How does the price of cUSDC remain stable?
The cUSDC project is a stablecoin, meaning that its value is designed to remain stable over time.
This is achieved through a process known as algorithmic central bank money (ACBM). ACBM works by using an algorithm to adjust the supply of cUSDC tokens in response to changes in demand. This ensures that the price of cUSDC remains stable, regardless of market conditions.
The algorithm works by monitoring the demand for cUSDC tokens and adjusting the supply accordingly. If demand increases, the algorithm will increase the supply of cUSDC tokens to meet it. Conversely, if demand decreases, the algorithm will decrease the supply of cUSDC tokens to match it.
This helps ensure that there is always enough cUSDC tokens available to meet market demand and keep its price stable. In addition, cUSDC also uses a reserve system to back its value and ensure stability. The reserve system consists of US dollars held in a secure account and used to back each cUSDC token issued.
This helps ensure that each token has real-world value and can be exchanged for US dollars at any time if needed. Overall, these mechanisms help ensure that the price of cUSDC remains stable over time regardless of market conditions or fluctuations in demand.
