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What Gives Djed Its Strong Stability ?

$Djed’s algorithm is based on a collateral ratio in the range of 400%-800% for $Djed and $Shen. So what will happen if the ratio decreases below 400% or increases above 800%? Read below to find out.

The reserve ratio is under 400%:

In this case, the smart contract will prohibit minting any new $Djed. In addition, $Shen holders won’t be able to burn their $Shen at any time while the reserve ratio is below 400%.

When the reserve ratio is under 400%, only 2 things are allowed:

  1. $Djed holders can burn their $Djed and redeem them for $ADA, which increases the reserve ratio.
  2. $Shen investors can mint additional $Shen in order to increase the reserve ratio.

What happens if the Reserve Ratio is above 800%?

In this case, the smart contract will prohibit minting any new $Shen. Burning $Shen is allowed and will decrease the reserve ratio.

In the coming days, we will publish more information about Djed, including examples of what will happen when the market fluctuates.

Stay COTI!

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