Coinbase CEO outlines concept of ‘flatcoins’

Flatcoins are a type of stablecoins that are not tied to a specific asset or fiat currency, but move in line with inflation dynamics. told Coinbase CEO Brian Armstrong.

«This is something new on the horizon. Two teams are working on ‘flatcoins’. We are not building anything in this space yet, but we are interested», — said the CEO of the trading platform.

Armstrong argues that flatcoins offer a better store of value, delivering higher returns on investment. A flatcoin could be backed by a basket of assets or use an algorithmic approach.

The concept of this new type of stablecoins was first mentioned by Coinbase’s Chief Technology Officer Balaji Srinivasan in 2021.

Two kinds of stablecoins.

Fiatcoins are pegged to an external fiat currency like USD, directly or indirectly.

Flatcoins are newer. If fiat itself starts to inflate, it isn’t really “stable”. So a flatcoin optimizes instead for price flatness vs an on-chain basket of goods.

— Balaji (@balajis) June 7, 2021

«If fiat itself begins to inflate, it isn’t really “stable”. Instead, a flatcoin is optimised to ensure price flatness relative to a basket of goods in the network», — explained him.

Armstrong himself included the concept of list of 10 noteworthy ideas in the crypto industry.

According to him, something like this is needed because people are reluctant to spend bitcoins, and fiat-backed stablecoins “suffer from inflation and confiscation — just like national currencies”.

According to the World Bank, between 2021 and 2022 global inflation rose by 4.8%. This means the purchasing power of currencies declined.

There are currently a number of projects developing “flatcoins”. Nuon aspires to be the first true flatcoin; it is an inflation-resistant token built on Ethereum.

Additionally, there is International Stable Currency (ISC) built on Solana. The coin is pegged to a diversified basket of assets, including Treasuries and gold. The project Collypto tracks indices for real estate and commodities.

In March, Coinbase named priority directions for improving the Base ecosystem, among which flatcoins were mentioned.