Basically what he is proposing is to make a synthetic US dollar pretty much. Basically back in the old days of Bitmex which was inverse perps, you would open up a short 1x leverage using your BTC collateral and it means you pretty much sold Bitcoin and you were hedged.
This might work but it would be very very difficult to implement. There is lots that can go wrong. In my opinion it’s better than what Luna did with its algo stablecoins which we all knew wouldn’t survive during a bear market.
Topic: Crypto Billionaire Arthur Hayes Proposes Bitcoin-Based USD Stablecoin (Read 55 times)
March 09, 2023, 09:41:48 PM
March 09, 2023, 05:51:44 PM
Quote
Crypto billionaire Arthur Hayes has proposed a Bitcoin-backed stablecoin. The stablecoin's value would need help from exchanges to maintain its $1 peg.
In a recent blog post, the former CEO of BitMex proposed the Satoshi Nakamoto Dollar, NakaDollar ($NUSD), which would rely upon derivatives exchanges that list liquid inverse perpetual swaps. This will allow the creation of a synthetic USD equivalent without using USD held in the fiat banking system.
The proposed stablecoin will be based on a set of short BTC positions and USD inverse perpetual swaps, maintaining its 1:1 peg to USD via mathematical transactions between the new decentralized autonomous organization (DAO), NakaDAO, authorized participants (AP), and derivatives exchanges.
"1 NUSD = $1 of Bitcoin + Short 1 Bitcoin / USD Inverse Perpetual Swap," Hayes wrote, noting that this is how the proposed stablecoin will be designed. He said this relationship allows for creating a USD equivalent without encumbering more crypto collateral than it creates in fiat value, unlike MakerDAO.
Notably, the NakaDollar would not be decentralized. The stablecoin is supposed to rely upon centralized crypto derivatives exchanges, which are highly liquid, rather than banks to custody USD for tokenization.
The NakaUSD DAO will have a legacy legal existence because it will need an account on all the member exchanges, Hayes said. The DAO will also come with its own governance token, NAKA, which can be used to raise funds and finance developments. Both NUSD and NAKA would be ERC-20 tokens that live on the Ethereum blockchain.
The crypto billionaire said the industry currently has the tools and the organizations needed to support $1 trillion or more worth of NakaUSD stablecoin. “If this solution were embraced by traders and exchanges, it would lead to a large growth in Bitcoin derivatives open interest, which would, in turn, create deep liquidity."
Search For Non-USD Stablecoin Finds Momentum
Hayes’ proposal comes amid a renewed call for stablecoins that are not tied to traditional currencies like the US dollar or euro.
Binance, for one, has revealed that it is looking beyond dollar-based stablecoins after the New York Department of Financial Services (DFS) ordered Paxos, a crypto firm that issues Binance’s stablecoin Binance USD (BUSD), to stop minting BUSD tokens.
Patrick Hillmann, Binance’s chief strategy officer, said in late February that multiple private and public entities had shown interest in collaborating with the exchange on launching another stablecoin, one that might not be dollar-based.
Stablecoins are an essential part of the crypto ecosystem as they facilitate billions of dollars in trading and lending and provide an alternative to the high volatility of popular cryptocurrencies.
https://cryptonews.com/news/crypto-billionaire-arthur-hayes-proposes-bitcoin-based-usd-stablecoin-how-would-it-work.htm
In a recent blog post, the former CEO of BitMex proposed the Satoshi Nakamoto Dollar, NakaDollar ($NUSD), which would rely upon derivatives exchanges that list liquid inverse perpetual swaps. This will allow the creation of a synthetic USD equivalent without using USD held in the fiat banking system.
The proposed stablecoin will be based on a set of short BTC positions and USD inverse perpetual swaps, maintaining its 1:1 peg to USD via mathematical transactions between the new decentralized autonomous organization (DAO), NakaDAO, authorized participants (AP), and derivatives exchanges.
"1 NUSD = $1 of Bitcoin + Short 1 Bitcoin / USD Inverse Perpetual Swap," Hayes wrote, noting that this is how the proposed stablecoin will be designed. He said this relationship allows for creating a USD equivalent without encumbering more crypto collateral than it creates in fiat value, unlike MakerDAO.
Notably, the NakaDollar would not be decentralized. The stablecoin is supposed to rely upon centralized crypto derivatives exchanges, which are highly liquid, rather than banks to custody USD for tokenization.
Quote
"The points of failure in the NakaDollar solution would be centralised crypto derivatives exchanges. I excluded decentralised derivative exchanges because they are nowhere near as liquid as their centralised counterparts, and their pricing oracles rely upon feeds from centralised spot exchanges."
The NakaUSD DAO will have a legacy legal existence because it will need an account on all the member exchanges, Hayes said. The DAO will also come with its own governance token, NAKA, which can be used to raise funds and finance developments. Both NUSD and NAKA would be ERC-20 tokens that live on the Ethereum blockchain.
The crypto billionaire said the industry currently has the tools and the organizations needed to support $1 trillion or more worth of NakaUSD stablecoin. “If this solution were embraced by traders and exchanges, it would lead to a large growth in Bitcoin derivatives open interest, which would, in turn, create deep liquidity."
Search For Non-USD Stablecoin Finds Momentum
Hayes’ proposal comes amid a renewed call for stablecoins that are not tied to traditional currencies like the US dollar or euro.
Binance, for one, has revealed that it is looking beyond dollar-based stablecoins after the New York Department of Financial Services (DFS) ordered Paxos, a crypto firm that issues Binance’s stablecoin Binance USD (BUSD), to stop minting BUSD tokens.
Patrick Hillmann, Binance’s chief strategy officer, said in late February that multiple private and public entities had shown interest in collaborating with the exchange on launching another stablecoin, one that might not be dollar-based.
Stablecoins are an essential part of the crypto ecosystem as they facilitate billions of dollars in trading and lending and provide an alternative to the high volatility of popular cryptocurrencies.
https://cryptonews.com/news/crypto-billionaire-arthur-hayes-proposes-bitcoin-based-usd-stablecoin-how-would-it-work.htm
....
Quote
The proposed stablecoin will be based on a set of short BTC positions and USD inverse perpetual swaps, maintaining its 1:1 peg to USD via mathematical transactions between the new decentralized autonomous organization (DAO), NakaDAO, authorized participants (AP), and derivatives exchanges.
Hmm. Is there anyone who is excited over the prospects of this becoming widely adopted?
Given past bitcoin's history of price volatility. Is it surprising to select it as a candidate for a stablecoin. And if BTC were pegged to an asset. Would the US dollar be the #1 choice for many? While it is true that many residents abroad favor dollar pegged stablecoins as an asset to store their wealth. As it allows them to escape inflation associated with native currencies. The US dollar does appear to be losing favor as an international reserve currency.
Perhaps it would be better to peg the value to a commodity? Such as firewood?
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