Coinbase is encouraging developers to work on 'flatcoins' that will keep pace with inflation

• In a recent blog post, Coinbase encouraged developers to work on "flatcoins" that keep pace with inflation.
• The tokens will enable users to "have stability in purchasing power while also having resiliency from the economic uncertainty caused by the legacy financial system."

In a recent blog post, Coinbase encouraged developers to work on inflation-linked "flatcoins."

The tokens will enable users to "have stability in purchasing power while also having resiliency from the economic uncertainty caused by the legacy financial system," the release said.

The crypto exchange said Friday that it's made the inflation-pegged tokens one of its four main priorities for Base, a network it launched last month where developers can build decentralized blockchain applications.

"We… are particularly interested in 'flatcoins' – stablecoins that track the rate of inflation, enabling users to have stability in purchasing power while also having resiliency from the economic uncertainty caused by the legacy financial system," Coinbase said in its statement.

"With the recent challenges in our global banking system, we believe these explorations are more important than ever," the exchange added, referring to the turmoil that's rocked the global banking sector since Silicon Valley Bank collapsed earlier this month.

Stablecoins are crypto tokens that derive their value from another asset. Flatcoins are hypothetical stablecoins that would keep pace with the rate of inflation, rather than fiat currencies like the US dollar or the euro or precious metals like gold or silver.

Inflation surged to four-decade highs last year amid supply-chain disruptions caused by COVID-19 and as Russia's invasion of Ukraine squeezed commodity markets.

The Federal Reserve responded by aggressively raising interest rates – which has cratered the value of stocks, bonds, and cryptocurrencies as well as fueling the collapse of high-profile companies like SVB and FTX.

Bridgewater Associates founder Ray Dalio – who's slammed other cryptocurrencies like bitcoin in the past – is one big name who's previously backed the idea of a flatcoin, which he's suggested as an alternative to bonds that pay out a yield in line with inflation.

"I think that what would really be best is an inflation-linked coin," the billionaire investor told CNBC's "Squawk Box" last month.

"The closest thing to that is an inflation index bond, but if you created a coin that says OK this is buying power that I know I can save in and put my money in over a period of time and transact in anywhere, I think that would be a good coin," Dalio added.

As well as building flatcoins, Coinbase's priorities for its Base network are to develop blockchain-based reputation and limited order book systems and to build tools that make the decentralized finance (DeFi) space safer, the exchange said in its Friday blog post.

Editors note: A previous version of this story said Coinbase was developing flatcoins. It has been corrected to say that the company was instead encouraging builders to develop them.