As Cardano’s Vasil Hard fork is getting closer, as well as the deployment of Djed to the mainnet, COTI decided it’s time to share more information about the Djed protocol and more specifically about its fee structure.
As COTI has mentioned before, neither the reserve ratio nor the fees were determined at random. This model was carefully researched, simulated and defined by a group of Mathematicians and Data Scientists in order to find the right percentage that would benefit the Djed protocol, its reserve coin holders, as well as the COTI Treasury users.
The DJED Protocol includes 3 different fees models as described below:
Minting Fees
Burning Fees
Operational Fee
Both $DJED and $SHEN minting and burning fees will be collected in $ADA and allocated to the reserve pool (increasing the reserve ratio). $SHEN holders will be able to redeem their rewards by burning their $SHEN.
Operational fees for minting and burning $DJED are also paid in $ADA, then converted into $COTI periodically, and will then be streamlined into the COTI Treasury.
Now that we understand how the fees work, let’s look at each of the fees:
The team also created a few test scenarios to measure and understand the possible impact of these fees. These numbers are based on the actual volume of $ADA transactions per month, and the estimated share of $DJED transfers.
Let’s see the examples below (assumed a reserve ratio of 400%):
Example 1
If, within the first 3-months, the protocol scales and the reserve contract accumulates $120M worth of $ADA, the protocol would be able to mint around 40M $DJED stablecoins.
Predicting that during the first 3 months, the Djed protocol grows at a conservative rate, with over 3,000 interactions of minting and burning $DJED, then at the end of this period, the contract would already have collected over $1M worth of $ADA from the minting and burning fees distributed to $SHEN holders, while the operational fees collected by COTI in this same timeframe would consequently be around $400K worth of $ADA. These fees would eventually be converted into $COTI and streamlined into the COTI Treasury.
Example 1.1
Now let’s take a look at the first year. If, within the first 12 months the protocol scales and the reserve contract accumulate $600M worth of $ADA, the protocol would be able to mint around 200M $DJED stablecoins.
Predicting that during the first year, the Djed protocol grows at a conservative rate, with over 23K interactions of minting and burning $DJED, then at the end of this period, the contract would already have collected over $8M worth of $ADA from the minting and burning fees distributed to $SHEN holders. The operational fees collected by COTI in this same timeframe would consequently be around $2.7M worth of $ADA. These fees will be converted into $COTI and streamlined into the COTI Treasury.
If, within the first 3-months, the protocol scales and the reserve contract accumulate $240M worth of $ADA, the protocol would be able to mint around 80M $DJED stablecoins.
Predicting that during the first 3 months, the Djed protocol grows with over 7,000 interactions of minting and burning $DJED, then at the end of this period, the contract would already have collected over $2.6M worth of $ADA from the minting and burning fees distributed to $SHEN holders. The operational fees collected by COTI in this same timeframe would consequently be almost $900K worth of $ADA. These fees would ultimately be converted into $COTI and streamlined into the COTI Treasury.
Example 2.1
Now let’s take a look at the next 3 years. If, within every year the protocol scales and the reserve contract accumulate $6B worth of $ADA, the protocol would be able to mint around 2B $DJED stablecoins.
Predicting that during the first 3 years, the Djed protocol grows at a fast rate, with over 2M interactions of minting and burning $DJED, then at the end of this period, the contract would already have collected about $500M worth of $ADA from the minting and burning fees distributed to $SHEN holders. The operational fees collected by COTI in this same timeframe would consequently be around $159M worth of $ADA. These fees would ultimately be converted into $COTI and streamlined into the COTI Treasury.
Djed hasn’t even launched on its Mainnet yet, and COTI already has 35+ partnerships and are still growing! Djed isn’t just a stablecoin built upon Cardano’s chain, it is also designed to become the ultimate coin with which Cardano’s entire network transaction fees will be paid. Its potential is unlimited. COTI will continue to update the community, so stay tuned!
