Remove Neutrino + USDN Peg Policy from Spartan Bucket and Create a Dedicated Capital Pool

Recent market volatility and payouts for UST Peg claims have significantly decreased the value of capital in the Spartan Bucket. In an effort to protect the remaining capital in the bucket, we must begin the process of reducing the total risk assumed by the Spartan Bucket capital suppliers.

One of the paths available to reduce risk is the removal of individual risky policies from the Spartan Bucket as the policies reach their rollover dates. In order to preserve coverage options for potential policyholders and deployment opportunities for capital suppliers, these policies should receive their own, dedicated capital pools, like the existing USDC Peg policy. In addition, they may be covered by other capital buckets proposed in the future.

Although none aside from UST have depegged, all Spartan Bucket-covered stablecoin peg policies have experienced peg stability issues in recent months. Continued coverage of these policies in their current form would be irresponsible, and could jeopardize the health of the entire protocol should another depeg event occur akin to UST.

The rollover date for the Neutrino + USDN Peg policy was July 5, 2022. Like UST, USDN is an algorithmic stablecoin, which inherently carries greater risk. As this peg policy has reached its rollover date, we must decide whether to end Spartan Bucket coverage of this policy.

In addition to reducing risk for Spartan Bucket capital suppliers, removing this policy from the bucket at its rollover date will help provide the time needed for the Unslashed community to decide if and how to responsibly resume broader capital supply of this policy, and continue broader capital supply of the remaining peg policies under a diversified capital pool.

Proposal:

Should we remove the Neutrino + USDN Peg policy from the Spartan Bucket and create an independent capital pool solely for covering this policy (akin to the USDC Peg policy) upon its rollover date?

Yes) No)