The last day of January 2023 will go down in Cardano history as the moment when the long-awaited overcollateralized stablecoin DJED was launched. The launch went smoothly. In less than 24 hours, over 1.7M DJEDs were minted. There were 27M ADA in the Djed reserve. You can use DJED on several DEXs. Bitrue is the first exchange that announced the listing of DJED and SHEN. Congratulations to the COTI team who implemented DJED and also to the IOG team.
Users should know that Djed version 1.1.1 has been launched. This version is referred to as Minimal Djed. It is compatible with the Vasil upgrade and has been audited. This version includes delegation rewards from day one. Fees are fixed.
The next version of Minimal Djed will be 1.2. It will use Vasil features including a reference script. It will increase the scalability of the project.
Djed 1.3 will be the extended Djed version. It will introduce dynamic fees. In addition, a more progressive delegation program will be supported, resulting in significant liquidity provision.
According to the white paper, there is also a difference in implementation between Minimal Djed and Extended Djed. The Minimal Djed version contains a few known minor issues that will be fully resolved in the Extended Djed version. Extended Djed is significantly more complex but retains the same stability principles as Minimal Djed.
One of the minor issues is described in the white paper as a "Reserve draining attack with price foresight". We don't think the COTI team would have launched Djed if they were worried that this attack vector could be exploited in practice. However, we do admit it's a little scary.
Let’s add that the team plans to expand the capabilities of Djed to allow other digital assets to be used as collateral alongside ADA. In particular, wrapped BTC and ETH.
SHEN holders will receive fees related to the minting and burning of both DJED and SHEN. Fees are collected in ADA and allocated to the reserve. It increases the reserve ratio. SHEN holders will harvest the fees when they burn their SHEN. To put it simply, SHEN holders will get back more ADA than they put into the system when they minted SHEN. Holding SHEN is profitable for those who want to long ADA since the market value correlates to ADA with an upside multiplier.
Cardano does not lock ADA during staking. ADA coins are always liquid even if they are used by a contract. ADA in the Djed reserve can be staked. This will create another revenue stream for SHEN holders. The ADA that will be in the reserve (under the control of the contract) will be delegated to the selected pools and 100% of the rewards will be transferred to the reserve.
All ADA holders can earn staking rewards if they delegate coins to the pool. It can be said that SHEN holders do not lose staking rewards and thus do not have to speculate whether staking or holding SHEN is more profitable. It is important to mention that the selection of the pool will be under the control of the team. SHEN and also DJED holders can be liquidity providers on any DEX that supports it and get extra profit for this service. You can also farm. DEX must of course support SHEN and DJED.
Let's add that many DEXs allow ADA staking during liquidity provision. So SHEN/ADA or DJED/ADA pairs might be attractive.
Remember that you cannot burn SHEN when the reserve ratio drops below 400%. It may be possible to sell SHEN on DEX, but don't expect it to be profitable.
Some may be surprised by the relatively high minimum amount of coins required for minting and burning. The minimum amount of DJED you can mint is 5000. For that, you need more than 13,000 ADA coins and the fee will be over 100 ADA. 100 ADA is an operational fee.
The minimum quantity required to burn DJED is 1000.
No minimum quantity is required for SHEN minting, but the minimum fee is again 100 ADA. The minimum quantity required for burning SHEN is 2500.
SHEN holders will benefit from the high fees. One of the reasons they are so high may be to protect the network from a flood of transactions. Users can buy both DJED and SHEN on DEX, so they may not mind the high minting and burning fees.
It is important to note that in the Cardano ecosystem, all tokens are native. No smart contract is required for their transfer. This means that you will pay normal fees for sending DJED and SHEN on the Cardano network.
The team plans to sell a portion of the fees collected and purchase COTI with them. COTI will be placed in the COTI treasury. This may cause selling pressure on the ADA. However, this will likely be negligible. Buying COTI coins will increase demand. We do not yet have more information about the ratio and the way in which this will take place.
Anyone who decides to use Djed should study well how the project works. Every profit is necessarily associated with some level of risk. Make sure you understand everything before you mint or buy SHEN.
The longer the Djed exists the more credible it will be. People may be apprehensive about using Djed because they remember the collapse of the Terra Luna (UST) project. It is important to stress that Djed is a different project using different mechanisms. It is fully algorithmic and autonomous.
Every DeFi ecosystem needs stablecoins. Djed will be an important part of the Cardano ecosystem. Let's wish Djed the best of luck