The stablecoin Djed is expected to drive new growth and new use cases in the burgeoning decentralized finance (DeFi) space of the Cardano ecosystem. In recent weeks, the Djed developer, COTI Network, has stated that the stablecoin will definitely be released in January.
In the Cardano community, however, there has been some speculation recently as to how far the preparations for the launch of the stablecoin, which was announced back in November, have progressed. To dispel the speculation, COTI has now published a new blog post confirming the launch within the next week. However, an exact date is still pending.
“We are pleased to share another update about Djed’s progress and to inform you that the launch is scheduled for next week,” the announcement reads.
In addition, COTI announced that cryptocurrency exchange Bitrue will list Djed and SHEN. Djed’s DEX partner Wingriders also hinted on Twitter that an announcement will be made soon.
As for Djed’s technological developments, the COTI team says it has begun the process of syncing the chain index.
“This process may take 14 days, and as we started the sync a week ago, we expect to complete it next week and be ready to launch. As of right now, this is the only technical bottleneck holding up the launch,” COTI says.
In addition, the company is still working on a snapshot mechanism and user interface that will allow tracking of the additional rewards for SHEN holders who deposit and stack ADA into the Djed smart contract.
Will Djed Awaken The Cardano DeFi Ecosystem?
The launch of Djed is accompanied by high expectations because a stablecoin has been missing in the Cardano ecosystem so far. Stablecoins are of tremendous importance to implement strategies at low fees, especially in the field of DeFi.
Djed also enters a crypto market where stablecoins have become increasingly important in recent years. Within the top 10 cryptocurrencies by market cap, there are no less than three stablecoins, Tether (USDT), USD Coin (USDC), and Binance USD (BUSD), which are pegged 1:1 to the US dollar and backed by various forms of fiat money reserves.
The Cardano-based stablecoin, on the other hand, is designed to ensure its price stability through reserves in ADA. Initially, the team had referred to it as an algorithmic stablecoin but had dropped that wording – presumably given the terrible memories of Terra Luna and its algorithmic stablecoin UST, which was backed by BTC.
COTI calls Djed an overcollateralized stablecoin, whose coverage in ADA is at least four times that of Djed issued. Hereby, the Cardano stablecoin shows certain similarities to the ecosystem of Tron (TRX), where the overcollateralized stablecoin USDD is based.
However, USDD has also been struggling to defend its peg to USD lately. Nevertheless, USDD enjoys great popularity. The stablecoin of the Tron ecosystem has a market capitalization of $716 million. Possibly because of this, Tron’s DeFi ecosystem is much larger ($5.1 billion TVL) than Cardano’s ($73 million TVL), according to DeFiLlama data.
Can ADA Reach $1 Following Djed’s Release?
If Djed’s concept works out, the stablecoin can massively boost Cardano’s DeFi ecosystem. However, Djed must first pass the field test. Besides the massive potential, there is also the risk of failure similar to Terra’s UST. This could severely damage the Cardano ecosystem and the ADA price.
But if Djed succeeds, it could give a big boost to ADA. A look at the 1-day chart of Cardano shows that the price has broken out of an eight-month downtrend and has successfully handled a retest in mid-January.
The next major price target is the resistance zone around $0.41, which has served as support for a long time. Should this resistance fall, $0.75 would be the next target before $1 could be on the cards.
Featured image from AnTa_ranga / Pixabay, Chart from TradingView.com