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Charles Hoskinson Explains How Djed's USD Peg Is Stronger Than UST's

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Wed, 05/11/2022 - 15:55
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Yuri Molchan
Cardano founder believes that Djed stablecoin cannot lose its USD peg, unlike Terra's UST; here's why
Charles Hoskinson Explains How Djed's USD Peg Is Stronger Than UST's
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Charles Hoskinson, founder of IOHK and Cardano chain, has suggested an explanation to today's collapse of Terra's stablecoin, UST, and its native coin, LUNA.

He has also claimed that Cardano-based stablecoin Djed is well protected from losing its dollar peg.

Meanwhile, LUNA has managed to put up a fight. After falling below $1, the coin surged to the $5 zone but then again went down. At press time, it is trading at $2.14, down 92.4%.

"Massive attack surface for UST"

Hoskinson believes that LUNA's crash was the result of an attack that any DeFi protocol or cryptocurrency may face at any time.

He stated that an attack like that could be pulled off by anyone from hackers to traders. A little exploit is enough to break it and succeed, Hosk tweeted.

Here's "how Djed is protected from something like this"

When asked by a Twitter user how the Djed stablecoin based on Cardano can avoid losing its USD peg, Hoskinson gave a short reply: "Overcollateralization."

Djed is also an algorithmic stablecoin, like UST; however, its algorithm is based on a 400%-800% collateral ratio for Djed and Shen (Djed's reserve coin).

Through this, Djed's collateralization mechanism is decentralized and supported by users who mint Shen and put ADA into the liquidity pool. Thus, the rate of collateralization remains more or less stable.

Related
Terra's Do Kwon Finally Releases Recovery Plan for UST, Community Recalls "Lehman Brothers" Tragedy

ADA will be next LUNA: Max Keiser

Prominent Bitcoin maxi Max Keiser believes that Cardano's ADA may soon follow in the footsteps of LUNA and crash, according to his recent tweet.

At the time that the tweet was published, ADA dropped 11.5%.

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About the author

Yuri is a crypto journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future in many of its aspects. ‘Hodls’ major cryptocurrencies and has written for multiple crypto media outlets. 

His articles have been quoted by such crypto influencers as Tyler Winklevoss, John McAfee, CZ Binance, Max Keiser, etc.

Currently Yuri is a news writer at U.Today and can be contacted at yuri.molchan@u.today.