Cardano-based overcollateralized stablecoin Djed (DJED) has attracted over 27 million cardano (ADA) tokens as backing less than a day after launch, data shows.
As of the time of writing, Djed has a reserve ratio of nearly 600%, meaning each djed is backed by six times its value in ADA. At current prices, the ADA locked for issuing djed is worth over $10 million.
The highly anticipated djed stablecoin has been jointly developed by Cardano code maintainer IOG and Coti, a layer 1 blockchain.
Djed will be backed by other tokens and requires between 400% and 800% in collateral value to be posted before it is issued to a user.
This overcollateralized mechanism would allow djed's value to be stable during market stress and prevent a repeat of terraUSD, the algorithmic stablecoin linked to the Terra system's luna token, which fell in value by over 99% in May.
Shen, the reserve token meant to support djed's stability, would receive extra rewards when holders of Cardano's ADA cryptocurrency stake their coins to mint djed stablecoins, which may fuel liquidity for the upstart ecosystem.
This may increase user demand for shen, and in turn a surge in price in the coming weeks as djed is integrated with more Cardano-based applications that add to its utility.
As of Wednesday morning, djed has a circulating supply of 1.7 million tokens, while shen has a supply of 20 million and is worth 38 cents apiece.
The djed tokens – alongside annualized yield rewards offered by the decentralized exchanges (DEX) – are expected to attract liquidity and interest from investors owing to their overcollaterized mechanism, which may benefit Cardano's $91 million decentralized finance (DeFi) market.
Some Cardano DeFi projects, such as Fluid, have already integrated djed stablecoins as liquidity against loans. Last week Cardano DeFi exchange MuesliSwap told CoinDesk it targeted annualized yields of 10% to 25% for djed users.