As I explained in a previous article last week, the ultimate cause of the current neutrino crisis is the excess of issued USDN. In that previous article I also mentioned some alternatives to cope with this problem (see note 1 below). One of the proposals consisted on swapping the excess of USDN in vires to SURF. Here I will describe a more elaborated proposal around this idea. Still we have to wait for the effects of current proposal under votation, but if things don’t work as expected we still have alternatives.
So, we have two big vaults of USDN there. The one destined to USDN vesting program (as of today, 412M) and Sasha’s account (139M)
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USDN in Sasha’s account are only used as collateral. So, what if he converts this collateral to SURF? This approach requires to add SURF as collateral in Vires. That is feasible if combined with an automatic conversion to USDN as the SURF in collateral is liquidated. And the possibility of using SURF as collateral in vires could improve significantly its attractiveness. It provides an immediate use.
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In case of vested program vault, part of it can be converted to SURF, in agreement with the beneficiaries, which I think they are not many, as all them are whales. As not all USDN there are needed now, the operation should be quite safe. They continue being paid in USDN, but last payments will either require SURF to be liquidated, or being paid in SURF.
For this last alternative, which involve an agreement with beneficiaries of the program, I think they must understand the risk of USDN going to zero, and that under current conditions, their funds will be more protected if partially converted to SURF. How much will depend on agreements, which can be updated with some frequency.
In all cases, the conversion from USDN to SURF can be performed progressively, and not all at once. Just enough in order to ensure a constant trend of SURF issuing and BR increase, and attract more people to invest, so its potential to increase BR don’t run out suddenly. Also, if we create suddenly a big BR, then the incentives to issue more SURF by others will be diminished.
The best scenario to encourage SURF issuing is a progressive one that shows constant increase of BR in order to reduce feeling of risk, without reaching highest suddenly, as the more BR, the less incentive.
Update Some people has argued that SURF is not a good collateral for vires. However, SURF is just future USDN. So, those who think that SURF will not be liquidated to USDN, don’t have confidence in USDN either, which is already a well spread collateral. If SURF fails, entire USDN will fail. If SURF is bad collateral, USDN is as well. If USDN is a good collateral, SURF as well. Partial or total replacement of USDN funds by SURF are totally neutral from the point of view of collateral quality. However, spreading SURF usage will be very beneficial for USDN collateralization.
Note 1. Reference: Limit USDN->WAVES burning when BR < 1