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RE: RE: Is the 20 % interest rate on HBD holding Hive price down?

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cmplxty.leo
@cmplxty.leo
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2 min read

So right now people on hive have four things they can do with liquid rewards.
They can convert or exchange hive for HBD which in many cases keeps the funds on the chain here. They can power up the hive which is even better for locking the assets away and preventing wild fluctuations in speculation and price for many people.
They can spend it on things like hive engine, Splinterlands etc.
They can transfer it out and sell it on an exchange.

If you eliminate HBD then everyone gets paid in liquid hive and hive power only. When we had this previously it caused even more of a downward pressure on the hive token because if you have the main token, hive, readily available and not needing to exchange it for something else, it prevents people from holding an asset longer term. Right now we are getting paid, according to an algorithm calculation, HBD as the liquid asset until the ratio of hive to HBD is at a certain threshold (I don’t know this exact number but I’m sure if you poke around blocktrades you can find it somewhere) forces people to do different things with their post rewards. They could either drop the HBD into savings, and locking away a liquid asset and preventing spur of the moment speculation and dumping of the token, or exchange it on the internal market or convert it into hive both which still do stay on the chain here and usually don’t involve outside exchanges.

If you remove HBD entirely, we’ve seen in the past that it just causes further price dumps of the token and people drive it to the ground to then buy it up, wait for more upward price movement and then dump again. It’s not guaranteed that having HBD around makes it impossible for these things to happen but it significantly reduces the chances of it happening which is great. I and many others keep the hive and HBD transactions internal to hive without going to exchanges. If it was just hive, this wouldn’t be the case and it’s too liberal of a fiscal policy for the chain governance. Taking the more conservative approach and incentivizing people to keep their funds on the chain here and in savings accounts is far better long term. It also creates good use cases which is important.

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