Cardano has been an Ethereum competitor for what feels like forever. Yet the gap between the two ecosystems remains enormous. While Ethereum remains the leader in decentralized finance, Cardano is struggling to get in the game. The recent Vasil update and arrival of a new stablecoin could have jump-started DeFi on Cardano. Unfortunately, the team in charge of the stablecoin has just stopped its development.
Is it Cardano season yet?
Smart contracts first arrived on Cardano in September 2021, but DeFi has failed to take off. The first applications took months to deploy, and the network is still very slow. The recent Vasil update came a few days after the Ethereum Merge and was meant to speed up the network but went almost unnoticed.
The Ardana team took on the task of building a native stablecoin to help establish DeFi on the network. The stablecoin, dUSD, has entered the audit phase, but the stableswap platform for the token, Danaswap, is still under construction.
Unfortunately, the Ardana team has fallen prey to the bear market and must discontinue development. The team cites insufficient reserves and uncertain timetables. The Ardana team explained that it was difficult to build on Cardano because a significant amount of development time had to be focused on tooling, security, and infrastructure. Since Ardana made their code open-source, it is still possible another team picks up where they left off.
Orbis, a project wanting to build a layer 2 using zk-rollup on Cardano and close to the Ardana team, has halted development for similar reasons.
These two projects halting because of network issues and funding proves that Cardano remains a difficult network to build on. Despite the optimism of the Cardano Foundation, their ecosystem seems to be at an impasse. Fortunately, the Cardano community is committed.
SundaeSwap, one of the main DEXs on the Cardano network, offered to buy the Ardana team’s tools to inject some needed capital. SundaeSwap is currently the third largest project on Cardano in terms of TVL, and the addition of a stable swap and a stablecoin would give it a central position in the ecosystem. It is unclear whether Ardana will take up SundaeSwap on this proposal.
Fortunately, other teams are actively building the foundations of this still fragile ecosystem. The dcSpark company, which launched the EVM Milkomeda rollup in spring, announced that it is working on a zk-rollup.
Ardana was just one team working on a Cardano-native stablecoin. Coti is still actively working on their stablecoin, DJED. DJED is a dollar-backed stablecoin that actually has its own DAG. DJED is an algorithmic and collateralized stablecoin with ADA and SHEN. The collateralization rate of DJED and SHEN must be between 400% and 800%. Thus each time a DJED is minted, there are between 3 and 7 dollars of ADA locked in the reserve pool. The SHEN will be used to maintain the peg. The SHEN reserve’s ADAs can be used to keep the DJED reserve ratio during high volatility. DJED trading fees go into the SHEN reserve pool and rewards SHEN holders. There is, thus, a whole mechanism that, in fact, allows these two tokens to balance each other.
Once again, Charles Hoskinson’s Cardon suffers serious setbacks. However, there is still hope. The dcSpark and Coti teams may provide the necessary tools for liquidity management on the network.
This article was written by Patrice Vibert. Follow him on Twitter @TendancesCrypto.