What is DJED Crypto? Here’s a Quick Brief on Cardano Stablecoin

Although the ADA course in 2022 brought little cause for excitement, Cardano fans know that the project can be extremely successful in the long term. That’s why followers are keeping an eye out for the latest exciting developments around the network. After the Vasil hard fork in autumn, another exciting step is now pending in January: the stablecoin DJED. What is DJED crypto? What does a stablecoin release mean for Cardano?

How is Cardano evolving in 2022?

Cardano (ADA) price saw heavy losses in 2022. This was due to the bear market that defined 2022. Nevertheless, the network continued to develop this year. After the completion of the Goguen development phase with the introduction of smart contracts, the next development step will continue in 2022.

In 2022 the 4th major development phase called Basho was started. At Basho, the scalability of the Cardano blockchain is to be optimized. This process started this year. The Vasil hard fork was the first step into a more scalable blockchain. This is primarily intended to make smart contracts more efficient. 

What is the next big project at Cardano?

The Cardano ecosystem is growing continuously. But one element is missing so far: its own stablecoin. That is why the own algorithmic stablecoin called DJED is now planned for January 2023. This should make Cardano even more attractive for possible decentralized applications.

The DJED was already in the annual plan of Cardano founder Charles Hoskinson in January 2022. However, the target date in 2022 is just missed, so the introduction of the stablecoin will only work in the new year 2023. But delays are relatively normal with Cardano and investors have become accustomed to longer waiting times. Cardano often relies on avoiding qualitative errors instead of speed. 

Who is behind the DJED stablecoin?

The companies COTI and Input Output are behind the Cardano stablecoin. They also set up the Cardano project themselves. The stablecoin DJED is algorithmic. This means that the price can be secured by reserves in the form of other cryptocurrencies.

Classic stablecoins such as Tether (USDT), USD Coins (USDC) and Binance USD (BUSD) guarantee a 1:1 connection to the US dollar by being secured by central cash reserves. Algorithmic stablecoins, on the other hand, can be organized in a decentralized manner. 

Why is DJED Risky?

The concept of algorithmic stablecoins has been criticized at least since the crash of Terra (LUNA). The downfall of Terra began with the fact that the LUNA token could no longer keep the value of the in-house stablecoin TerraUSD stable at the US dollar level. Many investors, therefore, doubt the concept. 

Due to the known doubts, Cardano wants to gradually introduce the DJED and build trust in the stablecoin over time. 

Why does Cardano need a stablecoin?

Initially, the DJED will only be used to pay transaction fees. Later, Cardano will need the stablecoin to do larger deals, especially in the DeFi space. With less than $60 million in capital provided in the Cardano ecosystem for DeFi , this area has fallen well short of the network’s expectations. The new stablecoin should help with this.

Can the stablecoin push the ADA price back up?

The new stablecoin is an exciting development at Cardano. But whether the ADA price can rise in the time around the introduction is difficult to say. Above all, the overall market would have to rise for the ADA price to rise. But this is quite possibly next year. At the moment the ADA price is so low that an investment can be worthwhile in the medium and long term. 

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