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- Coinbase is set to introduce an inflation-pegged Stablecoin called flatcoins.
- Developers asked to formulate an on-chain reputation system and an on-chain limit order book [LOB] exchange.
Coinbase Global Inc is seeking to launch an inflation-pegged Stablecoin dubbed “flatcoins” amid the ongoing discussions surrounding the industry’s regulation. Recently, Coinbase launched Base, a developer-friendly Ethereum L2 network as part of its effort to bring the next billion users on-chain. The company seeks to bring three critical innovations to the network, and flatcoins is one of them.
Flatcoins would be backed by the price of living rather than US dollars or fiat. According to reports, this will be done by tracking consumer price index and inflation data. Coinbase believes that this contradicts the flawed monetary policy decisions of the Central Bank.
We] are particularly interested in ‘flatcoins’ — stablecoins that track the rate of inflation, enabling users to have stability in purchasing power while also having resiliency from the economic uncertainty caused by the legacy financial system.
Commenting on this development, Coinbase stated that this is more important than ever, and the decision to tie the asset to the inflation rate is to enable it to retain its value over time. Considering the fact that buyers are always reluctant to keep their savings in local currencies in high-inflation countries or states, this option would be very important in such regions.
Coinbase makes special requests to developers
In addition to Flatcoin, Coinbase has asked developers to come up with an on-chain reputation system and an on-chain limit order book [LOB] exchange. Also, the company has requested that developers formulate tools to make the Defi space more secure. According to Coinbase, the collapse of FTX affected trust in centralized exchanges. However, the rise of Ethereum L2s like Base has made it possible to have the throughput important for a more advanced exchange and also eliminate counterparty risk through self-custody.
We recently launched Base, a secure, low-cost, developer-friendly Ethereum L2. Our vision is to collectively work towards an ambitious goal: bringing the next billion users on-chain. One of our values from the beginning has been “Base is for everyone” and we’re so grateful to see builders around the world starting to make Base their home.
The high throughput of Base makes it possible for new opportunities for “designing new mechanisms for spot trading, limit orders, options, perpetual, and more” to be established.
Stablecoins like Tether and USD Coin are backed by reserves like cash and bonds. TerraUSD is, however, known for trying an alternative approach by using algorithms and traders’ incentives to stabilize its value. Unfortunately, it failed woefully, pulling the entire crypto ecosystem down.
Coinbase also wrote in a blog post that they welcome other forms of flatcoins that do not peg to fiat. Rather, it should fill the space between fiat-pegged coins and volatile crypto assets.
With the recent challenges in our global banking system, we believe these explorations are more important than ever. We’re excited to hear from teams that are exploring their own system of stablecoin(s)/ flatcoin(s), or focusing on ways to increase adoption of already existing systems such as Reflexer/RAI, Spot/Ampleforth, Frax/FPIS, Olympus DAO, etc.
