What Are Flatcoins and Are They a Better Inflation Hedge?

Laguna Labs is launching the first cost-of-living-based ‘flatcoin’ as inflation remains stubbornly high

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • The NUON flatcoin is pegged to the value of $1 on July 1, 2022 — theoretically worth $1.04 as of Monday
  • “We’re trying to blend the best of both worlds where we take the user experience from the stablecoin market and the inflation hedge from bitcoin,” Laguna Labs’ founder said

As inflation rates go to the moon, so-called “flatcoins” are coming along for the ride.

Flatcoins are a new category of stablecoins that are pegged to the cost of living instead of real-world assets such as fiat currencies. Blockchain development house Laguna Labs is launching one of the first digital assets in this new category. If successful, their flatcoin could represent a legitimate inflation-hedging cryptocurrency as global inflation figures remain hot.

Their nuon flatcoin — which is now only on testnet — is designed to be pegged to the value of what $1 was on July 1, 2022. Once a day, the flatcoin’s value recalibrates to account for US dollar inflation. One nuon — worth $1 four months ago — would be theoretically valued at about $1.04 on Monday, if it were trading. 

To produce its daily inflation adjustment, Nuon developed the Truflation algorithm, which tracks price movement across ten million items and produces a daily inflation estimate that mostly tracks with Fed estimates.

With inflation at multiple-decade highs, dollar-pegged stablecoins such as Circle’s USDC and Tether’s USDT depreciate in value relative to the cost of goods over time. A flatcoin such as nuon holds its value through periods of inflation. Coinbase CEO Brian Armstrong and Ethereum co-founder Vitalik Buterin have both advocated for cryptos pegged to the cost of goods rather than fiat currencies.

Loading Tweet..

Like most major stablecoins, nuon is intentionally overcollateralized — and will automatically liquidate user loans if the value of their collateral falls below a given level. The hurdle Nuon faces is maintaining an ever-increasing peg, as US inflation has occurred every year since 1954. 

Nuon’s algorithm tinkers with the coin’s collateralization ratio so traders will keep the token at its peg. The collapsed Terra stablecoin used a similar system, though the coin was not fully collateralized. As long as investors are willing to mint and burn nuon, the flatcoin’s value ought to remain roughly flat — despite inflation. 

Stefan Rust, CEO of nuon developer Laguna Labs, said he doesn’t see the token competing with the likes of Circle or Tether but hopes the flatcoin can join bitcoin as investors’ go-to inflation hedge.

“Bitcoin is an amazing hedge against inflation, but it has got a level of volatility to it,” Rust said. “We’re trying to blend the best of both worlds where we take the user experience from the stablecoin market and the inflation hedge from bitcoin.”

A TradFi analogue for flatcoins is inflation-linked bonds, which adjust interest rates based on inflation and grew in popularity following the Great Recession. Like inflation-linked bonds, flatcoins become a less desirable asset when inflation cools down. 

“If deflation happens, you are underwater, if you will, but your purchasing power always stays the same,” Rust said.

Nuon is expected to going live in the first quarter of 2023. The flatcoin will go live on decentralized crypto exchanges before seeking approval to be listed on centralized exchanges.

Correction, Oct. 25, 8:22 am ET: The estimated value of one nuon flatcoin, if it was live on mainnet and available for trading today, is about $1.04 not $2.04, as originally stated.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates (1).jpg

Research

Jupiter has emerged as the undisputed liquidity backbone of Solana, commanding over 90% of spot DEX aggregation and 80% of perp trading volume. But behind the numbers lies a far more ambitious play: a cross-chain, vertically integrated super-app spanning swaps, synthetics, NFTs, memecoins, and launchpads. This report explores Jupiter’s rapid rise, the monetization upgrades reshaping its revenue profile, and the risks that could unwind its dominance, from token dilution to competition. With annualized revenues nearing $300M, the upside is undeniable, if it can navigate the turbulence.

article-image

Mining outfits have gone bust in the wake of prior halvings. Not so this time around.

article-image

Zora’s announcement that its token is for “fun only” sparked a debate about the need for such tokens

article-image

In recent weeks, Helium has hit new all-time highs while passing major protocol milestones

article-image

Financial advisers in a January survey said equity ETFs were their top choice for gaining crypto exposure in 2025

article-image

“Why put a target out there that’s really speculative, not knowing exactly where this environment is going to go?” CarMax CEO Bill Nash said

article-image

While the head of Base may support legal sex work, Coinbase policies prohibit said workers from using its exchange.