BACKGROUND
NSBT was supposed to be the instrument to recapitalize USDN when BR fell below 1. NSBT design was however deficient because the max amount was limited and the moon factor was introduced to effectively limit it’s circulating supply even below the max authorized amount.
DISCUSSION
Now USDN is woefully undercapitalized so SURF was issued to recapitalize. The only way SURF could ever have sufficient incentives to attract investors and recapitalize is if it took complete priority of NSBT. Without the additional benefits of receiving gNSBT, SURF is nothing more than a way-out-the-money call option on the WAVES price.
If NSBT would have been better designed, then its supply wouldn’t have been limited and when BR fell then more NSBT would have been issued, which would have been dilutive to existing NSBT holders.
Similarly, SURF should dilute existing gNSBT holders to a much greater extent than it currently is in order to be sufficiently interesting to investors.
How to allocate more gNSBT to SURF stakers without increasing the total amount of gNSBT too much so as to risk destabilizing USDN by allowing too many redemptions per day? This can be solved by changing the parameters on how many swaps can be made as function of gNSBT owned.
ACTIONS
Urgent action is required.
Many more SURF and NSBT need to be issued to recapitalize.
Action 1 - Remove the limit on NSBT authorized amount (maximum amount) and adjust the moon factor accordingly.
Action 2 - Increase by about x10 the amount of gNSBT per staked SURF.
Action 3 - Recalibrate Neutrino parameters so as to keep the max\avg amount of USDN swapped per day stable, taking into account that the total amount of gNSBT has and will continue to increase.
Other Actions - Other actions exist such as taxing node operators to take a % from their fees and adding it to Neutrino reserves, but this is beyond scope of this proposal / discussion.
WARNING
If no action is taken then NSBT holders will canibalize themselves until there is nothing left to eat.