How safe is Cardano's new stablecoin?
The Cardano stablecoin launched on January 31, Djed (DJED), is now backed by 31 million of its own ADA tokens.
The Cardano stablecoin launched on January 31st launch of Cardano's stablecoin, Djed (DJED), is now backed by 31 million of its own ADA tokens. That amounts to about $11 million at time of writing.
According to their own information, the reserve ratio is 508 percent. So for every DJED there is about $5 in collateral posted. The excess collateral "eliminates the need to trust a governance token, as with algorithmic stablecoins," per Djed. The cryptocurrency stems from the DeFi project Coti and is part of the Cardano ecosystem. It’s primarily intended as a means of payment in the DeFi space.
Despite the promise of stability, the project can’t fully dispel the skepticism of some investors. A Cryptopanic user explains: "An algorithmic stablecoin backed by an altcoin ... Where have we seen this before?" A nod to the Terra ecosystem collapse over the past year, which left users terrified. After Terra’s stablecoin lost its dollar peg, the crypto market slid into a tailspin.
