NOM as Perfect Collateral

Properties of NOM as Perfect Collateral

  • Malleable: Ability to mint any denomination of a stabilized virtual currency

  • Scarce: Predefined release into circulating supply and burning of supply

  • Transferable: Transactions on the Onomy Network finalize near instantaneously

  • Durable: Secure decentralized system capable of self-stabilizing from attacks

  • Verifiable: Anonymous accounts are publicly verifiable on the network

  • Fair: Transactions are ordered by which arrives at the most nodes first

Lastly, the Denoms are not only collateralized by NOM, but are also a vessel of collateralization of NOM. As mentioned before, the flows of currencies determine the exchange rate or value of a currency in terms of other currencies. The exchange rate, determined by the currency flows, is then, in essence, the evidence of a form of market collateralization. The ability for a currency to be exchanged for another is what backs fiat currencies not tied to gold as well as volatile cryptocurrencies that have no other underlying collateral. Therefore, if a Denom is stabilized with its counterpart fiat currency, then it becomes collateralized by the market. Thus, the NOM itself is collateralized by the Denoms it can mint. As the Denoms market capitalization grows, whilst being stabilized with their fiat counterparts, the NOM is itself collateralized by the market as well, while serving as the collateral for the market.

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