The DJED token, an algorithmic stablecoin on the Cardano network, recorded a significant drop in price on Friday, reaching $0.55.
The graph below shows that after maintaining stability around $0.99 until the previous day, DJED stablecoin price plummets Up to 0.55 USD It will return to its initial value after a few hours.
This act sparked debate in the community. The nature of DJED’s algorithm means that its stability relies on smart contracts and reserves in Cardano’s native cryptocurrency, ADA. This increases risk awareness in the event of sudden market fluctuations. All of this comes to mind when we recall the events of Luna and Terra, where the collapse of algorithmic stablecoins triggered a general bear market.
But project proponents say the system responded as expected. Charles Hoskinson, founder of Cardano, emphasized during the crash on Friday, October 10th, when ADA temporarily lost more than 60% of its value: “DJED maintained parity.”
In Hoskinson’s opinion, while the graph reflects a clear decoupling, “maintaining a fixed exchange rate does not mean maintaining an exact dollar 24 hours a day, but rather quickly recovering parity after a shock.”
Philip DiSarro, CEO of Anastasia Labs, explained that “DJED has never gone down to $0.55,” but rather in his opinion. That was the price on the secondary market.
“Users have always been able to redeem DJED within the protocol for between $0.98 and $1.02,” he said, later adding: External fluctuations do not affect the value guaranteed in the contract.
However, in the market you need to remember: Asset prices are determined by bidders and demanders. This means that a decoupling of the Cardano stablecoin actually existed, just as there was for example the Ethena stablecoin, as reported by CriptoNoticias, even if it was on the secondary market.
