I fully agree with the core issue being the supply of bnUSD being too high. I am not convinced altering the max LTV is the fix.
Whatever the economic reason, the current parameters have led to this current amount of bnUSD minted. The only parameter the LTV effects is the ‘capital efficiency’ of collateral. The exact same current bnUSD supply can be maintained just by adding some more collateral.
In the short term, it will increase borrower rewards for anyone under 25%, and remove them from anyone over 35%. Okay the ones over 35% pay some back, but anyone under now has an increased incentive to mint bnUSD due to increased borrower rewards. The economics of borrowing have not changed, only which parties are receiving it.
Additionally, the current bnUSD supply is well under 25% of total collateral, so that shift can happen easily with zero change in collateral, but likely will happen with a combination of increased minting by current participants below 25% and an increase in collateral.
All economic factors of current supply still remain, so the supply should have a similar equilibrium.
This is compounded by the fact that if 10% of the bnUSD supply is sitting in large accounts, presumably to maximise borrower rewards, with the decrease in max LVT if they repay that stagnant bnUSD we have the same issue since bnUSD just held current not effecting the peg. If all of it is burned, the amount of ‘liquid’ bnUSD remains the same.
That is neither here nor there and is neutral, but I do not see this move being particularly effective in reducing bnUSD supply. And especially muted by these apparently large reserves of bnUSD sitting there.
The market has decided that current net value of minting bnUSD is worth however much has been minted currently, so I don’t see that changing much just from this move, it will just shift it around a bit between participants. Not to say it will have ZERO effect since capital efficency matters, but it takes huge moves in max LTV for small changes to the net value of minting IMO.