By George Ward
In a recent podcast discussion, the CTO of COTI Network, a blockchain-based platform, Shahaf Bar-Geffen, disclosed that Cardano is working on releasing, Djed, an algorithmic stablecoin soon.
According to Bar-Geffen at the Cardano Summit in November, the algorithmic stablecoin is scheduled for launch in January 2023. Moreover, the asset has reached its final development stage since September and has undergone testing to enhance its functionality at the start of December.
The COTTI CTO disclosed that the development team had made the necessary efforts to ensure that the new Djed stablecoin could be compatible with Cardano’s Vasil upgrade. Apart from that, the algorithmic stablecoin project has undergone two different audits from the team of developers.
Bar-Geffen stated that security is of utmost importance in this project, and the team wants to ensure that the product passes the security test required of stablecoins.
He further said, “it is fine if people are not interested in the product, but I cannot live when the project has some security loopholes. That is why the release is taking more time than expected.”
Algorithmic Stablecoins And The Crypto Market
Since the collapse of the Terra UST stablecoin in May, investors have lost confidence and trust in algorithmic-backed tokens. Even before the Terra fiasco, several projects with similar features to Terra UST have also caved into the systemic risks associated with algorithmic stablecoins.
Once launched, the stablecoin will be integrated into some selected decentralized finance (DeFi) protocols. The developers want to make the new assets part of the DeFi ecosystem to boost adoption.
However, predicting how far Djed will go will take a lot of work due to the uncertainties in the stablecoin market. Last month, Cardano’s pet stablecoin project, Ardana, went underwater due to a lack of funds.
CEO Charles Hoskinson called the situation “distasteful” as partners of the project blamed Cardano for its failure. Following the spectacular crash of UST, the Terra network’s stablecoin, in May, the crypto industry began to write off algorithmic-backed tokens.
However, experts have been divided on the future of the asset, with some indicating that the end is near for algorithm tokens. The aim of Stablecoin issuers, no matter the model, is to have dollar-pegged crypto.
Unfortunately, regulators are increasing their scrutiny of stablecoins after the fallout of the Terra UST. With new rules on the way, policymakers are out to make stablecoins operate like conventional fiats.