Coinbase CEO Brian Armstrong has expressed his belief that "flatcoins" are the next evolution of stablecoins.
Coinbase CEO Believes "Flatcoins" Are the Future of Stablecoins
Coinbase CEO Brian Armstrong has expressed his belief that "flatcoins" are the next evolution of stablecoins. Flatcoins, a term coined by ex-Coinbase CTO Balaji Srinivasan in 2021, are designed to track inflation instead of being pegged to a specific currency or asset.
During a recent interview, Armstrong mentioned that there are teams working on developing flatcoins, although Coinbase itself is not currently involved in that space. In a Twitter thread last August, Armstrong listed flatcoins as one of the top 10 crypto ideas that excited him the most.
Flatcoins, as opposed to regular stablecoins, follow inflation to retain the purchase power of the holders' investment. Flatcoins enable improved value retention in a situation of escalating global inflation by following a basket of assets to collateralize the coin.
Several projects are already building flatcoins utilizing different approaches. For example, Nuon is an inflation-proof coin built on Ethereum, while Spot is pegged to the cost of living in the United States.
Flatcoins seek to maintain purchasing power while rewarding users for taking risks. They do, however, have hurdles, such as the requirement to keep adequate assets to cover potential losses if investors withdraw cash or assets decline. Furthermore, the legislative environment for flatcoins is unclear with some governments exploring limits on non-fiat-backed stablecoins.
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