beincrypto.com
Cardano momentum is building as the launch of the Djed stablecoin nears. ADA prices have yet to make a big move, but one could be soon.
Hype is mounting over the latest project to launch on the Cardano ecosystem. Djed is a crypto-backed, over-collateralized algorithmic stablecoin that is backed by ADA. It has been developed by Cardano backers IOG and powered by Coti, a layer-1 scalable enterprise network.
Djed is planned for release this month. However, no date has been specified just yet.
Djed is entering a crowded stablecoin market that already accounts for 13% of the entire crypto market cap and almost a third of the top ten assets.
Cardano DeFi Up 50%
On the surface, Djed uses a similar formula to existing stablecoins such as Frax. It uses collateral from ADA and a reserve coin called SHEN, minted and burnt to preserve the dollar peg of Djed.
ADA is sent to the Djed smart contract in return for Djed. Furthermore, Shen acts as the balance when ADA prices fluctuate. Unlike Frax, which is fractionally collateralized with USDC and FXS, Djed will be over-collateralized with ADA. According to a recent Coti blog post:
“Djed is over-collateralized by 400% — 800%, this means that it has 4 to 8 times more underlying value backing it, than the total sum of Djed minted.”
The launch will likely boost the total value locked on the Cardano ecosystem and potentially ADA prices.
Cardano DeFi TVL has already been on a tear this year. It is currently just shy of $100 million, following a 50% rise since the beginning of 2023. Cardano DeFi TVL is now at its highest level since early October, according to DeFiLlama.
Ecosystem dApp activity has also been increasing. The leading dApp on Cardano at the moment is the jpg.store NFT marketplace followed by the Minswap DEX.
ADA Price Outlook
ADA prices have not moved much over the past few days, hovering around the $0.35 level. However, they have notched up an impressive 40% gain over the past fortnight.
Furthermore, ADA has a lot of upside potential. The Cardano coin is currently down 88.6% from its September 2021 all-time high of $3.09.