A blockchain company has launched a token with the ability to track living expenses
The idea of launching a digital currency with the ability to fluctuate with the inflation rate is not a new idea; However, blockchain technology company Laguna Labs has just launched a testnet for its developing Flatcoin, which is essentially a stablecoin that, instead of being tied to a fiat currency, has its value tied to fees. Life is connected.
To Report Cointelegraph, Laguna Labs announced on October 24 (November 2) that the price of the Nuon flatcoin, unlike tokens that peg their value to fiat currencies such as the US dollar, will be determined using unbiased, reliable and on-chain data ( On-chain) is determined based on inflation and living expenses.
The company says the idea for Flatcoin Noon was inspired by discussions and tweets from major players in the field, such as Coinbase CEO Brian Armstrong, former Coinbase CTO Balaji Srinivasan, and Ethereum founder Vitalik Buterin, all of whom called for an alternative way to back an asset. are to maintain their purchasing power over time.
Although the idea of creating an inflation-based token is not new, almost no such scheme has been fully tested until now.
In April, Frax Finance launched a consumer price index (CPI) tracking stablecoin called “Forex Price Index” (FPI), which uses data from ChinaLink’s Oracle.
Forex was offered at a price of around $1.02. The value of this stablecoin reached its all-time high of $1.18 on July 19; But since then, the price has decreased by 10.6% and is in the range of $1.05.
The price of Volt Protocol Token (VALT) is also determined based on consumer price index data. However, it is difficult to check its price history; Because platforms such as CoinMarketCap and CoinGecko have not recorded its price history, and it is not listed on major exchanges such as Binance and Coinbase.
Inflation Hedging Coin (IHC) was also launched in October 2021 (Mehr 1400). This token uses a token-burning mechanism where the token-burning rate of assets is determined based on data from the annual US inflation rate and the monthly CPI rate. In theory, this mechanism will increase the inflation value of the hedging coin over time.
However, according to CoinGecko data, the price of IHC at the time of writing is around $0.00009529, and its value has decreased by 96.4% since last year.
According to Nunn’s whitepaper, this token uses an independent inflation index oracle to calculate daily price quotas and over-collateralization and arbitrage to maintain its price link when inflation moves.
Noon claims that overcollateralization prevents the token’s value from drifting away from its backing. However, it remains unclear how well this mechanism will work when the value of collateralized assets falls significantly.
Little is known about the Noon test network; However, the company has announced that users can now use the testnet to try out the Flatcoin Noon token multiplication mechanism.
Based on the data calculator Inflation in the United States, the inflation rate in this country has increased significantly since the beginning of the Corona epidemic around the world and has reached from 1.4% to about 8.2% in 2022.
In addition, the continued increase in the price of goods and services has also given a significant blow to the purchasing power of the dollar. However, digital currencies, especially stablecoins, have always been an important tool for citizens of countries suffering from high inflation and economic problems.