Why did Celo introduce an algorithmic stablecoin pegged to the Brazilian currency?

 Why did Celo introduce an algorithmic stablecoin pegged to the Brazilian currency?

Celo Real, a Brazilian Real-pegged algorithmic stablecoin, was just introduced by open-source blockchain Celo (cREAL).

Celo

The cREAL stablecoin will be available on three Brazilian cryptocurrency exchanges: FlowBTC, NovaDAX, and Ripio. Furthermore, the digital asset will be supported by the wallets Bitfy and Coins. Instead than being backed by fiat money, algorithmic stablecoins are meant to automatically maintain their peg to a currency.

While Pix, Brazil's popular public instant payment system, already exists, CLabs partner Markus Franke told The Block that the cREAL now allows users to use complementing DeFi applications (CLabs is a "service organization" devoted on developing and marketing Celo products). Celo's DeFi applications, for example, might help provide new possibilities for developing a credit history, he said.

"Because Celo is totally open-source, there will be projects that construct a bridge from Pix to Celo transactions," Franke explained. "Because there will be people building lending and borrowing applications, I believe this is really, really good."

According to Franke, Brazil's high smartphone penetration and large "gig economy" make it an appealing market for launching a stablecoin in local currency focused on mobile payments.

While most early stablecoins were fixed to the US dollar to enable individuals escape the volatility of their own currencies, Franke claims that those pegged to local currencies are also growing.

"This is changing now," Franke adds of stablecoins, which are normally tethered to the dollar. "Now we're seeing real end-users enter the picture, using crypto not only for trading but also for transactions, saving, lending and borrowing, and payments and remittances." And now it matters because people in these various countries may have to pay merchants in local currencies or pay taxes in local currencies."

According to Celo, the cREAL stablecoin can be utilized on its blockchain for both centralized and decentralized finance (DeFi) applications, such as Moola Market for collateralized loans.

Brazilians can also put cREAL into their Bitfy wallet to pay for bills, meals, or retailers on the network of Cielo, the top Brazilian payment processor.

(This content is provided solely for informational reasons. It is not meant to be used or supplied as legal, tax, investment, financial, or other advice.)