Bitmex Co-Founder Calls For A Bitcoin-Based Stablecoin

Former CEO and co-founder of BitMex crypto exchange Arthur Hayes proposed a new stablecoin design with a value pegged to Bitcoin. He called it Satoshi Nakamoto Dollar (NUSD) or NakaDollar.

The crypto community continues supporting stablecoins despite several misgivings among global regulators and central banks. However, the vast majority of stablecoins are pegged to fiat currencies.

This new stablecoin aims to stand independently and buck any movement of the U.S. dollar. This proposal comes amid increased stablecoin scrutiny among United States regulators.

Newly Proposed Bitcoin Stablecoin To Buck US Dollar Movements

According to Hayes’ proposal, the new stablecoin will be pegged to bitcoin instead of USD. Its value will peg to $1 worth of Bitcoin and one inverse perpetual swap of Bitcoin against the US dollar. In a blog post titled “Dust on Crust,” Hayes explained why he proposed the Satoshi Nakamoto Dollar (NUSD).

In contrast with several reserved-backed USD-pegged stablecoins like USDC and USDT, the Hayes-proposed NakaDolla will not depend on USD reserves. It will rely solely upon derivatives exchanges with liquid inverse perpetual swaps on their platforms.

Hayes mentioned that the stablecoin would base directly on short BTC positions and USD inverse perpetual swaps. This would allow it to maintain a 1:1 peg to the USD through a mathematical transaction between participants and derivatives exchanges authorized by the new decentralized autonomous organization, NakaDAO.

Also, creating the new NakaDollar stablecoin would be independent of any USD movements which require bank services. In other words, the new stablecoins would share no connection to fiat banks.

In Hayes’s words, using the NUSD would eliminate the need for bank transfer of USD to the crypto seller while acquiring cryptocurrencies. It would completely detach stablecoins from dollar price fluctuations. He also noted that the proposed NUSD stablecoin would not be decentralized. 

Crypto Industry Seeks Alternatives To US Dollar-Pegged Stablecoins

This development comes amid several depressing news and the market downturn in the crypto space. One is the liquidity crunch of US-based crypto bank, Silvergate, which recently shut down and plans to liquidate its business. The shutdown came after the New York Department of Financial Services ordered Paxos Trust to quit Binance USD issuance.

Binance USD (BUSD) is one the largest USD-pegged stablecoins on the crypto market. Paxos held deposits in several banks, including Silvergate and Signature. Now that the USD-pegged stablecoins are seemingly under regulators’ target, the crypto community has begun considering other options.

One of the top shots in the industry had also supported gold as an alternative to USD when pegging stablecoins. Previously, Binance CEO Changpeng Zhao (CZ) said the crypto industry would likely begin using other fiat currencies, including euro, yen, and Singapore dollars, as stablecoins pegs.

The Binance chief said this during a February 14 Twitter Spaces event while answering questions about the crypto industry using gold as a stablecoin peg instead of the US dollar. CZ concurred that using gold makes sense. However, most people’s spending is still in fiat currencies.

Due to this, many people calculate their investment returns in dollars, making USD-backed stablecoins a vital part of the crypto industry.

Featured image from Pexels and chart from Tradingview.com