The world of cryptocurrencies has been facing increasing scrutiny from regulators, especially stablecoins. These digital assets peg their value to a stable asset, such as the US dollar, and are used widely within the ecosystem. A stablecoin backed by a reserve of USD is the most common type of stablecoin. However, this reliance on the US dollar has drawn the attention of regulators, and as a result, the crypto community is coming up with ideas for stablecoins that are independent of the US dollar.
One such idea has been proposed by Arthur Hayes, co-founder and former CEO of BitMEX. He suggested creating a new stablecoin, the Satoshi Nakamoto Dollar (NakaDollar or NUSD), which would be pegged to the sum of $1 worth of Bitcoin (BTC) and one inverse perpetual swap of BTC against the USD. In his blog post titled “Dust on Crust,” Hayes outlined how this new stablecoin would work.
The proposed stablecoin would not depend on any USD reserves, but solely upon derivatives exchanges that list liquid inverse perpetual swaps. It would be based solely on a set of short BTC positions and USD inverse perpetual swaps, maintaining its 1:1 peg to the US dollar via mathematical transactions between the new decentralized autonomous organization (DAO) – NakaDAO – authorized participants and derivatives exchanges.
Hayes believes that creating the NakaDollar stablecoin will be entirely free from any movements of the US dollar, which require the services of banks. However, he notes that the proposed NUSD stablecoin would not be decentralized. Instead, the points of failure in the NakaDollar solution would be centralized crypto derivatives exchanges. Hayes excluded decentralized derivative exchanges because they are nowhere near as liquid as their centralized counterparts.
Despite the potential drawbacks, this idea has garnered attention thanks to its innovative approach to stablecoins. Moreover, it highlights the desire for a stablecoin that is independent of what many believe to be a volatile US dollar.
This new stablecoin proposal comes amid major shakeups in the cryptocurrency banking sector. Silvergate Bank, a major crypto-focused bank in the United States, announced that it was shutting operations and liquidating business amid the ongoing market downturn. Silvergate’s closure comes quickly after the New York Department of Financial Services abruptly ordered the Paxos Trust Company to stop the issuance of Binance USD, one of the largest US dollar-pegged stablecoins on the market. Paxos held deposits in several banks, including Silvergate and Signature.
Hayes is not alone in thinking of USD-independent stablecoins. In February, Binance CEO Changpeng Zhao suggested that the cryptocurrency industry will likely move to other fiat currencies as a base for stablecoins, including euro, yen, or Singapore dollars. Therefore, it is likely that new stablecoin solutions like NakaDollar will find a place in the digital asset world.
Despite the increasing regulatory scrutiny on stablecoins, it is evident that the crypto community is constantly evolving and developing new ideas to tackle problems. In this case, the problem is the reliance on an unstable currency. However, NakaDollar proposes a solution that could be instrumental in the future of stablecoins while adding new dimensions to the current digital asset ecosystem.
In conclusion, the Satoshi Nakamoto Dollar (NakaDollar) is a proposed new stablecoin that is not reliant on any USD reserves. Instead, it is based solely on liquid inverse perpetual swaps, with a value pegged to the sum of $1 worth of Bitcoin and one inverse perpetual swap of BTC against the USD. This innovative solution highlights the desire for digital assets that are independent of fiat currencies and could herald a new era for stablecoins.
