- This topic has 2 replies, 1 voice, and was last updated 1 week, 5 days ago by DMCarter_.
- Thursday, November 24th, 2022 at 14:53 #410012Heimdell_IrseiParticipant
I did read a few articles and posts, but it still isn’t clear for me who isn’t an expert. I did understand how LUNA worked, but I’m not sure I understand with Shen and ADA.
In which case is Djed, Shen and ADA burned/minted?Thursday, November 24th, 2022 at 14:53 #410013Outrageous_Dark
ADA is never burned or minted via the Djed smart contract.
Now let me get the 🍿 for the rest…Thursday, November 24th, 2022 at 14:53 #410014DMCarter_
You mint DJED and SHEN by sending ADA to the smart contract. You burn DJED and SHEN by sending them back to the contract. ADA is locked and unlocked by minting and burning, respectively.
However, you can only mint DJED and burn SHEN if the reserve ratio is over 400% (that is, the $ amount of ADA in the reserve is 4x more than the DJED that have been minted). If it is less than 400%, minting DJED and burning SHEN is disabled.
Likewise, you can only mint SHEN if it is below 800%. If it goes above, minting SHEN is disabled.
(Note that regardless of what the reserve ratio is, you are *always* able to burn DJED).
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