The Cardano (ADA) team is gearing up to launch their new stablecoin, DJED. DJED, which will be an algorithmic stablecoin, is actually experiencing a difficult period in terms of trust in this period of stablecoins. Especially after Terra's UST lost its stability, Tether (USDT)'s momentary crisis reduces confidence in stablecoins. However, DJED assures itself with these features.
Nazarcapital, one of the developers of Cardano (ADA), explains how DJED will thwart a possible attack, although he says stablecoins are having a hard time keeping their peg. Nazarcapital says that the collapse of TerraUSD (UST) has become even stronger with the death spiral scenario and its return is now impossible.
Most traders are triggered by this collapse and exit the UST one by one, causing the UST to drop to a level close to 0. The UST was fed with LUNA burns. On the other hand, it is also known that the stablecoin DJED, which is currently in the testing phase in Cardano, will be supported by ADA. Therefore, the same death spiral threat also applies to DJED.
However, the developer states that an additional token, SHEN, has been integrated into its design to ensure the stability of DJED. DJED is backing up with SHEN to ensure that if it can't find enough supply with ADA, it won't go into this death spiral. In this process, the developers emphasize that they are also protected from a possible SHEN inflation and that SHEN printing will stop when the reserve ratio reaches 800%.
The mentioned design has already been tested by COTI Network and Input Output Global. Even in the period of market volatility and increased ADA sales, DJED is guaranteed to be stable at a rate of 1:1 to the USD constant. With these developments, Cardano's first algorithmic stablecoin, DJED, is preparing to enter the market strongly despite the stablecoin bias in the market.