Stablecoins were introduced in the crypto market in 2014. It has been widely reported that BitUSD and NuBits were the first stablecoins issued in the same year. BitUSD and NuBits were collateralized using other cryptocurrencies.
Current stablecoins such as Tether Limited’s United States Dollar Tether (USDT), Circle’s United States Dollar Coin (USDC), and Binance’s United States Dollar (BUSD) are pegged to external references such as fiat currencies like USD, Euro, or the Great Britain Pound (GBP) or commodities such as gold or silver.
JPEX and many exchanges support the buying, selling, and holding of these stablecoins but the market is gradually warming up to a new kind of stablecoin that has been trending across social media.
On Monday, October 24, Laguna Labs, a blockchain development house announced the launch of its test network (testnet) for Nuon. Laguna Labs regard Nuon as the world’s first decentralized and over-collateralized flatcoin. According to Blockworks. co, flatcoins have become a new category of stablecoins that are pegged to the cost of living instead of real-world assets such as fiat currencies.
The idea of ‘Nuon’ and flatcoin, in general, came about due to a consistent rise in the depreciation of several fiat currencies such as the GBP and others in developing economies due to inflation. This has led to a significant demand for USD since it’s backed by a stable economy and the oldest democratic system.
Influential figures such as former Chief Technology Officer (CTO) of Coinbase Balaji S. Srinivasan and Ethereum founder Vitalik Buterin have consistently discussed the need to have another form of backing should the USD fail to maintain its strength over a lengthy time.
The top 10 stablecoins by market capitalization, per data from CoinMarketCap, are backed by the USD, and this signals an over-dollarization of the stablecoins.
According to Laguna Labs, developers and community members can test the Nuon minting mechanism on the protocol’s first testnet. This will help them participate in the growth and development of this emerging project. “Nuon – the world’s first flatcoin – provides a viable alternative to this system and is the first cryptocurrency to solve a massive real-world problem today: inflation. Fully decentralized, over-collateralized, and censorship-resistant, Nuon is the first digital asset aimed at helping people preserve their purchasing power,” CEO of Laguna Labs Stefan Rust said.
The industry is currently dominated by USDT, USDC, BUSD, DAI, Pax Dollar (USDP), TrueUSD (TUSD), USDD, Neutrino USD (USDN), Fei USD (FEI), and TerraClassicUSD (USTC).
Only time will tell if Nuon Flatcoin will become a mainstay in the decentralized finance industry. It will be interesting to also know what kind of stablecoins will follow Flatcoins in the not-too-distant future.