Formerly, in 2021, Charles Hoskinson (the founder of Cardano) declared in his speech that COTI (a DAG-based L1 project) will power Djed. Djed is an upcoming overcollateralized stablecoin being developed by COTI. The platform’s role in operating the stablecoin takes into account being the administrator of factors like the user interface of djed.xyz.
COTI Discloses Economics for a New Cardano-based Stablecoin Named Djed
In addition to this, COTI will also focus on business development (including above forty collaborations) as well as the deployment of smart contracts. Back in 2021, Djed was just a whitepaper. Thus, it was crucial to comprehend an economical design of the project and then implement it later on. One of the chief elements of Djed’s organization is its reserve ratio. This determines ADA’s (Cardano’s native digital token) proportion kept in the reserve for the collateralization as well as maintenance of DJED’s stability.
After thorough research, the COTI platform has reiterated the conclusion that the reserve ratio’s optimal range lies between 400% and 800%. This was previously noted in the whitepaper of the Djed stablecoin. The respective ratio was specified by evaluating the cumulative per-month decrease in the price of ADA which was nearly 66%. This led the platform to determine the DJED’s over-collateralization of almost 300% will assist to possess substantial reserve if it occurred another time.
The company specified that they have analyzed analogous protocols like the ERGO-based stablecoin “SigmaUSD” with the respective stability mechanism. As a result of this, they found out that this stablecoin preserved its stability along with keeping the peg thereof even during a condition where the minimum benchmark was reached by the reserve ratio. COTI additionally explained the fee structure of Djed.
The Platform to Charge 100 ADA in Operational Charges for SHEN and DJED’s Burning and Minting
The platform mentioned that the interests of both DJED and SHEN holders have been kept in mind in this respect. Analogous to the prominent forums for stablecoin minting, Djed’s company intends to carry out huge burn/mint transfers in enormous amounts. Hence, 5,000 DJED will be the minimum minting amount while 1,000 DJED will be the minimum burning amount.
The fee charged for burning or mining Djed tokens will be 1.5%. Apart from that, SHEN will have 5,000 tokens as its minimum minting amount and 2,500 tokens as its minimum burning amount. The burning/minting fee implemented on SHEN will also be 1.5%. The burn/mint functional charges for SHEN and DJED equal 100 ADA.
