Nuon - Stablecoin Summit Protocol Highlight
Dec 14, 2022
Greetings Nuon & Shade community,
In this highlight series, Shade Protocol will cover our partner projects for the upcoming Cosmos stablecoin summit in December - giving viewers the opportunity to learn about these protocols in advance.
Protocols and Speakers at the Cosmos Stablecoin Summit.
The Cosmos Stablecoin Summit features the following protocols and speakers: Eventbrite Registration - Set Event Reminder
Nuon - Inflation Flatcoin
Current daily inflation levels integrated into Nuon are measured by Truflation, an independent inflation index oracle. Truflation calculates the Nuon peg daily and shares it with the Nuon protocol, which uses over-collateralization and arbitrage to maintain the peg while offsetting inflation for Nuon flatcoin holders.
Nuon can be minted on the Nuon Protocol by depositing cryptocurrency collateral — accepted tokens include ETH, BTC, AVAX, BUSD, USDC and USDT. Nuon loans feature double-audited, open-source smart contracts, insured deposits and a zero percent interest rate for borrowers’ peace of mind. Additionally, minted Nuon is always over-collateralized to ensure the peg is stable.
Nuon can also be purchased directly from exchanges. This offers anybody a quick way to hedge against inflation without having to go through the process of collateralization. This avenue is best suited to retail users, leaving the minting of fresh Nuon primarily to market makers and arbitrageurs.
The Problem With Centralized Stablecoins
The biggest stablecoins today — USDT, USDC and Binance USD (BUSD) — are centralized, meaning they are wholly controlled by a central entity. In a sense, these companies function like independent banks that mint their own currencies. People who hold these centralized stablecoins bear risks. [credit]
Firstly, there is counterparty risk. To what extent can these companies be trusted to uphold their obligations? What if they go bankrupt? In addition, all of the top three stablecoins are collateralized with fiat, which brings its own risks. Tether, for example, came under public scrutiny in 2021 for refusing to disclose where they stored their collateral. [credit]
Secondly, there is the risk of censorship. Top stablecoin issuers have disproportionate power when it comes to legitimizing blockchain forks, giving the commanding organization the ability to strongly influence the market values of other cryptocurrencies. [credit]
Thirdly, there is increasing governmental pressure to regulate stablecoins in the near future, which means that centralized stablecoins may soon be forced to implement KYC procedures to continue operating, according to recommendations in a November 2021 report released by the White House and the US Department of the Treasury. [credit]
Furthermore, there is increasing competition from Centralized Bank Digital Currencies (CBDCs), which nations around the world are looking to roll out in the coming years (China, for example, has already done so). CBDCs pose direct competition to centralized, fiat-backed stablecoins.As a response to these drawbacks, 2017 saw the rise of decentralized stablecoins. These protocols utilize DeFi lending platforms to mint stablecoins via smart contracts when market makers deposit collateral. As the smart contracts run completely autonomously — i.e., without a centralized controlling organization — these stablecoins can mostly avoid the aforementioned risks of centralization. [credit]
Nuon flatcoins offer all the benefits of stablecoins, like being a safe haven from volatile crypto markets while allowing users to leverage inflation protection and limit their risk of liquidation through deposit insurance.
Here is a list of some of the key features of Nuon:
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