I am not sure how that nade works. But for me it´s obviously triggered by a person.
For me it´s radius and or dmg is way too high. When I kill someone on close range, and don´t immediately run in the opposite direction I am almost certainly dead as well. The problem tho is, that there could be reasons why I can´t run back, for example other enemies, etc… Also I can imagine this happening in a small corridor where even if I won a fight on a longer range, and can gib the person easily with a pistol, it will consume a lot of time.
Not only that, but it can also lead to an enemy having an easy kill on me me since I either have used up a good ammount of my primaries ammo allready to kill and gib that person, or even swapped to my pistol to save my primaries ammonition. This allways can happen when you gib someone, but it´s just much more likely to happen when I gib for a longer time with a gun (unless there is a way to do it instantly with a gun too) then when I do it instantly by knife.
In both cases I not only waste time my team may need me at the objective, but also open myself up to get killed for a longer period then I usually would. In games that are purely for fun/pub I don´t see this being a big issue, but for competitive and ranked play I would like to see this fact taken into consideration when balancing this merc.