By
Mayowa Adebajo
April 12th, 2024
The proposed NUSD stablecoin won’t depend on any USD reserves. Instead, it will solely depend on derivatives exchanges that list liquid inverse perpetual swaps, Hayes said.
Although the US regulators are going after stablecoin issuers, the asset class continues to attract market players from across the crypto landscape. Arthur Hayes, co-founder and former CEO of BitMEX cryptocurrency exchange, recently proposed a new Bitcoin-based stablecoin.
This sounds a bit bizarre considering the volatility of Bitcoin. However, Hayes states that the value of the stablecoin shall always be pegged to $1 worth of BTC. Also, there will be an inverse perpetual swap of Bitcoin against the US Dollar.
In his recent blog post titled “Dust on Crust”, Hayes proposed the idea of the potential Satoshi Nakamoto Dollar (NUSD), or NakaDollar. The NakaDollar will work quite differently from the traditional reserve-based USD-pegged stablecoins like Tether (USDT) and USD Coin (USDC).
The proposed NUSD stablecoin won’t depend on any USD reserves. Instead, it will solely depend on derivatives exchanges that list liquid inverse perpetual swaps, Hayes said.
Meaning the NUSD stablecoin will be based on a set of short BTC positions and USD inverse perpetual swaps. Thus, it will maintain the 1:1 peg via the mathematical transactions between the new decentralized autonomous organization (DAO) – NakaDAO, the authorized participants, and the derivatives exchange.
Stablecoin Is Free from USD Banking Services
BitMEX exchange founder Arthur Hayes stated that the process of NakaDollar stablecoin will be free from other movements of USD, and without needing any services from the banks. With the recent collapse of Silvergate Bank, US regulators have asked banks to stay extra vigilant in dealing with crypto firms.
This will also involve greater scrutiny of stablecoin issuers. But with a unique mechanism, the NakaDollar (NUSD) stablecoin could avoid dealing with the regulators. However, Arthur Hayes has explained that the NUSD stablecoin won’t be decentralized.
He added: “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 […]”.
Amid the growing pressure from regulators, Hayes is not the only one to propose a USD-independent stablecoin. Last month in February, Binance founder Changpeng Zhao stated that the crypto industry will move towards other fiat currencies as the base for stablecoins such as the Yen, Euro, or Singapore Dollars.
Interestingly, the Commodities and Futures Trading Commission (CFTC) recently proposed that stablecoins should be categorized as commodities and fall under their jurisdiction.