Can ADA Rise with Djed Stablecoin Launch Next Week?

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Con­tents

The launch of non­syn­thet­ic sta­ble­coins on the Car­dano (ADA) net­work has been high­ly antic­i­pat­ed by ADA hold­ers. Accord­ing to COTI, the com­pa­ny col­lab­o­rat­ing in the devel­op­ment of the sta­ble­coin on the ADA blockchain, Djed sta­ble­coin is expect­ed to launch in the com­ing week.

The COTI team has announced that the final step pri­or to the launch of the Djed sta­ble­coin is the syn­chro­niza­tion of the chain index. This process, which began approx­i­mate­ly one week ago, is expect­ed to take about 14 days to com­plete. Based on this infor­ma­tion, it is like­ly that Djed will be launched on Feb. 1, 2023.

ADA hold­ers are close­ly mon­i­tor­ing the devel­op­ment of the Djed sta­ble­coin as it has the poten­tial to sig­nif­i­cant­ly con­tribute to the growth of the Car­dano ecosys­tem and, more­over, to mak­ing the Ethereum (ETH) com­peti­tor gain more vis­i­bil­i­ty in decen­tral­ized finance (DeFi). After all, sta­ble­coins are wide­ly used as a means to facil­i­tate the entry and exit of investors onto the cryp­tocur­ren­cy market.

But what is Djed?

Djed is an over­col­lat­er­al­ized sta­ble­coin, an asset that has extra col­lat­er­al in addi­tion to the val­ue of the issued sta­ble­coin. Over­col­lat­er­al­iza­tion means that instead of only need­ing to deposit the equiv­a­lent val­ue you want to obtain, you need to deposit a high­er amount of assets to ensure the sta­bil­i­ty of the stablecoin.

To ensure its par­i­ty with the U.S. dol­lar, in addi­tion to lever­ag­ing Car­dano’s smart con­tract design, Djed will be backed by oth­er tokens and have col­lat­er­al of more than 400% of the request­ed val­ue before being issued to a user. This is one of the mea­sures tak­en to ensure that the sta­ble­coin does not repeat the steps tak­en by Ter­raUSD in 2022.

Djed will uti­lize a reserve of base cur­ren­cies and a process of min­ing and burn­ing oth­er sta­ble assets and reserve cur­ren­cies to man­age val­ue fluc­tu­a­tions. With the sta­ble­coin smart con­tract, the promise is that you can exchange ADA for Djed, facil­i­tat­ed by the pres­ence of a third token called SHEN, which acts as a mech­a­nism to main­tain the sta­bil­i­ty of the asset’s price.

An impor­tant aspect to note is that Coti has announced that the Djed sta­ble­coin will be able to serve as the pri­ma­ry cur­ren­cy for pay­ing all trans­ac­tion fees on the Car­dano net­work. This fea­ture may improve the usabil­i­ty of Djed and increase its demand.

Is ADA going to the moon?

It is chal­leng­ing to pre­dict the exact impact that the launch of Djed will have on the price of ADA. How­ev­er, it is com­mon for major events such as this to be reflect­ed in the asset’s price before they occur, and for the price to cor­rect soon after the event takes place.

This trend has been observed on many major blockchain assets, and it is like­ly that Car­dano will fol­low a sim­i­lar pat­tern. In the past, the Shel­ley, Alon­zo and Vasil updates also had this effect on the price of ADA.

Of course, the cryp­tocur­ren­cy may also not repeat its past and expe­ri­ence appre­ci­a­tion, but investors should not count on Djed being a fac­tor that will take ADA to $1 again, at least not in the short term. With the press keep­ing a close eye on the big launch, the arrival of the sta­ble asset on Car­dano should have been priced in some time ago.

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