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Network Debt Account
Since Stable Credits are created when members overdraft their network account, and destroyed when the resulting negative balance is reduced, member defaults create an excess in circulating Stable Credits and hence cause inflation. In order to avoid this and maintain a constant equilibrium between payable debt and the Stable Credit supply, excess Stable Credits need to be removed from circulation.
To achieve this, all defaulted credit balances are written off to a Network Debt account. Network members can then contribute to reducing the network debt by burning their positive balance of Stable Credits until the Network Debt value reaches zero. In order to incentivize network members to partake in this process, contributions are reimbursed by the network's AssurancePool (in Reserve Currency) in order to replace the Stable Credits they have burned.
This process allows members to convert their positive Stable Credit balance into the network’s Reserve Currency, while maintaining the Stable Credits’ supply/demand equilibrium.