Why are flatcoins becoming increasingly popular?

The first cryptocurrencies, such as Bitcoin and Ethereum, were general-purpose assets. However, as the digital asset industry evolved, separate market segments emerged and, accordingly, different types of cryptocurrencies appeared, such as:

• stablecoins;
• memecoins;
• flatcoins and others.

This article focuses on flatcoins (inflation-linked crypto assets).

What are flatcoins?

A flatcoin is a type of stablecoin whose primary goal is not only to maintain price stability but also to preserve purchasing power over time.

The term "flatcoin" was first proposed in 2021 by former Coinbase executive Balaji Srinivasan.

In essence, flatcoins are an attempt to protect investors' assets from inflation and the high volatility of cryptocurrencies.

How do flatcoins differ from stablecoins?

The idea behind creating flatcoins stems from the fact that while stablecoins protect investors from cryptocurrency volatility, they do not protect against inflation because they are pegged to fiat currencies that are themselves subject to inflation.

In other words, while stablecoins aim to maintain stability relative to the exchange rate of the currency to which they are pegged, flatcoins seek stability relative to inflation and the cost of living. Therefore, a flatcoin must take into account not only the value of a currency but also the price level of goods and services.

According to the International Monetary Fund (IMF), the global inflation rate in 2025 was 4.2%. However, while inflation in the United States declined from 3% to 2.7% during 2025, Venezuela recorded inflation of nearly 270%. The situation in Venezuela highlights the limitations of stablecoins and the need for flatcoins as an alternative.

Flatcoins are not pegged to any fiat currency. Instead, their value is adjusted according to the current inflation rate. Rather than tracking the exchange rate of a base currency, flatcoins are linked to the CPI*.

* CPI (Consumer Price Index) is an economic indicator that measures the average change in the prices of goods and services included in a consumer basket (food, housing, transportation, healthcare, education, etc.).

Pros and cons of flatcoins

One of the main advantages of flatcoins is that they protect holders from inflation, unlike traditional stablecoins. At the same time, flatcoins also protect investors from losses caused by the sharp price swings of volatile cryptocurrencies.

Another advantage of flatcoins is their decentralization, which distinguishes them from traditional financial instruments.

Flatcoins could become a new asset class and an important settlement instrument within the DeFi ecosystem.

However, despite their advantages, flatcoins also face several challenges, including issues with their design and implementation. One such challenge is the difficulty of measuring the "cost of living," as it varies significantly from one region to another.

Due to differing inflation rates, consumer basket costs vary across countries, adding complexity to the pricing mechanisms of flatcoins.

Another risk is that flatcoins rely on price oracles to determine value. Vulnerabilities in data sources or inaccurate information regarding consumer basket costs could negatively affect the stability of a flatcoin's price.

In addition, the issue of regulating flatcoins remains unresolved. Many stablecoins, such as Tether (USDT) and USDC (USDC), are already regulated, providing legal protection for holders. In contrast, flatcoins are generally unregulated and are often not backed by any tangible assets.

Examples of flatcoins

1. International Stable Currency (ISC)

As of June 2026, ISC is the largest flatcoin, with a market capitalization exceeding $2.4 billion. It was launched in 2023. The ISC flatcoin is pegged to the value of a basket of RWAs (real-world assets) that excludes the U.S. dollar.

Since its launch, the price of the ISC flatcoin has risen by more than 37%, from $1.6 to $2.2, and has demonstrated steady appreciation for most of its existence. Meanwhile, its market capitalization has nearly doubled over the past two years.

2. Rai Reflex Index (RAI)

One of the earliest flatcoins. Although RAI is among the largest flatcoins, its market capitalization is only about $1.7 million.

At the same time, RAI's price has declined by more than 9% since its listing in 2021, falling from $3.2 to $3.07. This suggests that the flatcoin has not been particularly effective at preserving value.

3. LendrUSD (USDL)

A flatcoin issued by the Lendr.fi platform. The flatcoin is pegged to the U.S. dollar and backed by a basket of assets.

To maintain the peg of the USDL flatcoin, Lendr.fi uses its proprietary price oracle, which aggregates data from more than 30 verified sources. At present, LendrUSD is not listed on major exchanges and is traded only on a limited number of decentralized exchanges.

Conclusion

At present, flatcoins remain a low-liquidity and niche financial instrument. The flatcoin ecosystem remains underdeveloped, and even major tracking platforms such as CoinMarketCap and CoinGecko do not yet have dedicated categories for flatcoins.

Nevertheless, the current limitations of the market do not diminish the potential of flatcoins. As DeFi continues to develop and demand for instruments that protect capital from inflation grows, such assets may establish their own niche and become an important component of the broader financial ecosystem.