With the impending launch of Cardano smart contracts, attention shifted to its ecosystem. This includes how it would compete with competing chains.
One such consideration is stable coins, which are an indispensable element of any crypto ecosystem. Stable coins traverse the gap with directives and contribute to a solution to volatility.
Developers of Input-Output Global (IOG) taunted the Djed stablecoin, which they depicted as an algorithmic token for proven price stability. As the Cardano ecosystem was quantified with the introduction of the stable coin, the ADA-backed Djed stable coin promised to be more stable and transparent.
Crypto-backed algorithmic stable coin
In a video he posted in mid-July, Charles Hoskinson, Chief Executive Officer of Input-Output Global, spoke about Djed. He stated that Input-Output Global (IOG) had been experimenting with the concept of stable coins for the last three years. This experimentation includes investigating distinctive classes such as algorithmically backed, asset-backed, and CBDCs. However, it was not until this time that senior figures decided to collect the experiments to work out an algorithmic stable coin for deployment on the Cardano network.
There was a goal of taking some of the experiments that were directed on Ergo and veritably shooting for the walls and going for an algorithmic stable coin that could be inserted on Cardano before this year. It is defined as a crypto-backed algorithmic stable coin contract that functions as an independent bank. This means a smart contract controls a backup of base coins, burns stable coins, and spare coins to contain the notch stable. This furtherance also includes charging fees, which are collected in the reserve. Holders of reserve coins employ the threat of price change but also profit from the fees collected. This method provides a stable means of exchange. Djed, on the other hand, does not limit dashing to the dollar. It can operate with other currencies as long as there are oracles furnishing the contract with the conforming pricing indicator.
Djed Verifies Stablecoins
In harmony with Cardano’s philosophy of formal verification and the scientific method, Djed was the first to formally verify stable coins in the market. Input-Output Global mentioned that a mathematical theorem can prove its features. These include upper and lower bound maintenance; robust design in the event of market crashes; no insolvency; and no reserve drain.
As the underpinning assets are visible on the blockchain, the design claims to be clear. However, ADA-backed DJED presents a stimulating alternative to others, if you add to the smart contract-controlled system of automating the stabilization process. In the early hours, ADA hit $2.56, which is a new ATH, and this came off the reverse of the amazing run this past week, with Cardano extending 23 percent and exceeding Binance. Furthermore, the design claims to be fully clarified and transparent as the assets are publicly viewable on the blockchain. In addition to that is the smart contract, which controls the method of automating the stabilization process. Djed presents a stimulating alternative to others.
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