Former BitMEX CEO Arthur Hayes has proposed a stablecoin that aims to be completely independent of the U.S. dollar.
The proposed Satoshi Nakamoto Dollar, or NakaDollar (NUSD), would be backed by $1 worth of bitcoin and bitcoin derivatives, which would hypothetically provide stability to the token if accepted and used by crypto exchanges.
The Satoshi Nakamoto Dollar
As regulators in the United States intensely scrutinize stablecoins, members of the crypto community continue sharing ideas for stablecoins that are fully free from any moves of the U.S. dollar.
In a March 8 blog post titled “Dust on Crust”, BitMEX co-founder Arthur Hayes suggested creating a stablecoin dubbed NakaDollar, whose value is pegged to the sum of $1 worth of bitcoin and 1x short of a bitcoin perpetual future.
Stablecoins are crypto assets designed to maintain a fairly stable value, typically in reference to a generally involatile asset such as a fiat currency. Unlike traditional fiat-backed stablecoins such as USDT and USDC, NUSD will not rely on any USD reserves or centralized entities like banks, but completely upon crypto exchanges that list inverse bitcoin perpetual swaps.
“If this solution were embraced by traders and exchanges, it would lead to a large growth in Bitcoin derivatives open interest, which would in turn create deep liquidity,” Hayes wrote Wednesday.
He also suggested creating a decentralized autonomous organization (DAO) with its own governance token, NAKA, to allow holders to vote on operational matters. The NakaDollar would maintain its 1:1 peg with the dollar through mathematical transactions between NakaDAO, exchanges, and authorized participants.
Notably, both NUSD and NAKA governance tokens would be ERC-20 tokens built on top of the Ethereum blockchain.
Hayes further noted that the NakaDollar would not be decentralized. “The points of failure in the NakaDollar solution would be centralized crypto derivatives exchanges. I excluded decentralized derivative exchanges because they are nowhere near as liquid as their centralized counterparts, and their pricing oracles rely upon feeds from centralized spot exchanges,” he added.
The former CEO’s pitch comes as crypto-friendly bank Silvergate liquidates its assets and winds down operations amid the worsening macroeconomic picture. Silvergate’s woes came shortly after the New York Department of Financial Services suddenly ordered Paxos to halt the issuance of Binance USD stablecoin (BUSD).
