So far, crypto assets have fallen into one of three categories: Bitcoin, Altcoins, and stablecoins. However, there is a new project that supposedly has a new type of crypto. With inflation on everyone’s mind, a team has developed crypto pegged to inflation. Here’s what we know about flatcoins so far.
What are flatcoins?
that the value of each flatcoin will be tied directly with the fiat currency. Except, this new token, the Nuon, isn’t pegged to the dollar. Instead, the Nuon is pegged to the Cost of Living. Developers hope that means the token will maintain its value regardless of inflation. Ethereum creator Vitalik Buterin has also expressed interest in flatcoins.
How are flatcoins different from other crypto tokens?
One way in which flatcoins are different from other types of crypto is that they are not mined. Instead, the company mints them at a predetermined rate and sells them on an open market. There is also no limit on how many can be minted that we know of so far. Bitcoin and altcoins like Ethereum follow trading supply and demand to determine their value. Stablecoins are pegged to the value of fiat currency like the dollar.
That means if the value of the dollar goes down, as it has with inflation, the value of stablecoins goes down as well. It’s crucial to note that flatcoins are currently an experiment. The Nuon might seem like a promising concept, but that’s all it is for now. If the experiment succeeds, flatcoins could help hedge inflation. The idea is the flatcoin will adjust to the cost of living, so one Nuon minted on a given day will always be worth that much. The Nuon does this thanks to developer Laguna Labs’ Truflation algorithm.
Are there any risks?
As of yet, the Nuon is the first flatcoin to get widespread publicity. It’s hard to judge whether or not the project will be a success. The concept is fascinating, but there’s still more to learn about the Truflation algorithm in action. The Nuon has existed for only a few months and, as such, should be viewed skeptically. Although crypto might have broken into mainstream culture, there are still plenty of uncertainties. Crypto scams are still everywhere, and faulty projects like TERRA/LUNA are bound to keep popping up.