What are flat coins and are they better inflation protection?
What are flat coins and are they better inflation protection?
- The Nuon-Flatcoin was bound to the value of $ 1 on July 1, 2022-on Monday worth 2.04
- "We try to combine the best of both worlds by taking the user experience from the StableCoin market and the inflation protection of Bitcoin," said the founder of Laguna Labs
When the inflation rates rise to the moon, so -called "flatcoins" come on the journey.
flatcoins are a new category of stable coins that are linked to the cost of living and not to real assets such as Fiat currencies. The Blockchain Development House Laguna Labs is launching one of the first digital assets in this new category. In the event of success, your flatcoin could be a legitimate cryptocurrency for inflation protection, since the global number of inflation remain high.
Your nuon flatcoin is bound to the value of $ 1 on July 1, 2022. Once a day, the value of the flatcoin is newly calibrated to take into account the US dollar inflation. A nuon-worth $ 1 four months ago-was rated $ 2.04 on Monday.
In order to create the daily inflation adjustment, Laguna Labs developed the truffle algorithm, the price movements are pursued and created a daily inflation estimate, which is largely Fed estimates match.
In view of the inflation at a maximum of several decades, stable coins such as the USDC from Circle and the USDT of Tether in relation to the goods costs will lose value. A flatcoin like Nuon retains its value in times of inflation. Coinbase-CEO Brian Armstrong From Ethereum Vitalik Buterin Cryptos pronounced that are tied to the goods costs rather than Fiat currencies.a flatcoin, as mentioned from @vitalikbuterin @brian_armstrong @Balajis and in recent times many, even tradfi people, a coin linked to an independent inflation index, which means that it is not influenced by the USD inflation or a centralized monetary policy. A cup of coffee costs 1 nuon forever! pic.twitter.com/e5urecbosq
- nuon finance (@nuonfinance) 21. October 2022
Like most large stable coins, Nuon is intentionally oversized - and will automatically liquidate user loans if the value of your safety falls under a certain level. The hurdle that Laguna Labs faces is the maintenance of a constantly increasing bond, such as US inflation has been taking place every year since 1954.
The Nuon algorithm tinkers on the Coin’s Collateralization Ratio, so that Trader will keep nuon on his course. The collapsed terra stable used a similar system, although the coin was not fully secured. As long as investors are ready to shape and burn Nuon, the value of the flat coins should remain about the same - despite inflation.
Stefan Rust, CEO of the Nuon developer Laguna Lags, said he does not see that Nuon competes with companies like Circle or Tether, but hope that the flatcoin Bitcoin can join investors.
"Bitcoin is an amazing protection against inflation, but it has a certain amount of volatility," said Rust. "We are trying to combine the best of both worlds by taking the user experience from the StableCoin market and the inflation protection of Bitcoin."
A tradfi analogue for flatcoins is Inflation-bound bonds Adjust inflation and growth in popularity after the big recession. Like inflation -bound bonds, flat coins become a less desirable asset if inflation cools down.
"If there is deflation, you are under water if you like, but your purchasing power always stays the same," said Rust.
nuon now runs on a test network with the intention of going live in the first quarter of 2023. The flatcoin will go live on decentralized crypto bonds before applying for approval for the listing of central stock exchanges.
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The contribution What are flatcoins and are they better inflation protection? is not a financial advice.