DJED Stablecoin — One Year Since Launch
It has already been a full year since Djed, the algorithmic stablecoin, had its mainnet release. On the 31st of January 2023 to be precise. Since then a lot happened with the stablecoin but more importantly, it has proven itself a worthy stablecoin by surviving the depths of the bear market during the crazy crypto year of 2023.
Of course, I followed the Djed development from the beginning as I was watching both COTI and Cardano. In 2021 I already was invested with both coins and was therefore also super happy that COTI got the job of being issuer and co-developer of Djed. Building a special stablecoin for Cardano was a big deal for COTI.
Especially because Djed was designed to be the main token for the Cardano network to handle all the fees. This is instead of a more volatile asset as $ADA itself. I have not found out why this never happened. Maybe, someday?
What Is Djed?
Before we stick our head into data and the several partnerships we should have a look at the core of Djed first. What is this algorithmic stablecoin, who came up with the idea of Djed, and how does it work?
It was back in August 2021 when the first ideas of Djed were published in a paper by IOG. IOG was looking for a partner to develop and issue Djed and the COTI team was chosen. The first big partnership for COTI was born and, as I will show further in the article, Djed would become a success. Both the development teams of IOG and COTI started to work on the project somewhere at the end of 2021 and it took about a year and a few months before Djed and Shen would become available to the public.
How Does Djed Work?
Djed is a decentralized algorithmic stablecoin that works with a certain mechanism to hold its peg. Let’s discuss this as if you are about to mint some $DJED, to make it less technical Gibberish.
You are browsing to djed.xyz and have connected your Nami account. You are planning to mint $DJED. But, can we mint Djed or are there rules in place to protect your funds?
Before you can mint Djed, the collateral must be higher than 400%. Is it lower? That means no Djed minting is available. Shen comes into play here. Djed’s best friend Shen is here to be the reserve coin for Djed. It makes sure there is always enough collateral available to prevent dilution. So, when the reserve ratio is below 400% more Shen needs to be minted to get it up. It makes sure there is always enough $ADA to be paid back when burning $DJED. When the reserve ratio hits 800%, no Shen minting is allowed anymore.
Good to know: burning your Djed is always available. However, burning Shen is only available when the reserve ratio is above 400%.
Fees, Rewards, And The COTI Treasury
How do these Shen holders get incentivized to add the collateral? Where are the Djed burn and mint fees going? Are there any operational fees?
Fees are being generated by minting and burning Djed and Shen. The fee structure is as follows.
$DJED
- Mint Djed 1.5%
- Burn Djed 1.5%
$SHEN
- Mint Shen 1.5%
- Burn Shen 1.5%
All the above fees are collected in $ADA and delegated to the Shen holders every 4 epochs. You can check the delegation rewards status here https://djed.xyz/delegation-rewards.
The operational fees of the minting and burning process are going to the COTI Treasury, a staking platform from the COTI team. The operational fees are 0.5%. It is converted and streamlined into the COTI Treasury, not sure how often this happens.
We Now Have Minted Djed And Shen
We have taken the necessary steps to mint $DJED and $SHEN. Where can you let Djed and Shen work for you? The below list is not the entire list of partnerships but just to showcase you can use Djed and Shen in multiple ways.
Minswap
Here you can farm your $DJED and $SHEN and there are multiple trading pairs for both the stablecoin and reserve coin.
WingRiders
On WingRiders you can farm Djed. Add to the liquidity pool of $DJED and farm. Add to the liquidity pool of $SHEN and receive airdrops every epoch.
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MuesliSwap & SundaeSwap
You have multiple liquidity pools where you can use your Djed and Shen
Bittrue
On the Centralized Exchange Bittrue, you have trading pairs for both $DJED and $SHEN, both with $USDT.
In the image below you can see the 40 partnerships of Djed announced at launch, but some of these partnerships do not exist anymore or did not survive the bear market.
The Roadmap
We are currently on Djed 1.1.1. Next up is Djed 1.2 which features Minimal Djed and will utilize the Vasil hard fork.
Minimal Djed means that it is the simple, intuitive version. Where Extended Djed enables more stability.
In Djed 1.3 the Extended Djed version will be implemented together with the Dynamic fees and prices plus enhanced delegating support. Meanwhile, there are also plans to extend Djed and use these with the likes of wrapped BTC (WBTC) and wrapped ETH (WETH). With these assets, you can mint DJED on the Cardano Network.
As many know IOG launched a special stablecoin venture with two seniors coming over from Algorand to supercharge stablecoins on Cardano. While we don’t know more we can only believe that Djed will get some more love from IOG. Either way, this will become a pivotal point in Djed’s future.
The Current Status
Let’s look at some data. Djed has a nice growth path and has reached new milestones during the first year. A few days ago Djed reached a daily volume of 725.000 $ADA, which was a 100% surge in daily volume that day.
Overall Djed is doing relatively well.
According to Messari (data from DefiLlama), Djed reached a TVL all-time-high in December last year at $27.930.000. Currently, Djed is sitting at about $18.900.000. More important is the growing pace Djed has TVL-wise.
Coinmarketcap tells us that the market cap of Djed is sitting at $3.2 million at the time of writing. This, however, doesn't correlate with Djed’s statistics from their website.
Djed
At the time of writing some Djed statistics
- Circulating Supply: 4,052,312.77
- Mintable Amount: 915,882.01
Shen
At the time of writing some Shen statistics
- Circulating Supply: 27,084,310.6
- Mintable Amount: 23,812,867.62
The reserve ratio is at 468%, the base reserve is sitting at 38.755.174 ₳.
Stats can be found here.
Conclusion
Djed works. There is no more to say about that part, technically it does exactly what it’s supposed to do. And that is a big shoutout to the development teams of both IOG and COTI. They have built a working piece of software that endured the crazy crypto year of 2023.
Currently, you can use Djed and Shen in DEX’s. Farm it, add it to a liquidity pool, and it should give you some passive income. Yes, it could use some more volume and usage but that depends on the usage of the Cardano ecosystem. The new stablecoin venture of IOG might kickstart a new era for Djed. Nothing is sure yet bout that part though.
I still hope Djed will become the main token to handle all fees on Cardano as was suggested at the start of Djed. This would increase the usage by a serious amount. That in turn will make it more attractive to be a Shen holder, providing the needed liquidity to the Djed protocol. Because rewards for these holders will go up.
Whatever happens. I’m a big fan of Djed because it is a working product that delivers and hasn’t failed. I’m excited for the future. Let’s see in a year from now where we are.
Thanks for reading, I hope you enjoyed it. I hope you will follow me, share the blog, and clap around. Everything I write is personal opinions and will never be investment advice. Always DYOR. This is NOT a sponsored article.
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