, the CEO of COTI Group, had this to say:<\/p>\n
\u201cThe stablecoin ecosystem has matured tremendously over the past few years. Blockchain participants are using stablecoins to engage in everyday transactions because they allow monetary value to be exchanged in a seamless manner, regardless of the sender and recipient\u2019s location. I believe that adding the Djed stablecoin to the Cardano blockchain will significantly improve how transactions are settled on the platform.<\/em>\u201c<\/p>\n And IOG Co-Founder and CEO Charles Hoskinson stated: <\/p>\n