Too much supply leads to low payouts to SNOs and ultimately higher churn as Nodes leave the network.
I am not sure that this is such a big risk, because I see a negative feedback loop here:
- more nodes leaving leads to more repair traffic,
- more repair traffic leads to bigger payments,
- bigger payments lead to nodes staying for a bit longer.
Hence I’d hypothesize that in case the demand does not grow as quickly as supply, the effect on the growth of supply will be delayed—hopefully long enough to attract more demand.