> For the complete documentation index, see [llms.txt](https://faq.coticommunity.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://faq.coticommunity.com/djed-and-shen/djed/overcollateralization.md). # Overcollateralization DJED uses exogenous collateral (ADA). This means that the collateral that backs DJED, ADA, has its own utility (its primary use-case is separate from the Djed stablecoin project), and is completely independent of the Djed protocol. ADA is used to buy DJED's reserve coin SHEN. DJED is overcollateralized by 400% to 800%, this means that it has 4 to 8 times more underlying value in the form of SHEN (that is purchased with ADA) backing it than the total sum of DJED minted. Algorithmic stablecoins on the other hand are usually only partially collateralized or undercollateralized. The stability of DJED is based on this overcollateralization and not on trust in a governance token. {% embed url="" %} {% hint style="info" %} For more deatiled information please go to and . {% endhint %} --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://faq.coticommunity.com/djed-and-shen/djed/overcollateralization.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.