I thought I would do a post tonight to help explain some things regarding DJED. There are going to be two areas of investment opportunities coming up within the next few weeks. If you have some ADA and would like to benefit then you could either buy SHEN or DJED and stake them earning APR. SHEN is expected to have multi levels of APR on offer which could see a 25% plus figure available. This is far better return for your ADA and why I will be purchasing a few more. 4 ADA (0.2629 currently) = 1 DJED currently as DJED will equal $1 and SHEN I would presume is 4 x this value so we should first wait and see but this will lock up plenty of ADA and who knows maybe a liquidity issue. That could happen and not saying it will.
DJED launches later this month which is the stablecoin for Cardano managed by COTI. What is important to know is COTI is categorising it as an over collateralized stablecoin even though it is decentralised and algorithmic. The collateral by having another token holding the 4-8 x value which controls whether the mint or burn happens depending on the value staked.
These are the safety controls in place which cannot be interfered with by any individual as the stablecoin is governed by the smart contract. The reason for categorizing it like this is other stables don't have a similar system in place and this is a more accurate description. DJED is using the best of both worlds except they have anywhere between 4 and 8 x the value locked up in SHEN which is the reserve token guaranteeing the liquidity of DJED along with the stability. This will hold the peg under any conditions as minting and burning happen only when the smart contract allows this to happen.
The key number is 4 x or 400% as below this figure there are only 2 actions that can take place. DJED holders can burn their DJED redeeming for ADA and SHEN holders can mint new SHEN increasing the reserve which will allow for more DJED to be minted as this will now climb over 400%.
When 800% is reached no new SHEN can be minted and will only allow for burning of SHEN redeeming for ADA.
This is a golden opportunity to get into SHEN early as when it is 8 x there is no more SHEN minted. There are fees from the Treasury along with a few other bonus options to earn with staking. I don't have a fortune in ADA and see this as a way of making the investment work growing the stake into something worthwhile. I do expect a mad rush on this as DJED will be very popular, but SHEN is where the bigger profit lies.
Minting SHEN you need ADA in order to do this. This will be available shortly as SHEN needs to mint in order to create DJED first.