09 Feb 2025

light mode

Cardano stablecoins: USDA и Djed

Cardano stablecoins: USDA и Djed

In early 2023, Cardano will release two stablecoins that are fundamentally different from each other but intend to solve the same tasks. The article analyzed in detail what their prospects and features are

On this page

Introduction

In recent years, stablecoins have come under increased scrutiny of regulators. The main concerns are the principles of operation of algorithmic stablecoins, the transparency of reserves, and the adequacy of the centralized stablecoins provision.

 

Incredibly often, the problems were discussed after the collapse of one of the most significant algorithmic stablecoins – TerraUSD (UST) that caused the fall of the entire cryptocurrency market. As a result, many stablecoins faced a temporary rate unpeg.

 

But the issue of reserves remains the main subject of discussion of their reliability. And the key concern here is that most of the reserves of centralized stablecoins are a complex mixture of stocks, secured loans, corporate bonds, precious metals, and other assets. And most typically, companies are criticized for the lack of proper audits to confirm reserves. In addition, these issuers need to be appropriately regulated, which increases the risks for investors.

 

Cardano is currently working on releasing two new stablecoins, which are tasked with solving critical issues inherent in most stablecoins.

 

The Cardano development team plans to release the first fully regulated stablecoin, USDA, backed by fiat and pegged to the US dollar in 2023. As well as an over-collateralized algorithmic stablecoin issued by the COTI platform called Djed.

 

The principle of operation of centralized and algorithmic stablecoins is different, and in this article, we will briefly describe the features of each of them.

USDA

On November 18, 2022, in Singapore, Emurgo announced the launch of a new stablecoin on the Cardano blockchain – USDA. This stablecoin will be fully regulated, backed by the US dollar, and pegged 1 to 1.

Emurgo is one of the co-founders of the Cardano project. Its mission is to develop and support businesses and help integrate businesses into the Cardano ecosystem.

Emurgo is one of the co-founders of the Cardano project. Its mission is to develop and support businesses and help integrate businesses into the Cardano ecosystem.

One of the Cardano’s global goals is to provide access to banking products to every person in the world. The company has been successfully developing its products for a long time in the markets of Africa and Asia. People there have no access to banking services, and the country's national currency is depreciating too quickly to act as a store of value.

To achieve this goal, the Cardano developers are introducing a set of products called “Anzens”, designed to connect traditional financial services to cryptocurrency. USDA will be the first product to help bridge the gap between TradFi (traditional finance) and DeFi (decentralized finance).

The Cardano ecosystem was built on the ethos of bringing real world applications to crypto and creating the foundation to build the economy of the future. The introduction of a fully fiat-backed, regulatory compliant stablecoin is the next step in realizing the future for our community. This stablecoin not only offers stability to investors conducting financial transactions on the blockchain but advances a path forward for the Cardano ecosystem to address a problem we are uniquely positioned to solve — banking the underbanked

says EMURGO Fintech Managing Director Vineeth Bhuvanagiri.

Users can tokenize their USD to USDA via credit cards, wire transfers, direct deposits or payments, and native ADA token conversion. USDA is scheduled to launch in the first quarter of 2023 on the Anzens platform. It will be followed by implementing plans to provide a secure and convenient conversion of other stablecoins to USDA (for example, USDC and USDT), as well as cryptocurrencies such as Bitcoin, Ethereum, and others. 

To fully comply with regulatory requirements and ensure compliance with oversight rules, Emurgo has partnered up with an as-yet-unnamed regulated US financial services company to act as the banking partner responsible for issuing USDA tokens and holding deposits.

 

By relying on regulation and the provision of tangible assets, the USDA can guarantee reliable long-term price stability, ultimately opening more global financial services to the Cardano ecosystem.

Djed

Unlike fiat-backed stablecoins, algorithmic stablecoins are regulated by specific algorithms that manage the balance between supply and demand, thus ensuring exchange rate stability.

 

Djed is an algorithmic, overcollateralized stablecoin backed by the Cardano (ADA) token and SHEN.

 

Algorithmic stablecoins, backed by a single currency, have some vulnerabilities. To solve this problem, Djed has a reserve asset – the SHEN token.

 

The concept of “over-collateralization” means that the stablecoin is backed by excess collateral in the form of a cryptocurrency held in reserve. And, if ADA falls too quickly, the underlying smart contracts include a reserve SHEN token that will be used to balance price fluctuations, helping to ensure a 400% to 800% over collateral level.

 

This stablecoin has been developed for more than two years in partnership with the COTI platform and IOG (please see the document describing all the technological features and operation of the stablecoin here)

COTI is a first-level blockchain payment network that provides a throughput of up to 100,000 transactions per second through the Proof-of-Trust consensus mechanism. COTI provides the infrastructure needed to create and issue stablecoins that are highly secure, scalable, and have low transaction fees.

 

Input Output Global is an engineering and technology company engaged in cryptocurrency development and research activities. 

The Djed stablecoin has been running on the testnet for several months now. And according to a tweet posted by the team on December 6, the 1.1.1 test version of Djed has been reactivated to include new features such as compatibility with the Vasil hard fork, activity history, and more.

Following completing a series of audits and stress tests, Djed is scheduled to launch on the mainnet in January 2023.

During the Cardano Summit in November, COTI CEO Shahaf Bar-Geffen stated,

Recent market events have proven again that we need a safe haven from volatility, and Djed will serve as this safe haven in the Cardano network. Not only do we need a stablecoin, but we need one that is decentralized, and has on chain proof of reserves.

Conclusion:

The primary mission of Cardano is to bring blockchain technologies into real life and provide access to them to anyone in the world. It is much work from a technological point of view, but the Cardano team is making good progress in this direction.

 

Providing economic identification is a crucial component in countries where people do not have an identity card or access to the banking sector. For example, in developing countries in Africa and Asia, digital services and decentralized identity will give people access to education, banking services, and the employment market. And Cardano is already addressing some of these issues by developing projects like Atala Scan, Atala Trace, and Atala Prism.

 

Cardano-powered stablecoins that share these values will help bring stability to the broader ecosystem and restore trust by acting as a trusted channel between TradFi and DeFi. It can bring cryptocurrencies closer to their original goals: provide access to digital financial for every person and ensure independence from centralized issuers.

The content on The Coinomist is for informational purposes only and should not be interpreted as financial advice. While we strive to provide accurate and up-to-date information, we do not guarantee the accuracy, completeness, or reliability of any content. Neither we accept liability for any errors or omissions in the information provided or for any financial losses incurred as a result of relying on this information. Actions based on this content are at your own risk. Always do your own research and consult a professional. See our Terms, Privacy Policy, and Disclaimers for more details.

Articles by this author

Latest News

MORE
Winklevoss Twins Consider IPO for Gemini Exchange

Winklevoss Twins Consider IPO for Gemini Exchange

The Winklevoss twins, Cameron and Tyler, are reportedly considering an initial public offering (IPO) for their cryptocurrency exchange, Gemini. If successful, this move would place Gemini among the growing list of crypto companies entering public markets.

09 Feb 2025
Trump Jr. States That Crypto Is America’s Path to Global Dominance

Trump Jr. States That Crypto Is America’s Path to Global Dominance

The crypto community has taken notice of Donald Trump Jr.’s latest remarks. Speaking at the Ondo Finance Summit in New York, he asserted that cryptocurrencies will play a crucial role in maintaining America’s global economic leadership.

07 Feb 2025
Rep. Green Criticizes TRUMP Coin at Congress Hearing

Rep. Green Criticizes TRUMP Coin at Congress Hearing

On February 6, the U.S. House Financial Services Committee held a hearing entitled “Operation Choke Point 2.0: The Biden Administration’s Effort to Put Crypto in the Crosshairs.”

07 Feb 2025
NFL Rivals Expands Web3 Gaming With Super Bowl NFT Cards

NFL Rivals Expands Web3 Gaming With Super Bowl NFT Cards

NFL Rivals, the blockchain-powered football game from Mythical Games, is rolling out a special in-game event to celebrate the biggest football showdown of the year.

07 Feb 2025

Latest News Alt

MORE
Weekly Analysis of BTC, ETH, and the Stock Market (Jan 27, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Jan 27, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, and the current cryptocurrency market dynamics.

27 Jan 2025
Weekly Analysis of BTC, ETH, and the Stock Market (Jan 13, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Jan 13, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, and the current cryptocurrency market dynamics.

13 Jan 2025
Weekly Analysis of BTC, ETH, and the Stock Market (Jan 6, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Jan 6, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, along with the current cryptocurrency market dynamics.

06 Jan 2025

Might Be Interesting

MORE
How Blockchain Helps Combat Disinformation

How Blockchain Helps Combat Disinformation

Fake news has become a global issue, shaping public opinion, fueling social tensions, and even influencing political decisions. With the rise of social media, the spread of misinformation has accelerated, making it increasingly difficult to regulate. However, blockchain technology offers a promising solution in the fight against fake news.

07 Feb 2025
Trading Psychology: How to Avoid Falling Victim to Your Own Biases

Trading Psychology: How to Avoid Falling Victim to Your Own Biases

The most successful traders aren’t always the smartest. More often, those who excel are the ones who understand psychological traps, manage their emotions, and maintain rationality under pressure.

03 Feb 2025
Liquidity Pools — The Engine Driving DeFi

Liquidity Pools — The Engine Driving DeFi

Liquidity pools fuel DeFi by enabling instant token swaps, but what exactly are they? These crowdsourced reserves make decentralized trading possible—but they also come with risks. Here’s what you need to know before diving in.

31 Jan 2025
Bitcoin Name Service — Making Web3 Addresses Easier to Read

Bitcoin Name Service — Making Web3 Addresses Easier to Read

As the Bitcoin blockchain evolves, new opportunities are emerging for users to interact with DEX technologies. One of the major advancements is the Bitcoin Name Service (BNS)—a protocol that replaces complex web3 addresses with names that are easy for humans to understand.

29 Jan 2025
How to Withdraw Bitcoin from PayPal: A Step-by-Step Guide

How to Withdraw Bitcoin from PayPal: A Step-by-Step Guide

PayPal is one of the most popular online payment platforms. In 2022, it introduced features that allow users to transact with cryptocurrencies, including Bitcoin (BTC). However, withdrawing crypto from PayPal is not as straightforward as transferring fiat funds. This guide will walk you through the process of withdrawing Bitcoin from PayPal.

29 Jan 2025
Crypto Wallet Backups: Are You Truly Ready for Self-Custody?

Crypto Wallet Backups: Are You Truly Ready for Self-Custody?

Being your own bank is one of the great perks of crypto. It’s perfect for those who want extra security or believe in decentralization. But self-custody isn’t exactly a walk in the park – you’ve got to master the art of backups because you’re the only one responsible for your assets.

28 Jan 2025

Opinions

Super Bowl Bets Under Fire: CFTC Probes Kalshi and Crypto.com

Super Bowl Bets Under Fire: CFTC Probes Kalshi and Crypto.com

The Super Bowl, the largest sporting event in the US, has more to it than just the competition. The exciting show and, of course, commercials and bets are a big part of it, too. The winner will become known as early as tomorrow. Not everything always goes smoothly, though.

08 Feb 2025
Arthur Hayes — Is Trump’s Crypto Policy Setting a Trap?

Arthur Hayes — Is Trump’s Crypto Policy Setting a Trap?

Arthur Hayes, in The Genie, argues that Trump’s crypto agenda might not be what it seems. Could regulatory changes lead to unexpected consequences? Read our full breakdown.

07 Feb 2025
MORE

Interviews

“Satoshi is CIA”: Swedish crypto bro opens up about his Bitcoin journey

“Satoshi is CIA”: Swedish crypto bro opens up about his Bitcoin journey

The first crypto craze took place almost a decade ago. Overnight, many people found out about Bitcoin and its underlying technology, blockchain.

31 Jan 2025
Dmytro Gordon and Volodymyr Nosov: A Sensational Interview

Dmytro Gordon and Volodymyr Nosov: A Sensational Interview

Volodymyr Nosov, CEO of Europe’s largest crypto exchange WhiteBIT, sat down with Dmytro Gordon, one of Ukraine’s most prominent journalists. The interview touched on Bitcoin, crypto, WhiteBIT, cars, keys to success, and business vision.

18 Dec 2024
MORE