The stablecoin Djed and its Shen governance token of the upcoming Djed protocol will be listed on the Cardano-based decentralized exchanges (DEX) MuesliSwap and MinSwap following their issuance next week, according to tweets from the two DEXs.
According to DeFiLlama, MinSwap is currently the largest Cardano DEX and is locking $30 million in tokens, while MuesliSwap is locking relatively smaller liquidity worth $6.5 million.
The highly anticipated djed stablecoin was jointly developed by Cardano code maintainer IOG and Coti, a Layer 1 blockchain. Djed is backed by other tokens and requires more than 400% of the collateral value to be booked before it is issued to a user.
DEXs rely on smart contracts to match trades between users anonymously and without third parties. These users provide trading pools with liquidity and earn rewards in the form of tokens.
This over-collateralized mechanism would allow djed’s value to remain stable during market stress and prevent a repeat of terraUSD, the notorious stablecoin pegged to Luna, which fell over 99% in May.
Shen, the reserve token designed to support Djed’s stability, would receive additional rewards if Cardano’s ADA cryptocurrency holders use their coins to mint Djed stablecoins, which could boost liquidity for the burgeoning ecosystem.
The Djed tokens are expected to attract liquidity and interest from investors due to their over-collateralised mechanism – alongside the annualized yield premiums offered by the DEXs – which could benefit Cardano’s $72 million decentralized finance (DeFi) market overall.
“We will introduce concentrated liquidity pools similar to UniSwap [version 3] next week with the launch of Djed, so we expect the trade APR itself to already be above 10% as capital can be used more efficiently,” a MuesliSwap developer told CoinDesk via a Twitter message on Friday.
“We are targeting at least 10-15% APR for both ADA/$DJED and ADA/$SHEN pairs. So overall, we’re aiming for over 20-25% APR in the first month of attracting liquidity,” the developer added.
Djed is expected to go live on over 40 Cardano-based decentralized finance applications (dapps) at launch. Developers concurrently created DjedPay, a payment application that uses djed and would allow users to transfer the tokens to merchants and businesses.
Coti did not immediately respond to requests for comment at the time of writing.
UPDATE (January 27, 10:55 UTC): Adds a comment from MuesliSwap developers.
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