RE: LeoThread 2025-03-29 04:21
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Plan for enhancing the system:
- Adjust the incentive pendulum to benefit nodes more, ensuring that when liquidity is dangerously low, almost all rewards go to nodes. This discourages deposits while encouraging bonding.
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Raise the burn rate to 10%.
A related thought was shared earlier:
"My stance for tonight’s Economic Security debate: The system has always relied on optimistic security assumptions. Even the strongest design is inherently optimistic.
Consider a scenario without Bond Providers, with ample over-collateralization and no trade or secured assets—classic operation with TVL and swaps still remains optimistic.
Security is underpinned by bonds, whose value is dictated by market price. With bonds expressed in a native unit multiplied by its market value, there’s always a risk that economic security might fall below the ideal collateral level.
The introduction of the cap may seem appealing since it halts liquidity deposits or the minting of secured assets when underperforming. However, this doesn’t truly solve the insecurity—it simply masks a simmering problem.
For the security to normalize, either TVL must exit or bond value must rise through economic expansion. Since forcing a TVL exit presents numerous challenges, the focus should be on fostering economic growth.
The cap, much like price controls, ends up thwarting the intended economic expansion it is supposed to protect.
Eliminating the cap allows the incentive system to naturally adjust, letting bond values progressively align with economic activity. Individuals unwilling to take the risk during this adjustment phase can simply choose not to participate."