BitMEX Founder Proposes Bitcoin-Backed Stablecoin NUSD, Collateralized with BTC and Futures Contracts
Arthur Hayes, founder of the crypto derivatives exchange BitMEX, has proposed a new stablecoin called NakaDollar (NUSD), backed by Bitcoin and short BTC futures contracts to manage risk.
BitMEX Founder Proposes Bitcoin-Backed Stablecoin NUSD, Collateralized with BTC and Futures Contracts
In a recent blog post, Arthur Hayes shared his vision for a stablecoin designed to reduce dependence on USD.
Hayes, a prominent figure in the crypto space before 2021, was well-known as the founder and CEO of BitMEX, one of the largest crypto derivatives exchanges before Binance Futures and FTX gained prominence. However, in late 2020, Hayes faced charges from the U.S. for violating banking regulations and facilitating money laundering. In early 2021, he surrendered to authorities, paid a $10 million fine, and served six months of house arrest. After his release in early 2023, Hayes revealed he had left the U.S. and had no plans to return.
Hayes' proposal involves creating a stablecoin named NakaDollar (NUSD) that will not rely on any bank or institution tied to USD. Instead, the stablecoin will be collateralized by Bitcoin and BTC short futures contracts provided by crypto exchanges.
.@silvergatebank just bit the dust. #Stablecoins are under siege. "Dust on Crust" is an essay discussing how we create a #crypto native solution to our current $USD problems.https://t.co/4AwFhymwsE pic.twitter.com/AK1V0jhLZI
— Arthur Hayes (@CryptoHayes) March 8, 2023
See Also: Arthur Crypto
Although NUSD will be pegged to USD, each NUSD will be backed by 1 BTC and one short BTC futures contract. According to Hayes, this mechanism will safeguard the stablecoin's value against Bitcoin volatility. Any increase in Bitcoin’s price will be counterbalanced by the short BTC futures contract, and vice versa. This setup offers a useful tool for both investors and those seeking to hedge their investments.
In essence, NUSD aims to be a stablecoin independent of USD and traditional banks, instead leveraging Bitcoin and derivatives markets.
Hayes also proposed the creation of a DAO with its own governance token named NAKA to oversee NUSD’s operations. Both NUSD and NAKA will be ERC-20 tokens issued on Ethereum.
This proposal indicates a well-prepared plan, and BitMEX may soon launch this stablecoin in the near future.
Despite the collapse of LUNA-UST in May 2022, the crypto industry remains committed to developing the "perfect" stablecoin, with ongoing proposals like Aave’s GHO, Curve’s crvUSD, and Cardano’s Djed.
