BitMEX co-founder Arthur Hayes has proposed a Bitcoin-backed dollar-pegged stablecoin NakaDollar (NUSD) which might be backed by $1 Bitcoin and one inverse perpetual swap of BTC towards USD.
In a March 8 weblog publish, Hayes stated the stablecoin wouldn’t depend on USD reserves or centralized entities like banks. As an alternative, the NUSD can be backed by derivatives exchanges itemizing liquid inverse perpetual swaps.
“If this resolution had been embraced by merchants and exchanges, it could result in a big progress in Bitcoin derivatives open curiosity, which might in flip create deep liquidity.”
The mix of brief BTC positions and USD inverse perpetual swaps ensures that regardless of the worth of Bitcoin, the greenback worth of the stablecoin will stay secure.
Hayes suggests DAO
Hayes famous that the NUSD stablecoin design will nonetheless be centralized, solely that the dependency can be on centralized crypto derivatives exchanges as an alternative of hostile fiat banks.
In the meantime, the proposal additionally acknowledged that step one in the direction of creating NakaUSD is establishing a decentralized autonomous group (DAO) with its personal NAKA token. The DAO can be chargeable for the governance and operations of the stablecoin.
How NUSD can be created
Utilizing mathematical calculations, Hayes confirmed how the stablecoin would stay secure regardless of the market’s volatility. Based on him, creating 1 NUSD would contain depositing $1 Bitcoin on a by-product change after which shorting it on an inverse perpetual swap.
Hayes defined that only some people or companies may create and redeem NUSD straight from the DAO. He added that the NAKA governance token and NUSD can be based mostly on the Ethereum blockchain.
Hayes believes his strategy would create dollar-pegged stablecoins that wouldn’t depend on the greenback. It permits the artificial creation of “USD equal, with out ever touching USD held within the fiat banking system or a stablecoin in crypto. It additionally doesn’t encumber extra crypto collateral than it creates in fiat worth, like MakerDAO,” he defined.
If efficiently applied, NUSD will break the reliance of stablecoins on the US greenback and the necessity to discover crypto-friendly banks. This may be a welcome growth for the business, which remains to be smarting from the latest regulatory efforts to curb conventional monetary establishments’ publicity to crypto.
BitMEX corroborated Hayes’ view. The change wrote:
“Utilizing NUSD vs. different stablecoins would take away a central pillar of crypto FUD which permits for extra buying and selling as a result of merchants would now not be frightened that they could get caught with a bunch of stablecoins that they can not redeem for 1:1 of their USD worth.”