Cardano-based Stablecoin "Djed" Implements Largest Upgrade Since Launch

COTI has launched "Djed 1.2," the most significant upgrade to its Cardano-based algorithmic stablecoin since its inception.

This update introduces dynamic fees, lowers minting and burning thresholds, strengthens SHEN's stability with increased ADA reserves, and migrates the system to Plutus V2, promising a more secure and cost-effective experience for users and developers alike.

Enhancements for Improved Usability and Stability

On August 9, 2024, COTI, the team leading the development of the algorithmic stablecoin "Djed" based on the Cardano (ADA) blockchain, announced the launch of its largest upgrade to date, "Djed 1.2," on the mainnet.

Djed, which debuted on the Cardano blockchain on January 31, 2023, is a USD-pegged stablecoin that operates as an overcollateralized algorithmic stablecoin backed by a reserve coin called $SHEN. This system maintains a collateral ratio between 400% and 800%.

This latest upgrade, the largest since Djed's launch, was the result of several months of development and includes multiple enhancements that were originally planned for Djed 1.3.

Here are the key updates introduced in the Djed 1.2 release:

Transition to a Dynamic Base Fee Model

The previous Djed protocol employed a fixed fee model, but this update introduces a more flexible "dynamic fee model." Initially planned for Djed 1.3, the dynamic fee model was implemented ahead of schedule due to faster-than-expected development progress.

The new dynamic base fee model allows the protocol to adjust base fees within a range of 0% to 5%. This enables users to help maintain the protocol's health through minting and burning of DJED/SHEN (Note: The fee range is subject to change).

Lowering the Minimum Amount for Minting & Burning

The minimum amount required for minting and burning DJED and SHEN has been reduced from "200 ADA" to "50 ADA." This change is designed to allow more users to participate in the Djed protocol.

By lowering the entry barrier, this update is expected to increase liquidity and enhance the stability of the ecosystem, making it accessible even to investors with smaller holdings.

Strengthening SHEN's Stability Through Increased ADA Reserves

To reinforce the stability of SHEN, the protocol has increased the amount of ADA held in its reserves.

This upgrade is expected to enhance the overall reliability of the Djed protocol, fostering greater user participation and confidence in the system.

Transition to a Percentage-Based Operational Fee Model

The operational fees have been switched from a fixed fee model to a percentage-based model. This more flexible fee structure ensures cost-effective transactions across various order sizes and reduces the risk of transaction failures.

Going forward, operational fees will be charged as a percentage of the transaction amount, with minimum and maximum limits set. Collected operational fees will be gathered in COTI's treasury and then distributed to users as rewards.

Additionally, this update introduces user-friendly mechanisms for handling insufficient fees, ensuring that transactions will no longer be automatically canceled due to fee shortages. In cases where a transaction is canceled due to insufficient fees, a status notification will be sent to the user's wallet.

Migration to Plutus V2

To leverage the latest smart contract capabilities on Cardano, Djed has migrated to "Plutus V2" (Plutus is the programming language used to build smart contracts on Cardano).

The migration to Plutus V2 brings several significant improvements, such as reduced transaction sizes and costs, and a more efficient development process. These enhancements make the Djed protocol more cost-effective, secure, and developer-friendly.

For more details on this upgrade, please refer to the "official announcement from COTI."

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