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:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

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.

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.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens