Djed began trading on Tuesday and has a 600% collateral backing ratio at the time of writing.
Less than 24 hours after its inception, the overcollateralized stablecoin Djed (DJED) has garnered more than 27 million cardano (ADA) tokens as support, according to statistics.
As of the time of writing, the reserve ratio for Djed is around 600%, meaning that each djed is backed by six times its value in ADA. The ADA locked for releasing djed is worth over $10 million at current values.
IOG, a Cardano code developer, and Coti, a layer 1 blockchain, have created the highly anticipated djed stablecoin collaboratively.
Djed will be backed by other tokens and will need 400% to 800% collateral value to be submitted prior to issuance.
This overcollateralized technique would let djed’s value remain constant amid market stress and avoid a repetition of terraUSD, the algorithmic stablecoin tied to the Terra system’s luna token, which lost over 99 percent of its value in May.
Shen, the reserve token intended to maintain djed’s stability, will gain additional incentives when holders of Cardano’s ADA cryptocurrency bet their coins to manufacture djed stablecoins, potentially boosting the liquidity of the young ecosystem.
As additional Cardano-based apps are integrated with djed to boost its usability, this may raise user demand for shen, resulting in a price spike in the coming weeks.
As of Wednesday morning, there are 1.7 million djed tokens in circulation, while there are 20 million shen tokens with a value of 38 cents each.
The overcollaterized mechanism of the djed tokens, together with the annualised return incentives given by the decentralised exchanges (DEX), is anticipated to generate liquidity and interest from investors, which may assist Cardano’s $91 million decentralized financing (DeFi) sector.
Some Cardano DeFi applications, like Fluid, have already included djed stablecoins as collateral for loans. Last week, Cardano DeFi exchange MuesliSwap informed CoinDesk that its yearly yield aim for djed customers was between 10% and 25%.
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