Laguna Labs stated in an October 24 statement that the Nuon flatcoin, unlike tokens related to fiat currencies such as the US dollar, is pegged to the cost of living via daily unbiased, real, and on-chain inflation data.
The idea was inspired by discussions and Twitter threads from big players in the space, including Coinbase CEO Brian Armstrong, ex-Coinbase CTO Balaji S. Srinivasan, and Ethereum co-founder Vitalik Buterin, who all call for alternative ways to peg an asset so that its purchasing power remains stable over time.
While the notion of an inflation-linked crypto coin is not new, it has received little attention. Frax Finance created the Frax Price Index (FPI) in April, a consumer price index (CPI) stablecoin that uses Oracle data from ChainLink.
According to the Nuon white paper, the Nuon peg is calculated daily using an independent inflation index oracle and over-collateralization and arbitrage to preserve the peg while countering inflation.
It further asserts that the asset’s over-collateralization will keep it from depreciating. However, it is uncertain how well that hypothesis will hold up if the value of the collateralized assets falls dramatically.
The testnet has few details, but the company claims that anyone may now use it to test the Nuon flatcoin’s minting method.
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