Arthur Hayes, the co-founder of cryptocurrency derivative trading platform BitMEX, has proposed a new type of stablecoin, NakaDollar (NUSD), which would be backed by bitcoin (BTC) and bitcoin derivatives.
Hayes noted in a blog post that, unlike a majority of already existing stablecoins, including Tether USD (USDT), USD Coin (USDC), and Binance USD (BUSD), NUSD would be created without the services of the traditional banking system.
Creating NakaDollar: DAO First
The BitMEX co-founder explained that the first step in developing the NakaDollar would be to create a crypto-native decentralized autonomous organization (DAO).
The DAO would issue its governance token NAKA, which would be distributed in exchange for the provision of liquidity across the decentralized finance (DeFi) ecosystem. The NAKA and NUSD tokens would be ERC-20 tokens, living on the Ethereum network.
Rather than relying on fiat entities for tokenization, NUSD would be supported by member centralized crypto derivative exchanges that list liquid inverse perpetual swaps. Holders of the NAKA tokens would vote on operational matters and the distribution of net interest Marvin among member exchanges.
“We, the crypto faithful, have the tools and the organizations needed to support $1 trillion or more worth of NakaUSD outstanding. 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,” Hayes said.
Eliminating the Need for Centralized Fiat Entities
Furthermore, Hayes cited the strained relationship between the crypto ecosystem and traditional banks, especially in the face of Silvergate’s collapse.
CryptoPotato reported earlier that the crypto-friendly bank went into voluntary liquidation due to the effects of bankrupt crypto exchange FTX’s collapse. The event could mean trouble for existing stablecoins, which are deeply tied to the fiat banking system.
The BitMEX co-founder believes that the relationship between NUSD, BTC, and the inverse perpetual swaps would allow the crypto community to create a USD equivalent without touching the USD held in banks or stablecoins in the ecosystem.
“This would help both speculators and hedgers. It would become a positive flywheel that would not only benefit the member exchanges, but also DeFi users and anyone else who needs a USD token that can be moved 24/7 with a low fee,” he added.