Arthur Hayes Proposes the NakaDollar: A Decentralized Solution to Stablecoin Woes

• Financial

Stablecoins have been a main topic in the cryptocurrency world for the past few years, with many seeking alternatives to the US dollar as the basis for their value. In light of increased scrutiny from US regulators, Arthur Hayes, co-founder and former CEO of BitMEX, has proposed a new stablecoin that would be completely independent from the US dollar.

The Satoshi Nakamoto Dollar (NakaDollar)

The NakaDollar, also referred to as the "To Dollar," would be based on a pool of short Bitcoin positions and inverse standing USD swaps, maintained through mathematical transactions between the new Decentralized Autonomous Organization (DAO), NakaDAO, and authorized participants and exchanges.

Unlike major stablecoins such as Tether and USD Coin, the NakaDollar would not rely on any US reserves, but instead would be based on liquid inverse swaps on derivatives exchanges. Hayes emphasized that the creation of the NakaDollar would be free from any movement of the US dollar that requires banking services.

He also stated that the proposed stablecoin would not be decentralized, with centralized crypto derivatives exchanges being the points of failure. “The points of failure in the NakaDollar solution would be centralized crypto derivatives exchanges.

I excluded decentralized derivative exchanges because they are nowhere near as liquid as their centralized counterparts [...],” he said.

The Move Away from the US Dollar

Hayes's proposal comes at a time when the cryptocurrency industry is looking for alternatives to the US dollar as the basis for stablecoins.

This trend was recently highlighted by Binance CEO Changpeng Zhao, who suggested that the industry would likely move to other fiat currencies, such as the euro, yen, or Singapore dollars. The closure of Silvergate Bank, a major cryptocurrency-focused bank in the US, and the halt of the issuance of Binance USD by the New York Department of Financial Services, have added further pressure to find alternatives to the US dollar.

As regulators continue to tighten their grip on stablecoins, the cryptocurrency community is exploring new ideas for stablecoins independent of the US dollar.