The first stablecoin to launch on the Cardano blockchain, Djed, will be issued by the COTI platform. According to an announcement published on 26 September, COTI has been a long-time partner of IOHK, the company behind Cardano, and is invested in various parts of the Cardano ecosystem.
Djed is a stablecoin based on an algorithmic design that uses smart contracts to ensure price stability. Unlike traditional stablecoins, which maintain reserves of a single fiat currency to ensure a 1:1 peg, Djed operates by maintaining a reserve of various base coins. The smart contract programming underpinning Djed also mints and burns various other stable assets and reserve coins in order to maintain a peg.
IOHK noted the token was designed to be used for paying transaction fees on the Cardano network. Using a stablecoin instead of Cardano’s native cryptocurrency, ADA, will make transaction costs more predictable and avoid gas fee volatility, the company said.
The COTI development team believes this design will allow more people to adopt stabelcoins and use them for settling payments and covering fees.
“The stablecoin ecosystem has matured tremendously over the past few years,” said Shahaf Bar-Geffen, the Chief Executive of COTI Group. “Blockchain participants are using stablecoins to engage in everyday transactions because they allow monetary value to be exchanged in a seamless manner, regardless of the sender and recipient’s location.”