Djed is coming on Milkomeda for Cardano

We are thrilled to announce an upcoming deployment of the Djed stablecoin protocol on Milkomeda-C1, the EVM-compatible side-chain of Cardano. This will be the third deployment, following SigmaUSD on Ergo (in Q1 2021) and COTI’s Djed on Cardano (in Q1 2023). It will also mark the first deployment of Djed implemented in the Solidity smart contract programming language, paving the way for Djed’s expansion to various other EVM-compatible blockchains.

Djed’s Collaborative Development

This implementation is the outcome of a productive collaboration between Vacuum Labs, Bloxico, AOSSIE, dcSpark and Milkomeda. It can be traced back to the original joint work between Ergo, Emurgo and Input Output in 2020. Two engineers from Emurgo who worked on the inception stage of the Djed stablecoin protocol co-founded dcSpark and built Milkomeda-C1. dcSpark subsequently commenced this Djed implementation.

Milkomeda and the initial development of this implementation of Djed received numerous grants from Project Catalyst, Cardano’s community-driven decentralized innovation fund. The Djed Alliance is deeply grateful for the support of the Cardano community to this implementation and we hope that this deployment will boost Cardano’s thriving ecosystem on Milkomeda.

The Importance of Stablecoins

Stablecoins are digital assets that have mechanisms to maintain a low deviation of their price from a target price. Stability is a key characteristic for an asset to be a currency and be able to properly perform the various functions of money, including serving as a unit of account, store of value and means of exchange. For this reason, stablecoins have emerged as a critical component for decentralized finance.

The Djed Stablecoin Protocol

Djed stablecoins differ from other stablecoins in several ways. For instance, unlike fiat-backed stablecoins, Djed stablecoins are crypto-backed and thus are not susceptible to risks associated with entities managing fiat currency reserves, such as insolvency of the banks where the fiat reserves are kept or potential losses associated with investment of the reserves. And, in contrast to other algorithmic stablecoin protocols, the Djed protocol has been formally verified. This means that mathematical theorems have been proven, clearly showing under which assumptions the stablecoins remain pegged, and the proofs have been checked using the interactive theorem prover Isabelle and the bounded model checker Lustre. A version of the technical white paper was thoroughly peer-reviewed and accepted in the 5th IEEE International Conference on Blockchain and Cryptocurrency in 2023. Beyond theory, the Djed stablecoin protocol has been empirically battle-tested on Ergo since Q1 2021, where SigmaUSD has endured several market crashes without ever losing its stability.

Djed’s Version O (a.k.a. Osiris)

The deployment on Milkomeda-C1 is based on version O (Osiris) of the protocol, which builds upon the experience gathered with the successful previous deployment of SigmaUSD on Ergo. The main distinguishing feature of Osiris is that it allows reservecoins and stablecoins to be simultaneously sold back to the Djed contract independently of the reserve ratio, provided that the sale does not reduce the reserve ratio. This improves the experience for reservecoin holders, who do not need to fear being unable to sell back their reservecoins when the reserve ratio is below the minimum threshold anymore. Another distinction is a transaction limit, to reduce reserve drainage in case of oracle delays and the wholesale discount effect. To further prevent oracle delays, this deployment relies on an oracle managed by Milkomeda’s nodes, which checks prices every 10 seconds and posts a new price to the blockchain if the new price is different from the previously posted price by more than 1%.

Furthermore, this is the first deployment of Djed that is fully autonomous. By virtue of being immutable and zero-governance, no one is able to change the rules or even the parameters of the deployment. To ensure that the immutable code behaves according to the protocol’s specification, the code underwent numerous refactorings, extensive testing, testnet deployments and a thorough smart contract audit by Peckshield.

Conclusion

The Djed Alliance is proud of our collective achievement of this significant milestone in our mission to bring reliable stability to the cryptocurrency industry. We wish success to this deployment on Milkomeda-C1 and we look forward to continuing our support for the Djed stablecoin protocol and its implementations on multiple blockchains.

Summary

• Djed stablecoin protocol is set to launch on Milkomeda C1, the EVM-compatible sidechain of Cardano, marking the third deployment of the stablecoin protocol and the first one in Solidity.
• The Djed stablecoin protocol has been formally verified and battle-tested since Q1 2021.
• The upcoming deployment implements version O (Osiris) of the Protocol, which improves the experience of reservecoin holders.
• The upcoming deployment is fully autonomous and immutable: no one operates it and no one can change the rules or parameters of the deployment.

Stay tuned to the Djed Alliance’s twitter account for further news and, for now, try a testnet deployment on https://milkomeda-c1-testnet.djed.one/ .