Market Comparisons

nuMoney is decentralized and yield-bearing

Problem:

Existing tokenized, off-chain assets are exposed to third-party, custodial risk—e.g., USDC or WBTC.

Solution:

Decentralized, synthetic assets, which are collateralized 1:1 on-chain via burn & mint tokenomics.

What makes nuMoney, such as $nuBTC, different than existing stablecoins, such as WBTC?

Simply put, $nuBTC is non-custodial and collateralized on-chain. Unlike WBTC, there is no centralized, third-party which holds Bitcoin as collateral in order to issue ERC-20 tokens that represent that Bitcoin. Further, no one has control of the price pegging mechanism. It is synthetic in the sense that it is not literally Bitcoin; instead, it is a representation of Bitcoin on the Ethereum blockchain. In the case of nuMoney, the tokens are minted on Arbitrum.

In the case of WBTC, users must send Bitcoin to Bitgo (the company responsible for WBTC), and then Bitgo issues an ERC-20 token that represents the collateral which the user deposited. In the case of buying WBTC on the open market, the same is true. The WBTC bought from Uniswap represents Bitcoin that Bitgo holds, which another person deposited in the past. $nuBTC radically reinvents the idea of having Bitcoin on a smart contract blockchain. WBTC is a custodial solution, while $nuBTC is non-custodial.

With the recent high profile breakdowns of centralized entities in the crypto space, the risks of a custodial solution are readily apparent. By holding WBTC, users place their trust in Bitgo to manage their holdings properly and for their business to stay afloat. Users trust that Bitgo actually holds the Bitcoin it says it does. These ideas run directly in contrast to the principles of Bitcoin and crypto, in general: we seek to embrace decentralization and remove trust.

numa solves this by removing the third-party custodian and creating a decentralized pegging mechanism via the burn-mint tokenomics and transparent proof-of-reserves. The same comparisons can be made for any of the synthetic nuMoney minted on the numa protocol.