The reserve ratio of Djed, an algorithmic stablecoin designed for the Cardano ecosystem by Input Output Global (IOG), dropped to 300% in real-time data on June 11. show. Falling Cardano (ADA) price is behind it.
Djed’s reserve ratio drops to 300%
Djed is a COTI-issued stablecoin that, according to the issuer, will be collateralized between 400% and 800% by default.
Due to the turmoil facing the cryptocurrency market and the falling ADA price, Djed’s collateral ratio is now tripled. Below the ideal 4X to 8X range.
The latest update on the Djed official website showed that the stablecoin is backed by 38,108,555.96 ADA, which constitutes the basic reserve. This could allow minting of 10,175,632.28 DJED.
This reserve pool of over 38 million ADA comes from the ADA fees sent to the contract pool when minting Djed or SHEN, the reserve coin that guarantees the stability of the Djed stablecoin.
However, Jed has not lifted the peg during this contraction and continues to track the US dollar while the ADA provides the much-needed cushion.
according to tracker On June 11, each Djed traded at $1.02 against the U.S. dollar, bringing the circulating supply to $3,340,007.
Protocol adjustment
There are further reports that users cannot mint Djed for $1 against the US dollar from decentralized exchanges, and that stablecoins are well backed and users can redeem Djed for other assets. increase.
By default, every time the reserve requirement ratio drops under If the current level is 4X, the protocol forbids minting new Djed. At the same time, SHEN holders cannot burn tokens for ADA, but can mint new SHEN to increase reserve ratio. At the same time, Djed holders can burn tokens for his ADA, increasing the reserve ratio.
Djed will launch on the Cardano mainnet in late January 2023. As an algorithmic stablecoin backed by ADA and powered by COTI, this coin was designed to be overcollateralized. In addition to 400% to 800% ADA overcollateralization, Djed is also guaranteed SHEN.
The over-collateralisation was intentional, as the IOG stated in its whitepaper: Said Its purpose is to eliminate the need to trust a governance token as seen in other algorithmic stablecoins such as MakerDAO. MakerDAO issues his DAI, but has a lender of last resort, the governance token MKR.