The "griefing collateral" (also called the "security deposit" on the issue page) requires a user to lock some KINT in order to create an issue request. Its purpose is to deter individuals from creating issue requests that they do not intend to fulfill. If a user creates an issue request and doesn't send the BTC within the time limit (currently 48+ hours, depending on block production rate) then the request expires and they lose the griefing collateral.

Currently the griefing collateral is calculated as 0.005% of the amount of kBTC being issued. For instance, a user who wants to issue $1,000 worth of kBTC must lock a meager $0.05 worth of KINT. The amount was initially set low in order to limit the hurdles involved in minting kBTC while launching the parachain and bootstrapping liquidity. However this seems to no longer be a concern, as kBTC has been in high demand for over 6 weeks and the bridge is regularly at or close to its maximum capacity.

Instead, what has transpired is that a small number of accounts tend to "reserve" kBTC whenever it is available, creating issue requests without the intent to send the BTC until later (either close to the deadline or not at all). Of the last 100 issue requests, more than 20% of them expired. This has the negative effect of tying up the available capacity in the bridge and preventing other, honest users from being able to issue kBTC, as well as affecting the distribution of vault rewards. When done maliciously this would be classified as a Denial of Service attack. In short, the griefing collateral is not high enough to fulfill its purpose.

After some discussion in the community Discord, my suggestion is to raise the griefing collateral to 0.5% (i.e., $5 of KINT when issuing $1,000 worth of kBTC). I believe this amount strikes a good balance, with increased financial costs for dishonest activity while not being prohibitive for honest users wishing to use the bridge (and will hopefully help with the capacity issue which prevents those users from bridging BTC at all). It's on the same order of magnitude as the issue fee (0.15%), but unlike the fee, the griefing collateral is returned to the issuer once their request has completed successfully.

Prior to the fee.setIssueGriefingCollateral extrinsic being available, this proposal was polled off-chain where it passed unanimously, here: https://voting.opensquare.io/space/kintsugi/proposal/QmVyuks8HLFbbmXHoEZRgaGrb3j5DoVQBakERbqPepjR3N