In a time of record inflation in the U.S., the idea of "flat" has its appeal. According to Web3 luminaries Balaji Srinivasan, Coinbase Global Inc (NASDAQ:COIN) CEO Brian Armstrong and Ethereum (CRYPTO: ETH) co-founder Vitalik Buterin, the flatcoin might just be the solution for steep inflation.
What Happened: Stefan Rust, CEO of Laguna Labs, met the challenge with the launch of Nuon, the world’s first inflation-resistant flatcoin.
See Also: Stefan Rust is speaking regarding the future of digital ownership at Benzinga’s Future of Crypto summit on Dec. 7.
In early June, Srinivasan, former chief technology officer of Coinbase and former general partner at Andreessen Horowitz (a16z), tweeted about the nature and utility of a flatcoin versus fiat-based stablecoins: “Two kinds of stablecoins. Fiat coins are pegged to an external fiat currency like USD, directly or indirectly.
Flatcoins are newer. If fiat itself starts to inflate, it isn’t really 'stable'. So a flatcoin optimizes instead for price flatness vs. an on-chain basket of goods.”
In a recent video interview, Buterin supported the need for flatcoins. When asked if crypto could create a better form of money, Buterin responded: “Absolutely. It's still at least prepared to de-peg from any kind of overreliance on one particular kind of asset. USDC is a great product but at the same time, there is a systemic risk if everyone is using USDC.
"Or what happens if something happens to the United States or at least its dollar at some point, down the line … I do think that there is a lot of value in trying to figure out whether or not the crypto space can have some standard of stability that's more connected to something like some kind of CPI than it is to a specific fiat currency.”
Enter the Flatcoin
Laguna Labs launched its testnet for Nuon, calling it “the world’s first decentralized and overcollateralized flatcoin.” The value of flatcoin is pegged to the cost of living, not just a single fiat currency or other assets.
Flatcoins garnered attention because of the record-breaking inflation and depreciating value of the U.S. dollar. Laguna Labs claimed the value of a Nuon flatcoin was based on daily unbiased, authentic and on-chain inflation data. This meant Nuon’s purchasing power remained “flat,” or constant.
“For too long has 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," said Laguna Labs CEO Rust.
"Nuon, the world’s first flatcoin 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.”
The Final Word
It’s easy to see why an inflation-proof coin would attract the attention of buyers, but it remains to be seen whether it will work as intended. Cryptocurrency as a phenomenon has always been driven by bull-market wishes for exponential gains — will retail investors buy with the hope of simply maintaining their current positions?
It’s possible that a flatcoin approach could gird people against inflation, and that would be an extraordinarily helpful use case for a stablecoin. But what will it mean to have the same dollar invested a year ago, followed by a year of unchecked inflation and a downward-trending global economy? It’s good to see Laguna innovating and putting the concept to the test, though the future remains to be seen.
This story is part of the Benzinga Future of Crypto 2022 summit-related content. Rust will be speaking about the intersection of art and technology at the first Future of Crypto live summit on Dec. 7 in New York City at Pier Sixty.
Some of the best minds and most important projects in Web3 will be in attendance, including Rarible, Cosmos, Yuga Labs, Solana, Laguna Labs and Algorand. Keynote speakers include Jordan Belfort, Kevin O’Leary and Anthony Scaramucci.
Photo: eko pramono via Pixabay.
