# DMT-NAT — Bitcoin's second miner subsidy to address the declining security budget

## What is DMT-NAT?

DMT-NAT is positioned as Bitcoin's second miner subsidy — a miner-aligned economic mechanism
designed to address Bitcoin's declining long-term security budget. It exists to strengthen miner
incentives as block subsidies fall and fee revenue remains structurally insufficient.

## The Problem: Bitcoin's Security Budget Crisis

Bitcoin's security model is elegant but faces a structural challenge over time:

- **Proof of Work**: Bitcoin miners expend real-world energy to produce blocks, securing the
  network against attack. The cost of this energy expenditure is what makes the network safe.
- **Miner Revenue = Security**: Miners are compensated by block subsidies (newly minted BTC)
  and transaction fees. This revenue funds the energy expenditure that equals security.
- **The Halving**: Every ~210,000 blocks (~4 years), the block subsidy halves. It started at
  50 BTC/block in 2009 and will approach zero over time (21 million BTC cap).
- **The Fee Gap**: Bitcoin's transaction fee market has not grown proportionally to replace
  the shrinking subsidy. Fee revenue is volatile and, on average, far below what's needed
  to sustain current hashrate long-term.
- **The Risk**: As block subsidies dwindle and fees remain insufficient, miner revenue falls.
  Lower revenue → less energy expenditure → lower hashrate → weaker security. A network
  with dramatically reduced hashrate becomes vulnerable to 51% attacks.

## The Solution: DMT-NAT

DMT-NAT addresses this by introducing a miner-aligned economic mechanism that:

1. **Generate miner revenue** beyond the base block subsidy
2. **Are tied to real proof-of-work**, preserving Bitcoin's energy-backed security model
3. **Create fee pressure** that feeds back into Bitcoin transaction fees
4. **Scale with hashrate**, meaning security and NAT economics are aligned

The core idea is to create an additional miner subsidy aligned with Bitcoin's security model,
rather than relying on arbitrary token economics detached from proof-of-work realities.

## Key Concepts

- **Security Budget**: The total annualized USD value of miner revenue (subsidy + fees).
  Higher = more secure. Current estimates put Bitcoin's security budget at risk post-2032.
- **Hashrate**: The total computational power securing the Bitcoin network. Proxy for security.
- **Fee Market**: The market for Bitcoin transaction fees. Underdeveloped relative to security needs.
- **Halving**: Every ~4 years, Bitcoin's block reward drops by 50%. Next halvings: 2028, 2032.
- **51% Attack**: If a single entity controls >50% of hashrate, they can reorg the chain.
  Costly at current hashrate; becomes cheaper as miner revenue and hashrate fall.

## Why This Matters Now

The 2024 halving reduced the block subsidy to 3.125 BTC. The 2028 halving will cut it to
1.5625 BTC. Each halving increases the pressure on the fee market to compensate. NAT.fun
aims to have robust economic infrastructure in place before that gap becomes critical.

## Links & Resources

- **Website**: https://natgmi.com
- **Twitter / X**: https://twitter.com/NATGMI (@NATGMI)