Cardano’s DJED Stablecoin Facing Challenges with Unminting and Depegging
– DJED, the stablecoin launched by COTI on the Cardano network, is encountering issues with unminting and depegging.
– The stablecoin has experienced a loss of stability on decentralized exchanges following a decline in its reserve ratio.
– Users have faced problems with depegging and unminting since DJED’s release in January 2023.
– The reserve ratio, crucial for maintaining value stability, has fallen below the safe threshold.
– The reserve held approximately 11,555,202 DJED tokens or 39,343,556 ADA as of July 4th.
COTI Confirms DJED’s De-pegging
– COTI acknowledged the issue and stated that DJED failed to maintain the reserve ratio between 400-800%.
– Users are unable to unmint their tokens, leading to depegging on all Cardano decentralized exchanges.
– Some users criticize COTI for not ensuring sufficient liquidity for the stablecoin.
Suggestions for Maintaining DJED’s Value
– Jonah Koch from EMURGO Academy defends DJED’s performance and recommends measures to maintain its value.
– Koch suggests ceasing minting SHEN reserve tokens and issuing them only to compensate COTI holders.
Closing
– DJED’s depegging issue is specific to Cardano decentralized exchanges and not the protocol itself.
– DJED’s recent use for lending and borrowing on Liqwid highlights the evolving nature of the stablecoin’s applications.
– It remains to be seen how COTI and the Cardano community address the challenges faced by DJED.
**Hot Take:**
The challenges faced by DJED highlight the importance of maintaining a stable reserve ratio for algorithmic stablecoins. COTI’s acknowledgement of the issue and suggestions for maintaining DJED’s value show a commitment to addressing the problem. The Cardano community’s mixed reactions and the stablecoin’s continued use in new applications demonstrate the adaptability and potential of DJED. It will be interesting to see how these challenges are resolved and how DJED evolves in the future.
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