We’ve had a couple interesting threads recently, discussing how to add a NBT burn mechanism to reduce supply of NBT in times of crisis. Some ideas propose replacing the parking-for-NBT-interest feature entirely. I disagree with this view, because I think the parking mechanism is a great thing for NuBits. I do think that NBT-burn should be added, but not at the expense of parking.
Some of the benefits of the parking mechanism, as it exists today:
Easy to Understand
The general public is familiar with savings accounts or certificates of deposit that work in the same way: lock up your funds, and earn an interest rate. NBT burn (or park) in exchange for NuShares is not so simple.
Appeals to Newcomers
A new user considers the option to park as a nice bonus to owning NBT. For this reason, I think we should offer low (not zero) interest rates in times of stability. For recommended interest rates, see Chronos Park Rates Feed.
Supports the Peg
We have yet to see what effect moderate-to-high parking rates will have on market demand for NBT. However, as the white paper describes, this tool is expected to be useful in increasing short-term demand to defend the peg.
Fights USD Inflation
It’s well-known that the Federal Reserve currently targets a 2% inflation rate for USD. If we have parking rates at about this level, users can feel confident that they won’t lose value to inflation by parking NBT. An option to burn does not give the same peace-of-mind.
I look forward to further discussion on how to implement a NBT-burn mechanism into NuBits. In the meantime, I think it is best to keep Jordan Lee’s parking invention the way it was originally intended.
Open to your thoughts.