Holders of Cardano’s Stablecoin Reserve Coin To Receive Rewards For ADA Deposits

COTI has found a temporary solution to enable SHEN holders to receive delegation rewards when Djed launches.

Holders of Djed’s reserve currency, SHEN, will receive rewards for ADA held in Djed’s smart contract at launch.

COTI, the issuer of Djed, the Cardano stablecoin, revealed this in a Medium blog post shared on Twitter yesterday. According to the article, it is a temporary solution. COTI says a multiple-pool staking solution that will ship with Djed v1.3 will replace it.

We are happy to share that Djed 1.1.1 will include delegation rewards for $SHEN holders starting from day one! In this update we explained Djed’s economics and delegation process.

Read all about it: https://t.co/Q9rNRCrxL4$DJED $COTI @Cardano pic.twitter.com/11LRFldr11

— COTI (@COTInetwork) January 29, 2023

As explained, the solution will delegate the ADA deposited in the Djed smart contract to mint SHEN with a dedicated public staking pool operated by Wave Financial. Notably, the pool will calculate rewards using screenshots taken during each epoch. COTI says the pool will send the rewards to eligible SHEN holders at the end of every four epochs with no action needed on the part of recipients.

As highlighted previously, SHEN holders can track these rewards using an interface created on djed.xyz. Notably, COTI first hinted at implementing staking rewards for SHEN holders with the current Djed version in a blog post on January 13.

Meanwhile, the latest update from COTI has met with mixed responses, as some users have expressed misgivings over the choice of stake pool, noting that Wave already controls 3% of all ADA staked.

Bad stake pool choices

— $HOSKY Token ? (@hoskytoken) January 30, 2023

It is worth noting that in the blog post released yesterday, COTI also revealed other details about the Djed protocol. Highlighting that the protocol will be restricted for large mint and burn transactions, leaving small transactions for exchanges, COTI revealed that users would be able to mint a minimum of $5,000 worth of Djed and burn a minimum of $1,000 worth of the stablecoin. Similarly, users could mint a minimum of 5,000 SHEN and burn a minimum of 2,500 SHEN.

Notably, mint and burn transactions will attract a 1.5% fee in addition to operational fees of 100 ADA.

Recall that, as previously reported, the long-anticipated overcollateralized algorithmic stablecoin is set to launch this week. According to COTI, completing the chain index syncing process is the only thing left.

Proponents expect it to lead to a significant boost in Cardano’s decentralized finance ecosystem.