BitMEX Founder Suggests Bitcoin-backed Stablecoin

Arthur Hayes, the founder of BitMEX, one of the world's largest crypto derivatives exchanges, has suggested the development of a Bitcoin-backed stablecoin. In a recent newsletter, Hayes proposed the use of a stablecoin, which is pegged to the value of Bitcoin, rather than the US dollar. According to Hayes, the introduction of a Bitcoin-backed stablecoin would offer several advantages over traditional fiat-collateralized stablecoins, such as greater price stability, reduced counterparty risk, and the ability to transact in a decentralized manner.

On the other hand, Hayes also revealed his plans to launch a new stablecoin named "Nubitcoin USD" (NUSD), which will be backed by Bitcoin derivatives, instead of the US dollar. The proposed stablecoin will use inverse perpetual swaps to determine its value, which are readily available on derivatives exchanges. The NUSD stablecoin aims to provide a more secure and decentralized alternative to traditional fiat-backed stablecoins, which are dependent on the solvency of a centralized issuer.

The development of a Bitcoin-backed stablecoin has been met with mixed reactions from the crypto community. While some argue that such an asset could offer greater stability and decentralization, others have raised concerns over the potential market fluctuations of Bitcoin, which could make the stablecoin unstable. Moreover, the concept of a stablecoin that is not backed by a real-world asset, such as the US dollar, may be difficult for users to grasp and trust.

Despite the uncertainties surrounding the use of Bitcoin as a stablecoin collateral, Hayes remains optimistic about the potential of his proposed NUSD stablecoin, which is expected to launch in Q4 2021. The use of Bitcoin derivatives as collateral for stablecoins is not a new concept, as several other platforms, such as Synthetix and Terra, have already implemented similar models. However, the success of these alternative stablecoins remains to be seen, and it will only be a matter of time before the crypto community decides whether Bitcoin-backed stablecoins have a place in the market.