NakaDollar would rely on exchanges to maintain dollar peg, according to Arthur Hayes
- March 9, 2023
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Hayes said a stablecoin backed by $1 worth of bitcoin and 1x short of a bitcoin perpetual future could provide stability to such a token.
The BitMEX co-founder Arthur Hayes has proposed NakaDollar (NUSD), a stablecoin backed by bitcoin (BTC) and bitcoin derivatives that would theoretically be deeply liquid, attractive to traders, and provide stability if adopted by investors and crypto exchanges.
At the moment, the token is entirely theoretical, but will be supported by member crypto exchanges that list inverse bitcoin perpetual swaps – a derivative product that trades and settles with bitcoin. The token will not be backed by any centralized entity.
“We, the crypto faithful, have the tools and the organisations to support $1 trillion or more worth of NakaUSD outstanding,” Hayes wrote Thursday. This solution would result in a large increase in Bitcoin derivatives open interest, which in turn would increase liquidity for the cryptocurrency.
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Arthur Hayes, co-founder of BitMEX, proposes NakaDollar (NUSD), a stablecoin backed by bitcoins (BTC) and bitcoin derivatives, that should be highly liquid, attractive to traders, and stable if accepted by investors and crypto exchanges.
The token, which is wholly-theoretical as of Thursday, will not rely on any centralized entity, such as a bank, and instead will be supported by member crypto exchanges that list inverse bitcoin perpetual swaps – a derivative product that is traded and settled with the underlying asset.
“We, the crypto faithful, have the tools and the organizations to support $1 trillion or more worth of NakaUSD outstanding,” Hayes wrote Thursday. The adoption of this solution would result in a significant increase in Bitcoin derivatives open interest, which would create significant liquidity for traders and exchanges.
“This would benefit both speculators and hedgers. It would create a positive flywheel which would not only benefit exchange members, but also DeFi users and anyone else who needs a USD token that can be moved 24/7 with a low fee,” Hayes added.
The dollar value of NUSD ultimately remains the same if you hold a perpetual swap that shorts, or bets against, the price of bitcoin along with $1 worth of bitcoin.
According to Hayes, a decentralized autonomous organization (DAO) with its own governance token, NAKA, would seed liquidity and allow holders to vote on operational matters.
Hayes added that both NAKA governance tokens and NUSD are ERC-20 tokens.