First Crypto Pegged to the Cost of Living: A Solution or Another Soon-to-Be Failure?

The Flatcoin project is a stablecoin that is linked to the cost of living in order to beat inflation.

First Crypto Pegged to the Cost of Living: A Solution or Another Soon-to-Be Failure?

Nuon is a new cryptocurrency launched by Laguna Labs, a blockchain development company. According to its creators, it is the first over-collateralized and decentralized "Flatcoin" in the world.

In an attempt to protect purchasing power, Nuon is designed to be inflation-resistant. Thus, in an ideal world, a burger purchased today would be the same price as one purchased five years from now if we use a flat coin.

It is stated by Laguna Labs that “Unlike most stablecoins that are pinned to depreciating assets like the US dollar, the value of a Nuon Flatcoin is based on daily unbiased, authentic, and on-chain inflation data. This means a Nuon’s purchasing power remains constant, or flat, from the moment it is bought to the moment it is sold.”

Laguna Labs' CEO, Stefan Rust stated about the project: “For too long, crypto relied on centralized, depreciating assets for its stablecoins. Not only has this presented concentration and counterparty risk, but it is simply not an accurate reflection of people’s lives. Nuon 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.”

Stablecoin vs. Flatcoin

All over the world, inflation is soaring, and fiat currency is depreciating rapidly. Several blockchain founders have expressed interest in Flatcoins, according to Laguna Labs.

In a series of tweets, Balaji S. Srinivasan, the ex-CTO of Coinbase, explored the concept of Flatcoins. In his opinion, it represents a means of avoiding depreciation in stable digital assets due to the US dollar.

Twitter Source

On a recent podcast, Ethereum founder Vitalik Buterin stated that cryptocurrencies should not be dependent on any single asset. The purpose of this is to avoid potential concentrations as well as regulatory risks. A peg against an unbiased Consumer Price Index may be an alternative option, according to Buterin.

Armstrong is the founder and CEO of Coinbase. He said, “In the crypto economy, I think we need to have a currency that’s not linked to fiat. We have USD Coin which is backed one to one by the dollar, and then we have decentralized stablecoins like DAI, but it would be nice to have a stablecoin, like a Flatcoin, that is linked to purchasing power. Like, every one coin buys you a McDonald’s hamburger today, and hopefully, in five years, one coin will still buy you a McDonald’s hamburger.”

Is this a new way to combat inflation? Or could this be another algorithmic promise that ends up in smoke? We will keep you updated.

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