Following the news at the Cardano Summit 2021 that Cardano will launch their first stablecoin Djed, Coin Rivet discussed this with the head of communications at Occam.fi, Elliot Hill.
Occam.fi is a Cardano-based DeFi launchpad and decentralised exchange.
Djed, which is set to be the only stablecoin on the Cardano network, is based on an algorithmic design that uses smart contracts to maintain price stabilisation.
When asked about the influence Djed could impose on the cryptocurrency industry, Hill explained what the current problems are with stablecoins and how Djed could not only help traders but the industry as a whole.
“There’s one key flaw with both USDC and USDT that no one talks about – transaction fees,” Hill explained.
“To transact stablecoins on Ethereum requires users to hold ETH for gas. For regular traders, gas costs associated with moving in and out of stablecoins are significant, reducing their profit margins substantially.
“Cardano Native Tokens (CNTs) use the same underlying token logic as the Cardano blockchain itself, which enables incredibly inexpensive transaction fees. Through a stablecoin issued on Cardano, say one pegged to the value of the US dollar, traders could save a huge amount on transaction fees compared to those issued on the Ethereum network, which is in turn good for the entire DeFi space on Cardano.”
COTI Group partnership
Djed will be created by the COTI Group, a software development company that’s been a long-time partner of the Cardano ecosystem.
Hill explained why it was important for Cardano to partner up with the COTI Group and why his own organisation, Occam.fi, works closely with COTI.
“COTI is a recipient of the cFund, the official venture capital arm of Cardano engineering group IOHK, and the two projects work very closely together on a number of initiatives,” Hill said.
“This is the same reason that our project, Occam.fi, works closely with COTI, as we are also a cFund supported project.
COTI offers payment gateways to merchants and services, allowing them to accept ADA payments from users who aren’t necessarily crypto-savvy. It’s a great way of broadening the appeal of ADA to a wider audience, and promoting inclusivity and adoption.”
Cardano also partnered with Chainlink to build smart contracts for DeFi applications. Cardano only recently became compatible with smart contracts on September 12 and according to Hill, it’s a win-win move for both blockchains.
“For Cardano, the benefit is access to asset price feeds from the decentralised oracles that Chainlink maintains. This is essential for powering decentralised exchanges and providing up-to-date pricing data for trading pairs,” Hill said.
“For Chainlink, I think they can see the writing on the wall for how big Cardano is set to become.
“If Cardano can rival Ethereum with its promise of low-cost transactions, and provide the infrastructure required to port dApps from Solidity to Plutus, then they could become the leading behemoth of DeFi, and I think Chainlink sees the huge opportunity there.”
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.