Coinbase asked developers to work on an inflation-tracking stablecoin that could serve as a hedge against poor monetary policy decisions from central banks.
crypto exchange coinbase Has been working on a few major projects and one of them involves inflation-linked flatcoin on the recently launched Layer-2 network base.
Coinbase sees flatcoin as one of four important innovations in the future of crypto. The other three projects include an on-chain limit order book (LOB) exchange, an on-chain reputation system, and tools to make the DeFi ecosystem secure.
Last month, crypto exchange Coinbase launched the Base Network, a network secured by Ethereum and powered by fellow layer-2 network Optimism. Last week, Coinbase talked about the above four areas where they would like developers to do some work.
Are you a builder passionate about developing an on-chain economy but unsure where to start?
We’ve just published a solicitation for builders: Four areas we’d love to see builders explore on Base (with funding from the Base Ecosystem Fund) 🧵https://t.co/XSSdPnusyc
– Base (@BuildOnBase) March 24, 2023
One of the interesting concepts presented was the development of flatcoins actually tied to inflation. Amid the ongoing banking crisis, Coinbase said it is more important than ever to create an inflation-tracking stablecoin that can serve as a hedge against bad monetary policy decisions from central banks. coinbase report notes,
,[We] Particularly interested in ‘flatcoins’ – stablecoins that track the rate of inflation, allowing users to gain stability in purchasing power, while also relieving the economic uncertainty caused by the legacy financial system Is.
Unlike other stablecoins pegged to a reference asset such as the US dollar, flat coins will be pegged to a “price of life” that tracks the Consumer Price Index and inflation data.
Coinbase said it is also open to other ideas such as fiat-pegged stablecoins and some intermediary between volatile cryptocurrencies. Even veteran investors like Ray Dalio have extended their support for such a stablecoin. Dalio would like to see an “inflation-linked” coin to ensure that consumers can secure their purchasing power.
Other Areas Coinbase Wants Developers to Focus On
Coinbase has also asked developers to focus on developing an on-chain reputation system. The cryptocurrency exchange believes it will play an “important role” in establishing “on-chain trust” among users.
A reputation protocol would have a credit score or a rank-like system that would ensure that certain criteria are met whenever an on-chain identity interacts with a DeFi application. Coinbase noted:
“This can look like FICO or Google Page Rank type scores on ENS names, ratings/reviews for merchants, and other measures that help build trust in the chain.”
Coinbase said that these reputation protocols should not compromise user privacy and autonomy.
The third area of focus for developers will be the on-chain limit order book exchange. It would be an “advanced exchange” because it could conduct normal operations while eliminating counterparty risk through self-custody. Limit orders allow users to buy or sell an asset with no restrictions on the maximum price.
Coinbase believes that by taking it on-chain it will give professional traders and institutions a new trading venue to execute their trading strategies. Coinbase said that “Base’s high throughput opens up significant new opportunities for designing new mechanisms for spot trading, limit orders, options, perpetuals, and more. And, builders can use open source tooling such as OP Stack to create L3s.” That gives them even more speed and control, potentially enabling even deeper liquidity, still accessible via L2.
read more crypto news on Coinspeaker.
Bhushan is passionate about Fintech and has a good grasp of understanding the financial markets. His interest in economics and finance drew his attention to the newly emerging blockchain technology and cryptocurrency markets. He is in the process of continuous learning and keeps motivating himself by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and occasionally explores his culinary skills.
Bitcoin Crypto Related Post