Coinbase Asks Devs to Create ‘Flatcoins’ on its Base Network
- Coinbase stated that inflation-pegged “flatcoins” will be one of the four critical innovations that will be built on its recently launched layer 2 network, Base.
- The other three innovations include an on-chain reputation system, an on-chain limit order book (LOB) exchange, and tools that make the DeFi ecosystem safer.
- The exchange also welcomed developers to create “flatcoins,” which “fill the space between fiat pegged coins and volatile crypto assets.”
- Coinbase said that the creation of “flatcoins” is a more important task than ever, taking into account the recent banking crisis that shook the foundation of the US.
The stability of stablecoins, blockchain-based crypto coins pegged in a 1:1 ratio to fiat currencies, was tested in 2022 following the collapse of UST, now known as USTC, a dollar-based stablecoin. In 2023, Circle’s USDC, the second-largest stablecoin by market cap, lost its peg to $1 and caused panic in the industry. As a result, the largest crypto exchange in the United States, Coinbase, has stated that inflation-pegged “flatcoins” will be one of the four critical innovations that will be built on its recently launched layer 2 network, Base.
As per a tweet on the official social media account of the Base Network, the other three crucial innovations include an on-chain reputation system, an on-chain limit order book (LOB) exchange, and tools that make the decentralized finance (DeFi) ecosystem safer. Coinbase outlined the four key innovations in a March 24 post, a month after the launch of Base on February 23.
Base, a layer 2 network secured by Ethereum and powered by fellow layer-2 network Optimism (OP), claims to provide a low cost environment to developers in an attempt to bring the next one billion users to blockchain.
“We are fascinated by the deep thought we’re seeing in decentralized stablecoin design and 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,” said Coinbase.
The exchange further added that it welcomes developers to create “flatcoins,” which are not pegged to the fiat currencies but “rather fill the space between fiat pegged coins and volatile crypto assets.” Coinbase believes that the creation of such coins is a more important task than ever, taking into account the recent banking crisis that shook the foundation of the United States of America.
As reported earlier by Bitnation, the Silicon Valley Bank (SVB) and Signature Bank were closed off by California and New York regulators earlier this month. However, the Federal Deposit Insurance Corporation (FDIC) promised that each and every client of these banks would have access to their money.
On the other hand, Credit Suisse also landed in trouble recently, and as a result, it was acquired by the largest bank in Switzerland, UBS Group, for more than $3 billion. As per the regulators of the region, this was the only way to keep the faith of the investors in the bank.
Interestingly, the idea of Coinbase creating an inflation-linked “flatcoin” has the approval of Ray Dalio, an American billionaire investor and hedge fund manager, who recently stated that fiat is in “jeopardy” and an “inflation-linked coin” can be brought to the masses to ensure that consumers secure their buying power.
“The closest thing to that is an inflation index bond, but if you created a coin that says OK this is buying power that I know I can save in and put my money in over a period of time and transact in anywhere, I think that would be a good coin,” he said.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
