Cardano Partner Plans 400% to 800% Reserve Ratio for DJED Stablecoin

• COTI said the DJED over-collateralization range would be from 400% to 800%.
• The 400-800% is considered ideal as ADA has only a 66% average monthly drop.
• Crypto exchanges Bitrue and WingRiders have pledged to list DJED upon launch.

COTI, the layer-one protocol overseeing the upcoming algorithmic stablecoin of the Cardano blockchain, has shared an update regarding the collateralization ratio of the coin.

In a blog post over the weekend, COTI reaffirmed that the optimal range for the reserve ratio of the DJED stablecoin would be between 400% to 800%, as initially stated in its whitepaper.

The team agreed on this ratio following extensive research on the maximum monthly decrease in Cardano’s native token, ADA. It found that, at all times, ADA dropped approximately 66%, which implies that COTI needs a 300% over-collateralization to keep DJED at the peg.

Although the 300% reserve ratio was sufficient, COTI has decided to set a minimum of 400% over-collateralization to provide additional safety to DJED holders in the event that ADA’s price decreases by above 66.28%.

Last week, COTI officially confirmed that the long-awaited DJED stablecoin would premiere this week. The team said in the official note that it started a chain index syncing process in the past week, which is expected to complete this new week before the launch of DJED.

COTI also noted that the syncing process was the only technical bottleneck holding the DJED stablecoin from going live.

Furthermore, Bitrue, a Singapore-based crypto exchange, has offered to list DJED on its platform upon launch. Similarly, WingRiders, a decentralized exchange (DEX) on the Cardano network, hinted that it would also be listing the algorithmic stablecoin. Selected partners will incorporate the algorithmic stablecoin and compensate users for providing liquidity using DJED.