Arthur Hayes, the co-founder of BitMEX, has proposed a new Bitcoin-based stablecoin: Satoshi Nakamoto Dollar. The goal is to make the stablecoin free from any movement of the US dollar (USD) and thus from banks.
BitMEX’s Arthur Hayes’ proposal: the Bitcoin-based stablecoin
The co-founder of the crypto-exchange BitMEX has indulged himself by proposing a new stablecoin based on Bitcoin, calling it Satoshi Nakamoto Dollar, NakaDollar (NUSD).
In a roundup of tweets reported by BitMEX, the purpose of NakaDollar is outlined.
The ultimate goal? Delivering a solution that allows for the lock-up of 1 USD worth of crypto, in order to obtain 1 USD worth of a stablecoin.
For a sneak 👀of how it works (and @CryptoHayes‘ calculations), read on.
— BitMEX (@BitMEX) March 8, 2023
Basically, Arthur Hayes wanted to explain the purpose of stablecoins, and that is to provide a fiat tokenization service that banks refuse to offer.
The reason is that decentralized stablecoins, would destroy the trillions of dollars that the global banking system earns each year from transaction and foreign exchange fees.
Basically, according to Hayes, stablecoins should bridge the gap between centralized and decentralized finance, in other words, they should eliminate banking services.
Bitcoin-based stablecoin: a preview of how NUSD would work by Arthur Hayes of BitMEX
Continuing with his tweets, BitMEX on behalf of Hayes would describe how NakaDollar (NUSD) would work.
Basically, unlike major USD stablecoins backed by reserves such as Tether (USDT) and USD Coin (USDC), the proposed NakaDollar will not depend on any USD reserves. But rather, NUSD will rely exclusively on derivatives exchanges that quote liquid inverse perpetual swaps.
Thus, it is a matter of having a stablecoin that relies specifically on a combination of BTC short positions and USD inverse perpetual swaps.
NUSD would maintain its 1:1 peg to USD through mathematical transactions between the new decentralized autonomous organization (DAO), NakaDAO, authorized participants (APs), and derivatives exchanges.
A follow-up on the news about Silvergate Bank
Hayes’ new proposal comes in reference to the FUD that has erupted around Silvergate Bank, the crypto-friendly bank that appears to be on the verge of bankruptcy.
And indeed, as of earlier this month, there are many crypto-exchanges that have begun to move away from Silvergate Bank. Crypto.com, Coinbase, Paxos, Galaxy Digital, Gemini, BitStamp, and Circle are well on their way to doing so.
The reason for it all is a precautionary move, even after the bank suffered a 56% collapse in its shares and may be insolvent.
Silvergate Bank has been in the news through its parent company, Silvergate Capital Corporation, for delaying the filing of its annual 10-K report with the US Securities and Exchange Commission.
In this regard, Hayes’ proposed stablecoin would become free not only from USD but also from services offered by banks.