What is DJED?

Djed is an algorithmic stablecoin on Cardano blockchain. It is developed by COTI(Currency of the internet)Protocol. Djed uses smart contracts to maintain its peg, unlike Terra stablecoin Djed is designed to be over-collateralized by a margin of 400-800% of its value in ADA and Shen holdings.

What is SHEN?

Shen is a Djed reserve coin, designed to keep peg of Djed at 1$. 

~Citing medium: 

"By buying and selling Shen, users are able to maintain Djed’s USD currency peg while earning a share of transaction fees in the reserve pool. Since the Reserve Coin is a tradable asset, holders can also profit from the short-mid term price fluctuations as an added incentive. We look forward to providing more information as we approach the official launch."

What is happening?

COTI Protocol, on its twitter confirmed that Djed is launching next week which is a great accomplishment for Cardano, since there isn't many stablecoins on its blockchain.

In order to maintain its function Djed needs liquidity, and usage. Liquidity is maintained by its developed smart contracts and usage is provided by CEX'es and DEX'es

Three DEX'es on Cardano and a CEX confirmed their collaboration with COTI in order to spread and widen Djed usage.

My thoughts

Time showed that algorithmic stablecoins are dangerous and demanding endeavours.

Its mechanisms tend to fail over time but only time will tell if that's the case for Cardanos Djed.

If the spirit of banking the unbanked is real and Djed isn't another magic tool to create illusions of astronomically high APY's and in the end rip off the investors, then we might be witnessing something grand becoming real.

None of information in this article should be considered a financial advice, it's my own analysis and facts I wanted to share with this wonderful community.