BitMEX Co-Founder Proposes Bitcoin-Based Stablecoin

As the United States regulators increasingly scrutinize stablecoins, Arthur Hayes, co-founder and former CEO of BitMEX cryptocurrency exchange, has proposed creating a new stablecoin, NakaDollar, with a value pegged to $1 worth of Bitcoin and one inverse perpetual swap of BTC against USD. Unlike major reserve-backed USD stablecoins like Tether and USD Coin, NakaDollar will not depend on any USD reserves, offering a potential solution to USD dependency.

NakaDollar: A USD-Independent Stablecoin

Hayes outlined the idea of the potential Satoshi Nakamoto Dollar (NUSD), or NakaDollar, in a blog post titled “Dust on Crust” on March 8. The proposed stablecoin is planned to be based specifically 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. Hayes said that the proposed NakaDollar will not be really decentralized, adding that the points of failure in the NakaDollar solution would be centralized crypto derivatives exchanges.

Potential Advantages of NakaDollar

The process of creating the NakaDollar stablecoin will be entirely free from any movements of USD, which require the services of banks, Hayes stated. This approach could offer a solution to the ongoing pressure from regulators as seen in the sudden shutdown of Paxos Trust, one of the largest USD stablecoins on the market, by the New York Department of Financial Services. Hayes is not alone in considering USD-independent stablecoins as Binance CEO Changpeng Zhao suggested that the cryptocurrency industry would likely move to other fiat currencies as a base for stablecoins, including euro, yen, or Singapore dollars.

Conclusion:

Hayes’ proposal for a Bitcoin-based stablecoin offers a potential solution to the current USD dependency in the stablecoin market, with the added benefit of being free from movements of USD. Although the proposed NakaDollar is not fully decentralized, it still offers a new approach that could be considered by the cryptocurrency industry as regulators increase their scrutiny on stablecoins.

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