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Cardano To Launch Its Very Own U.S Debt Backed Stablecoins “Djed”

Cardano blockchain has made quite a name for itself with all that’s been happening in the crypto industry. The blockchain has stayed online and haven’t experienced any form of attack on the network unlike its counterpart Solona that keeps having a network downtime.

Cardano is a public blockchain with Charles Hoskinson Ethereum co-founder as the founder. The Cardano blockchain achieves consensus mechanism through proof of stake and has over 2,000 Validators across the ecosystem.

The Cardano blockchain was recently hard forked and its Vasil upgrade went live on 22nd of September,2022. The blockchain has maintained stability, security and decentralization. With the Vasil upgrade Cardano blockchain has become faster solving the crypto trilemma which states that a blockchain can’t be Fast, Secure and Decentralized.

Unfortunately, even with all this, the blockchain native cryptocurrency Ada isn’t doing so well compared to what was expected of it and has remained stunted over the past years. Regardless it is notable to cite that Cardano currently has over 400 Dapps running on the blockchain and more still developing.

It’s also important to know that Cardano is written in Haskell, which is an advanced programming language and quite hard to code. Cardano was criticized for choosing Haskell as their programming language which can be linked to why there hasn’t been wider adoption of developers building on the Cardano blockchain. While it may look as if Cardano isn’t growing as much as expected, we shouldn’t overlook the fact that Cardano has one of the strongest ecosystem in the blockchain industry and their choice of Haskell as the blockchain programming language is one of the reasons the blockchain has remained highly secured.

With all that has been happening in the crypto industry it is without doubt that only solid platforms, projects and blockchains will survive, and all other inferior ones will go down the drain.

Djed which is the official name of the Cardano blockchain stablecoin will be released in January,2023. It will also be an algorithmic stablecoin.

What is a stablecoin?

A stablecoin is a cryptocurrency that is designed to hold a stable value like a fiat currency. They might be in pounds’ or dollars, and sometimes backed with fiat currency kept in a bank vault. Stablecoins was invented to mitigate the volatility of other cryptocurrencies. For example, when the prices of crypto assets are on the uptrend one can easily convert them to stablecoins in other to maintain its value. Stablecoins are very important in the crypto industry especially in decentralized finance (DeFi).

There are also different types of Algorithmic Stablecoins namely;

1. Rebase stablecoins

2. Seigniorage stablecoins

3. Fractional-algorithmic stablecoins.

Rebase stablecoins:

this type of algorithmic stablecoins is achieved through minting and burning of coins. The protocol adds or removes supply from circulation in proportion to the coin’s price deviation from the $1 peg. If the coin is > $1 more coin will be minted and if the coin is <$1 some of it will be burnt.

Seigniorage stablecoins:

is a multi-coin system, wherein one coin is designed to be stable and at least one other coin is designed to facilitate that stability. I guess this was the same type of algorithmic protocol Terra blockchain used for their UST stablecoin which was to be maintained by Luna coin market price. This however failed after Luna coin went on the downtrend on May 7 and UST lost its peg to the dollar.

Fractional-algorithmic stablecoin:

this is a combination of Seigniorage and part collateralized, it aims to maintain their peg by combining the best mechanisms from pure uncollateralized stablecoins and their collateralized counterparts. This model was also pioneered by Frax Finance.

The stablecoin technology is still an experiment in the cryptocurrency industry and many have tried and failed over the years, but with Cardano we should expect something steady and unique, hopefully their stablecoin might solve the issues with stablecoins maintaining its peg with the U.S dollar.

Charles Honskinson has also been working closely with the U.S congress and it should be expected that the Cardano blockchain we produced something solid. Also if the Cardano Stablecoins fails, I can’t stress how much negative impact it will have on the blockchain. At the same time, I believe that Cardano blockchain is one that we can look out for in terms of delivering stability, this has been proven with all that has happened this year in the cryptocurrency industry.

Cardano blockchain seems to be on a slow and steady win the race mode and this new announcement is likely going to have a positive impact on their native cryptocurrency Ada.

Conclusion

The stablecoins technology is still experimental and has a 50% chance of failing. The crypto industry is still in infant stage and so many things will be tried to make the ecosystem better. Things are getting a little bit messy with Luna, UST, FTX, etc. But all this will help flush out the unsolid projects and the solid stands strong long term. This isn’t a financial advice to stack up Ada, it is only an informative article to get you up to speed with what is currently going on in the Cardano ecosystem.

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