Arthur Hayes, a crypto billionaire and former CEO of BitMex, recently proposed the creation of the Satoshi Nakamoto Dollar (NakaDollar or $NUSD), a Bitcoin-backed stablecoin. The value of the stablecoin would be maintained at $1 through the help of exchanges. The NakaDollar would rely on derivatives exchanges to list liquid inverse perpetual swaps to create a synthetic USD equivalent without using USD held in the fiat banking system. The stablecoin would be based on short BTC positions and USD inverse perpetual swaps, and it would use mathematical transactions between a new decentralized autonomous organization (DAO), NakaDAO, authorized participants (AP), and derivatives exchanges to maintain the 1:1 USD peg. Unlike MakerDAO, the proposed stablecoin would encumber less crypto collateral than it creates in fiat value. The NakaUSD DAO would have a legacy legal existence and come with its governance token, NAKA, which could raise funds and finance developments. NUSD and NAKA would be ERC-20 tokens that live on the Ethereum blockchain. The stablecoin would rely on centralized crypto derivatives exchanges to custody USD for tokenization, which could be seen as a point of failure. Nonetheless, Hayes believes that the industry has the necessary tools and organizations to support $1 trillion or more worth of NakaUSD stablecoin, leading to deep liquidity due to traders and exchanges’ embracing. Hayes’ proposal comes as there is a growing demand for stablecoins not tied to traditional currencies like the US dollar or Euro. Binance, for example, has revealed that it is exploring non-USD stablecoins after the New York Department of Financial Services (DFS) ordered Paxos, a crypto firm that issues Binance’s stablecoin Binance USD (BUSD), to stop minting BUSD tokens. Stablecoins are critical to the crypto ecosystem as they facilitate billions of dollars in trading and lending and offer an alternative to the volatility of popular cryptocurrencies.