The indirect Hive return model
What I love about the hive ecosystem is actually all the trials that are started to create tokens and coins. There are almost as many strategies as there are currencies out there. I had a blast to look at dcity lately and to see what the effect of diminishing supply is doing to the market. I see Hive as a very important space to try out things for the tokenization of tomorrow.
On hive, thanks to delegations, staking, second layer tokens and soon also smart contracts, you have tons of different tools to build up an interesting token economy.
In this post I would like to present a possible model that could be used for different things on the blockchain. Probably some people are using it already but maybe with another name. I call it the indirect Hive return model.
What is the indirect Hive return model
Let's imagine that you have an income from the blockchain that generates Hive for you. Instead of using this hive directly, you power it up and delegate it out to a service that pays liquid interests on it. The interests that you receive is your return with this model and you can allocate this return how you want.
Why use this model?
The greatest advantage of this model is that you can build a pretty regular income in a very sustainable way. The stake isn't loosing substance over the time. Thanks to organic growth, the stake will actually grow constantly and with it also the return of this stake. In theory, this could go on forever...
Direct vs indirect return
Let's say that you are a game owner and you just sold 100 starter packs for 80 Hive each. This means that you have a capital of 8000 Hive. You can use these 8000 Hive once in a direct model.
If you use the indirect return. You would have these 8000 Hive and stake them. They would provide a return of 20% per year (just as an example). It means that every year you would earn 1600 Hive from these starter packs. After year one, you would still be able to earn or distribute the same amount of Hive. Your principle is still there and working for you. After 5 years you would have used the same amount of hive as if you would have used it in a direct manner. The difference is that you still have the 8000 Hive in your stake (+the organic growth) and this stake can work many more years for you.
Use Cases
The game that wants to succeed in the long term
A part from the free and fast transactions, Hive offers a great way to finance play to earn games. Often there is an entry level to play such a game. You have to buy a starter pack and probably there also some items that are auctioned. This means that the game creators have a certain amount of Hive when they launch the game.
With the indirect Hive return model, the game creators would power up all their Hive and then delegate the hive to places like dlease, @leo.voter ... where they get a liquid return on their stake. Thanks to these investments, the game will start to produce an income every day in liquid form. The more people start to play the game, the more this stake grows. Thanks to the organic growth of staked hive, the stake is actually growing by around 3% APR.
With this model, the game owners will have a stake that is growing constantly with every new income and also with the organic growth. However this stake will produce a return of somewhere between 10 and 20% APR. This will be the indirect return of the game and the game owners can decide how they want to split this income. They can take a part for themselves and then they can give another part to the players. The best thing is that this stake will pay them even if they stop the game one day!
An innovative form for Membership sites
When you join a restricted member area you are often asked to leave your credit card information so that every month a certain amount can be deducted from your card. Now imagine that instead of asking for recurring payments, you ask for a one time membership fee. You take this fees and you power it up 100%. You delegate this stake and get a return on it. For every new member that you get, your stake and your return will grow. The more members you have, the bigger your daily income will be. No need for credit cards. No need for recurring payments. Just another way to build your business.
Stabilizing your second layer token
Imagine that you want to create your own hive-engine tribe token. Many of these tokens come with miners that mine these new tokens. The sales of these miners goes into the pocket of the token owner. Imagine now that instead of putting the proceeds of these sales into his pockets, the token owners powers up this hive and delegates it. He will get a daily return in Hive that he will be able to use to buy back the tokens and burn them. This would be a great way to stabilize the token price. The more miners sold, the more stake and the more it's possible to buy and burn tokens.
I believe that this model is very easy to implement. It could be a good solution for many scenarios on the blockchain.
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