Arthur Hayes, the founder of BitMEX, has proposed a new stablecoin mechanism in his Medium blog post. Hayes stated that using Bitcoin as a financial asset and easily swapping between it and a fiat currency like USD is not easy, as exchanges require a bank account for the USD leg of a transaction.
Hence, he proposed a new stablecoin called NUSD, which would be worth $1 of Bitcoin + short 1 Bitcoin/USD inverse perpetual swap. To create 1 NUSD, traders need to deposit 1 BTC on a derivatives exchange and short 1 XBTUSD swap.
Hayes argued in a Medium blog post that traditional exchanges require users to have a bank account to trade between Bitcoin and fiat currency. It is a significant hurdle for crypto companies that aim to create a parallel financial system that does not rely on banks.
Stablecoins like Tether (USDT) have emerged as an alternative to traditional exchanges, allowing traders to move between fiat and cryptocurrency without the need for a bank account.
NUSD: A New Stablecoin Proposal Leveraging Bitcoin’s Potential
The proposed NUSD stablecoin aims to bridge the gap between centralized and decentralized finance, allowing users to swap between Bitcoin and fiat currency without the need for a bank account.
Hayes believes that stablecoins are not meant to serve as a decentralized store of value but rather to provide a fiat tokenization service that banks refuse to offer.
Hayes argues that overcollateralized stablecoins like MakerDAO/DAI and algorithmic stablecoins like TerraUSD are fundamentally unnecessary. Instead, stablecoins like NUSD are intended to solve a real pain point in the crypto capital markets, allowing traders to quickly move between fiat and crypto.
The problem with current stablecoins, according to Hayes, is not centralization but rather the lack of reputable, established banking institutions launching their own stablecoins.
If commercial banks like JP Morgan were to launch their own stablecoins, they could put existing stablecoins like USDT, USDC, and BUSD out of business immediately.
While the proposed NUSD stablecoin is still in the conceptual stage, Hayes’ idea has garnered significant attention from the crypto community.
If successfully implemented, NUSD could provide a more efficient way for traders to swap between Bitcoin and fiat currency without relying on traditional exchanges or banks.
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