Cardano And IOST Announce Algorithmic Stablecoin Plans
The teams behind Cardano and IOST have both revealed intentions to build their own versions of algorithmic stablecoins, indicating that the digital currencies are gaining traction.
To begin, the COTI team has announced the launch of the public Tesnet version of Djed — a decentralized algorithmic stablecoin based on the Cardano network – in cooperation with the Cardano team. The Testnet environment will allow the key functionality to be tested without the risk of using real money.
Shen, a reserve coin specifically created to guarantee the collateralization rate and the peg of the stablecoin, will sustain Djed’s stability.
Djed has been under development since September 2021, with the goal of being “the ultimate token with which Cardano’s whole network transaction costs will be paid.”
Second, the IOST team has revealed plans to produce an algorithmic stablecoin that addresses the three issues below. These include ensuring the accuracy of Oracle price feeds, managing scarcity to maintain price stability and deal with deflationary costs, and developing a short-term price arbitrage model to reduce short-term price volatility.
The IOST team hopes to ‘leverage its strong community of hundreds of thousands of users, underpinning excellent technical support, and the increasingly mature multi-chain ecosystem, which provides a good platform for the next decentralized algorithm stablecoin.’
The IOST Foundation has also increased its financing and resources for the network’s multi-chain ecosystem in order to make its algorithmic stablecoin known for its high annualized interest rates and lower risks than its competitors.
The announcements of Cardano and IOST establishing algorithmic stablecoins follow Tron’s introduction of USDD and Terra’s purchase of $1.5 billion in Bitcoin as reserves for its UST stablecoin.
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