Cardano DEXs Will Support Djed Stablecoin Liquidity Pools Starting Next Week

The issuance of Djed’s overcollateralized stablecoin has been a much-hyped topic in the Cardano community.

AccessTimeIconJan 27, 2023 at 8:38 a.m. UTC
Updated Jan 27, 2023 at 4:12 p.m. UTC

The upcoming Djed protocol's stablecoin, djed, and its shen governance token will list on Cardano-based decentralized exchanges (DEX) MuesliSwap and MinSwap after their issuance next week, as per tweets from the two DEXs.

As per DeFiLlama, MinSwap is currently the largest Cardano DEX, locking $30 million in tokens, while MuesliSwap locks up a relatively smaller $6.5 million worth of liquidity.

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 more than 400% in collateral value to be posted before it is issued to a user.

DEXs rely on smart contracts to match trades between users anonymously, without third parties. These users supply liquidity to trading pools, earning rewards in the form of tokens.

This overcollateralized mechanism would allow djed's value to hold stably during market stress and prevent a repeat of terraUSD, the infamous stablecoin linked to luna, which fell 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.

The djed tokens – alongside annualized yield rewards offered by the DEXs – are expected to attract liquidity and interest from investors owing to their overcollaterized mechanism, which may overall benefit Cardano's $72 million decentralized finance (DeFi) market.

"We are going to launch concentrated liquidity pools similar to UniSwap [version 3] next week with the Djed launch so we expect that the trading APR itself will already be above 10% as capital can be used more efficiently," a MuesliSwap developer told CoinDesk via Twitter message on Friday.

"We are aiming for at least a 10%-15% farming APR for both the pairs ADA/$DJED and ADA/$SHEN. So, in total, we are aiming to be above 20-25% APR in the first month to attract liquidity," the developer added.

Djed is expected to go live on over 40 Cardano-based decentralized finance applications (dapps) on launch. Developers have simultaneously developed DjedPay, a payments application that uses djed, that would allow users to transfer the tokens to merchants and businesses.

Coti did not immediately respond to requests for comment at writing time.

UPDATE (Jan 27, 10:55 UTC): Adds comment from MuesliSwap developers.


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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

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