The over-collateralized stablecoin, Djed, is developed by COTI which is a decentralized network for payment transactions.

COTI network, which is in charge of developing the over-collateralized stablecoin Djed, has released the roadmap, and it is anticipated that the launch will proceed in January. Although the exact dates have not been made public and the end of the month is drawing closer, it is anticipated that it will go live during the final week of the month.

Cardano‘s native currency, the ADA token, is being used to fund the Djed cryptocurrency. Users will be able to send ADA to the smart contract that governs the platform, and in exchange, they will be able to obtain Djed. Its mission is to replace all other cryptocurrencies as the token of choice for paying transaction fees on the Cardano network. This will make it possible to have a steady and predictable transaction cost rather than gas fees that are prone to fluctuation.

What is an over-collateralized stablecoin?

An over-collateralized stablecoin is a type of cryptocurrency that is pegged to the value of a specific asset or a basket of assets, such as the US dollar. It is called “over-collateralized” because the value of the assets used to back the stablecoin is typically greater than the value of the stablecoin itself. This is done to ensure that the stablecoin remains stable in value, even if the value of the underlying assets fluctuates.

An over-collateralized stablecoin can be beneficial for a blockchain mainnet in a few ways:

  • Increased stability: The over-collateralization of the stablecoin helps to ensure that its value remains stable, which can attract more users and businesses to the mainnet.
  • Improved liquidity: The stablecoin can be easily traded on various exchanges, which increases liquidity and makes it easier for users to buy and sell assets on the mainnet.
  • Lower volatility: Stablecoins are less volatile than other cryptocurrencies, which can make them more attractive to users who are looking for a more stable form of investment.
  • Reduced risk: Since the stablecoin is over-collateralized, the risk of it losing value is significantly reduced, making it a safer investment option for users.
  • Increased adoption: Stablecoins are widely used in various applications such as DeFi, lending, borrowing and payment, which can increase the adoption of blockchain mainnet.

According to the company’s official website, in order to guarantee the reliability of Djed, it employs a collateral ratio that ranges between 400% and 800% for $DJED and $SHEN.

Final thoughts

A cryptocurrency like ADA that focuses on the ongoing development and improvement of its blockchain technology is likely to be a better investment in the future compared to a cryptocurrency that doesn’t prioritize development. The reason for this is that a well-developed and continually improving blockchain is more likely to attract users and businesses, which can lead to increased adoption and demand for the cryptocurrency. 

A blockchain that is built for scalability, security and interoperability will be more robust and resilient to market fluctuations, which can provide a more stable investment opportunity. With the development of new use-cases and applications, the cryptocurrency will have more utility and can become more valuable over time. Cardano is constantly developing in its technology and is likely to be a more viable long-term investment than one that is not.

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