Crypto Billionaire Arthur Hayes Proposes Bitcoin-Based USD Stablecoin – How Would it Work?
Crypto billionaire Arthur Hayes has proposed a Bitcoin-backed stablecoin. The stablecoin's value would need help from exchanges to maintain its $1 peg.
In a recent blog post, the former CEO of BitMex proposed the Satoshi Nakamoto Dollar, NakaDollar ($NUSD), which would rely upon derivatives exchanges that list liquid inverse perpetual swaps. This will allow the creation of a synthetic USD equivalent without using USD held in the fiat banking system.
The proposed stablecoin will be based 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.
"1 NUSD = $1 of Bitcoin + Short 1 Bitcoin / USD Inverse Perpetual Swap," Hayes wrote, noting that this is how the proposed stablecoin will be designed. He said this relationship allows for creating a USD equivalent without encumbering more crypto collateral than it creates in fiat value, unlike MakerDAO.
Notably, the NakaDollar would not be decentralized. The stablecoin is supposed to rely upon centralized crypto derivatives exchanges, which are highly liquid, rather than banks to custody USD for tokenization.
"The points of failure in the NakaDollar solution would be centralised crypto derivatives exchanges. I excluded decentralised derivative exchanges because they are nowhere near as liquid as their centralised counterparts, and their pricing oracles rely upon feeds from centralised spot exchanges."
The NakaUSD DAO will have a legacy legal existence because it will need an account on all the member exchanges, Hayes said. The DAO will also come with its own governance token, NAKA, which can be
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