Flatcoin: A project aiming to beat inflation is centered around a cost-of-living-linked stablecoin. Is it the answer to raging inflation? Or could it be another Terra-like circus?
Blockchain development company Laguna Labs have launched a new crypto called Nuon. They say it is the world’s first overcollateralized and decentralized “flatcoin.”
The idea is that Nuon is an inflation-resistant coin, designed to protect purchasing power. So in an ideal word, using a flatcoin, a burger bought today will be the same price as a burger bought five years from now.
Here’s the explainer.
Laguna Labs say, “Unlike most stablecoins that are pinned to depreciating assets like the US dollar, the value of a Nuon flatcoin is based on daily unbiased, authentic, and on-chain inflation data. This means a Nuon’s purchasing power remains constant, or flat, from the moment it is bought to the moment it is sold.”
If you want to have a play, you can test the Nuon minting mechanism. The protocol’s first testnet is here. Developers and enthusiasts can be in early and perhaps be part of the growth (or demise) of the new project.
Stefan Rust is the CEO at Laguna Labs. “For too long, crypto relied on centralized, depreciating assets for its stablecoins. Not only has this presented concentration and counterparty risk, but it is simply not an accurate reflection of people’s lives. Nuon provides a viable alternative to this system and is the first cryptocurrency to solve a massive real-world problem today: inflation. Fully decentralized, over-collateralized, and censorship-resistant, Nuon is the first digital asset aimed at helping people preserve their purchasing power.”
Inflation is going gangbusters all over the world, and fiat is depreciating fast. Laguna Labs say that flatcoins have been the topic of conversation by multiple blockchain founders.
Balaji S. Srinivasan, the ex-CTO of Coinbase, explored the flatcoin concept in a series of Twitter threads. He saw it as a way to avoid US dollar depreciation in stable digital assets.
Ethereum founder Vitalik Buterin said a recent podcast that cryptocurrencies should be ready to de-peg from an overreliance on any one asset. This is to avoid potential concentration, plus avoid regulatory risks. Buterin said that a peg against an unbiased Consumer Price Index could be an alternative option.
Brian Armstrong is the founder of Coinbase. He said, “In the crypto economy, I think we need to have a currency that’s not linked to fiat. We have USD Coin which is backed one to one by the dollar, and then we have decentralized stablecoins like DAI, but it would be nice to have a stablecoin, like a flatcoin, that is linked to purchasing power. Like, every one coin buys you a McDonald’s hamburger today, and hopefully, in five years, one coin will still buy you a McDonald’s hamburger.”
Could this be a new way to beat inflation? Or is it another algorithmic promise that burns to the ground? We will keep you updated.