Introducing Shen — Djed’s Reserve Coin
As we continue to progress with Djed’s development, we would like to reveal some information about Shen and its role in the Djed’s stablecoin ecosystem.
The Concept of Reserve Coins
As the digital marketplace continues to grow, there is a constant need for innovative, transparent solutions with economic incentives driven by community participation. We have seen the tremendous value stablecoins provide to the crypto economy by bridging the gap between fiat currencies and crypto. Taking this a step further, we would like to explain the concept of Reserve Coins — a unique mechanism that will maintain the efficient pegging of stablecoins (like USD) while providing an incentive to token holders in the long term. We see this as a necessary tool that will enable the continued growth and development of stablecoins across the digital economy.
What are Reserve Coins?
In simple terms, Reserve Coins are digital tokens that maintain the algorithmic peg of stablecoins. By trading Reserve Coins, users can contribute to the stablecoin mechanism by providing the appropriate liquidity to maintain a sufficient peg ratio. By utilizing a reserve, base fees can be charged, collected, and pooled for transactions facilitated by the underlying stablecoin. Reserve Coin holders then get a share of this transaction pool as an incentive for their participation in maintaining the stablecoin peg ratio.
Before the launch of Djed, we will be implementing a Reserve Coin that will serve this function of maintaining Djed’s peg and liquidity stability. We have provided some details on this below.
The Stablecoin, Djed
Djed is an algorithmic stablecoin that will be launched on the Cardano chain. As the official issuer of Djed, the COTI team is responsible for the successful implementation and launch of the stablecoin across the Cardano ecosystem.
During the initial design phase, the concept of creating a stablecoin that will form the foundation for further development and growth in the Cardano ecosystem was something we explored in detail. “Djed” is an ancient Egyptian symbol that represents stability — it is also known as “The Backbone of Osiris,” which also means strength and stability. Egyptians of ancient times believed that Djed was a combination of four main pillars that formed the earth’s foundation by holding it steady on those corners.
The Reserve Coin, Shen
Continuing with the ancient Egyptian theme, we picked Shen as the name for Djed’s Reserve Coin. The Shen is a symbol of both royalty and symmetry. It has a deep connection with infinity, eternity, protection, and completeness given its circularity.
During our brainstorming sessions, we found this name to convey the characteristics and properties of Djed’s Reserve Coin appropriately.
By buying and selling Shen, users are able to maintain Djed’s USD currency peg while earning a share of transaction fees in the reserve pool. Since the Reserve Coin is a tradable asset, holders can also profit from the short-mid term price fluctuations as an added incentive. We look forward to providing more information as we approach the official launch.
We see the introduction of Reserve Coins as an appropriate initiative that will establish an economic relationship between the community and any associated stablecoin. Keeping to the decentralized nature of crypto, this will also be an added measure to limit the impact of any central controlling entity on the ongoing operation of a stablecoin. We look forward to providing more updates in the near future.
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Technical whitepaper: https://coti.io/files/COTI-technical-whitepaper.pdf