What I bring here is just an idea and reflection on a little discussed topic.
I would like opinions on how this could be done and whether there are systematic risks and what the challenges would be. What I propose if turned into reality could be an extra use case for nsbt
In the “SDEFO” proposal to issue BTCN and speculative assets, NSBT is indicated as collateral.
In the “USDN” proposal, WAVES is proposed as collateral and NSBT as a recapitalization system.
When I issue USDN using the swap WAVES>USDN I change my waves to receive usdn. These waves are stored in the NODE neutrino which generates income for stakers of $USDN. This proposal is practically 1: 1, if 1 waves = $6 then I will receive something close to 6 $USDN - fees for waves given.
Thinking about take borrow $USDN with $NSBT as collateral similar to the DAI protocol (150% for example equal to DAI), would be something interesting to think about, but this would conflict with the $USDN proposal to be a currency with an interesting APY, this gain is possible because to the waves LPOS system.
When issuing $USDN giving $NSBT as a guarantee, NSBT other than WAVES would not go to the neutrino node which would increase the circulation of USDN and less $waves in the contract = dilution of the profit of the $USDN Stakers. ( I mean the fixed profit from the neutrino node ).
So how could issuing $USDN with $NSBT as collateral be viable through a lending mechanism? How could this not pose a systematic risk to the protocol?
Well, we need to think, I’ll detalied a few things I thought about the first problem: USDN APY
1) Do not use this proposal in USDN, but use it in other assets (and this is what is being done with SDEFO).
2) Profits from blocked nsbt go to $ usdn stakers. 150% NSBT as guarantee whose profit “From nsbt staking” allocated for USDN STAKING we can imagine that the usdn’s APY would increase as the NSBT has been performing well in the last few days. Being able to take advantage of the situation, we could allocate 100% of the nsbt profit to usdn staking and the 50% remaining with the person responsible for issuing the usdn. It turns out that this option may become unfeasible if the price of the NSBT increases a lot and the return on staking not so much, so we would still have a dilution of the USDN profit.
3) POSSIBLE SOLUTION: Instead of being 150% in NSBT for guarantee: 100% in waves + 50% in nsbt.
=> 100% was in Waves and these waves were destined for the node generating revenue for all USDN in staking.
=> And 50% was in NSBT and the NSBT staking profit went to the person who issued USDN.
All profits from NSBT staking converted into $NSBT in the open market and seded to the person who issued usdn. It increased their ownership NSBT guarantees similar to ERC20 autostaking proposal “For more liquidity”. In this way we preserve the USDN APY and still generate extra incentives for someone to borrow by giving nsbt as part of the guarantee.
~ This is just a draft of the idea developed on 23/01/2021 and posted on 23/01/2021, I can think more things and update over time. ~