A cadre of seasoned derivatives and FX traders in the US, apparently bored with conventional financial instruments, have decided to create USDi, a stablecoin designed not to be pegged to the dollar, but to constantly adjust itself according to the whims of inflation. Because, as any rational person would argue, what better way to manage your finances than by following inflation’s every unpredictable move?
The mastermind behind this scheme, Michael Ashton, is under the delusion that this newfangled asset will somehow protect your purchasing power by reducing your exposure to inflation risk. One can only hope the rest of the stablecoin market, teeming with competition, doesn’t find its niche too quickly and squash this ambitious project.
Stablecoin That Fights Inflation – or Just Another Wild Idea?
In the wake of the latest cryptocurrency craze, and with the US government apparently taking the “regulate everything” approach to crypto, the stage is set for yet another stablecoin. Enter USDi, this one aiming to “fight” inflation. It’s the perfect addition to the ever-expanding crypto circus.
“The riskless asset doesn’t actually currently exist, and that’s inflation-linked cash. Holding cash is an option on future opportunities, and the cost of that option is inflation. If you create inflation-linked cash, that’s the end of the risk line,” Ashton proclaimed, no doubt with a flourish.
For years, crypto enthusiasts have been using digital coins to hedge against inflation—because, clearly, Bitcoin’s ups and downs were just too stable. Now Ashton has brought us USDi, a stablecoin that’s correlated with the dollar, but not exactly tethered to it. Instead, it dances around the dollar, mirroring the ebbs and flows of US inflation. How charmingly complex!
If that sounds like a convoluted approach, fret not; Ashton has a “simple” plan: USDi will rise in line with the Consumer Price Index (CPI), measuring inflation from a predetermined start date (December 2024, which is just around the corner—practically yesterday). Currently, USDi’s price is $1.00863, which is… interesting.
The idea here, inspired by Treasury Inflation-Protected Securities (TIPS)—a government bond designed to protect against inflation—seems to be that USDi will adjust its value more frequently than CPI data is released. Because, obviously, inflation can’t wait a month for a report.
To keep things running smoothly, Ashton and his team will manage a fund that serves as USDi’s reserves. This will mint and burn tokens daily, in a manner that sounds suspiciously like burning the midnight oil to figure out the daily inflation rate, plus a little transaction fee for good measure. Naturally, only accredited investors can get in on the action initially, but don’t hold your breath for the official release date—they haven’t set one yet.
In the end, USDi is just another quirky entry into the crowded world of stablecoins. Whether it takes off or fizzles out, only time will tell. If Ashton and his co-founders manage to gain a foothold in this already competitive market, they may yet prove that crypto can be practical—or, at the very least, wildly entertaining.
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2025-04-16 00:14