Former CEO and co-founder of BitMex crypto exchange Arthur Hayes suggested a new stablecoin design with value tied to bitcoin. He called it Satoshi Nakamoto Dollar (NUSD) or NakaDollar.
The crypto community continues to support stablecoins despite multiple concerns from global regulators and central banks. However, the vast majority of stablecoins are pegged to fiat currencies.
This new stablecoin aims to stand independently and resist any movement of the US dollar. This proposal comes amid increased scrutiny of stablecoins by US regulators.
Newly Proposed Bitcoin Stablecoin To Counter US Dollar Moves
According to Hayes’ proposal, the new stablecoin will be pegged to Bitcoin instead of USD. Its value will be pegged to $1 worth of bitcoin and an inverse perpetual swap of bitcoin to the US dollar. In a blog post Titled “Dust on Crust,” Hayes explained why he proposed the Satoshi Nakamoto Dollar (NUSD).
Unlike several reserved USD-pegged stablecoins like USDC and USDT, Hayes’ proposed NakaDolla will not depend on USD reserves. It will rely solely on derivatives exchanges with liquid inverse perpetual swaps on their platforms.
Hayes mentioned that the stablecoin would be based directly on BTC short positions and USD inverse perpetual swaps. This would allow it to maintain a 1:1 peg to the USD through a mathematical transaction between participants and derivatives exchanges authorized by the new decentralized autonomous organization NakaDAO.
Also, the creation of the new stablecoin NakaDollar would be independent of USD movements that require banking services. In other words, the new stablecoins would have no connection to fiat banks.
In Hayes’ words, using the NUSD would eliminate the need for a bank transfer of USD to the crypto seller when purchasing cryptocurrencies. It would completely decouple stablecoins from dollar price fluctuations. He also noted that the proposed NUSD stablecoin would not be decentralized.
The crypto industry is looking for alternatives to USD-pegged stablecoins
This development comes amid several depressing news stories and the market downturn in the crypto space. One of them is the liquidity crisis of US-based crypto bank Silvergate, which recently switch off and plans to liquidate his business. The closure came after the New York Treasury Department ordered Paxos Trust to stop issuing Binance USD.
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Binance USD (BUSD) is one of the largest USD-pegged stablecoins in the crypto market. Paxos held deposits with several banks including Silvergate and Signature. Now, with USD-pegged stablecoins seemingly under regulators’ target, the crypto community has started to consider other options.
One of the industry’s top shots had also backed gold as an alternative to the USD in pegging stablecoins. Earlier, Binance CEO Changpeng Zhao (CZ) said that the crypto industry would likely start using other fiat currencies, including the euro, yen, and Singapore dollar, as stablecoin pegs.
That’s what the Binance boss said during a February 14 Twitter Spaces Event while answering questions about the crypto industry using gold as a stablecoin peg instead of the US dollar. CZ agreed that using gold makes sense. However, most people’s spending is still done in fiat currencies.
Because of this, many people calculate their investment returns in dollars, making USD-backed stablecoins an important part of the crypto industry.
Featured image from Pexels and chart from Tradingview.com
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