Nuon’s flatcoin maintains its peg through a triple redundancy mechanism, which incentivizes users to mint or burn NUON based on the liquidation ratio.
NUON: A Hedge Against Inflation
Creator of ‘World’s first Flatcoin,’ Nuon, is officially live on Arbitrum, allowing users to mint and buy NUON.
Flatcoins function similarly to stablecoins, but instead of being pegged to the value of an asset, such as the US dollar or gold, they are pegged to an independent measure of the cost of living, and their purchasing power remains constant. The Nuon flat coin hedges against inflation by recalibrating its value each day to reflect the rising cost of living in a way that uses the Truflation Index.
The Nuon protocol incentivizes users to “mint or burn NUON” to maintain its peg through a “triple redundancy mechanism.”
Liquidation ratios drop if the price exceeds the peg, creating an incentive to mint more and sell the tokens. In contrast, when the price of the token dips, the liquidation ratio increases, urging users to increase collateral or burn NUON.
According to Neon, this way, minters would have a reason to risk their collateral and would be closely monitoring their liquidation ratio.
As reported, Nuon differs from Terra USD in that it is only minted from collateral. In theory, that should put a buffer for the arbitrage mechanism to keep the peg.
“Just as decentralized protocols are the answer to risks posed by centralized currencies, and over-collateralization is the answer to maintaining value in the face of market instability, inflation-proof flatcoins are the solution to preserving value over time,” said Nuon CEO Stefan Rust.
Laguna Labs, Nuon’s parent company, launched the testnet for Nuon last October. Further, the NUON-USDT pair is also live on Sushi that will be incentivized with yield.
Nuon (NUON) is trading at $1.4, up 1.81% in 24 hours.
What is Nuon:
Nuon is the first unbiased flatcoin in the world. It is an inflation-resistant coin pegged to an independent cost of living index that protects your purchasing power from the loss of value caused by inflation. As per the protocol, Nuon restores economic sovereignty and powers the people’s inflation-proof economy through a decentralized governance philosophy that is censorship-resistant and people-powered.
Learn more about Nuon:
Source : bsc.news
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