How Celo is Trying to Bank the Unbanked
General - August 25, 2020
One of the important protocols being build in the crypto stablecoin space is Celo. In this video, we break down what the Celo network is and how it can help the unbanked.
The Celo network is an example of how blockchain and DeFi is helping those who can’t afford a bank account. The network brings in developers building financial applications. Applications like lending, and investing, invoicing and more will be built in this network. These applications will be accessible through a smart phone with an internet connection.
Cryptocurrencies and digital assets come to provide stability. Celo has created a stablecoin CUSD, which is pegged to the US dollar. What this means is the price of a CUSD is $1. This is done so that the users will have a stable currency to transact with.
In order for Celo to verify transactions they have validators who use private nodes. The network has 100 validators. These validators are used a cryptocurrency to incentivize them to continue working. This cryptocurrency is called the CGLD or Celo gold. The price of CGLD is not stable, it fluctuates in value.
The CUSD is backed by Bitcoin, Ether ( the native token of Ethereum ), CGLD and DAI.
If the demand for CUSD rises, the Celo network can mint more. This creates more supply. They way they print it is by buying CGLD from the validators to back the CUSD. The balancing of supply and demand allows the Celo network to have a stable stablecoin, and a valuable cryptocurrency.
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