We have seen a little discussion about the addition of an inflation-protected asset inside Nu, to be offered in conjunction with the NBT-dollar peg. This new currency unit would be something like a peg to a market basket of goods.
- A clear branding of inflation protection on the alternative currency unit
- No change to the current NBT currency unit
- Cannibalism of market share: users would be divided between the two currency units
- Complexity for merchants who must accept and manage two currency units
- Complexity of maintaining peg on two currency units
- Division of peg support between units weakens support for both units
- Risk of failure of peg of one currency unit, which shocks the entire ecosystem
An alternative: to make the NBT unit itself inflation-protected via parking. Each month, take the CPI inflation index from the previous month, and vote 1-month parking rates to an annualized equivalent of this value. Any holder of NBT who wished for inflation-protection could simply park at one-month intervals to have their real value keep pace with USD inflation.
- Strengthening brand image and market demand of core product (NBT) by adding inflation protection
- Simple to integrate with existing system
- Mildly increases supply of NBT, weakening peg
After thinking this through, I favor this second option. I think creating an additional inflation-protected currency unit could divide Nu into two halves, each more weakly supported than the original product. I think that bringing 1-month parking rates up to the rate of inflation would make NuBits a more useful and sought-after product.
What do you think?