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January Inflation For Hive | Lower Than The Projected

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Dalz
@dalz
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Hive starts 2023 with overall good numbers. The overall crypto markets are up, the HIVE price is up, HBD also increased in price, triggering HIVE to HBD conversion, that lower the HIVE supply.
Let’s take a look at the HIVE tokenomics for January 2022.

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The projected inflation for 2023 is around 6.5% on a yearly basis, or 0.55% on a monthly basis. As for the title said Hive ended the month with lower inflation then the projected.

Hive has a double currency system, HIVE and HBD, with conversions between them that add or remove HIVE from circulation on top of the regular inflation. Furthermore, the decentralized hive fund DHF, that serves as a DAO converts the HIVE that is in the DHF. The @hbdstabilizer has also grown and it is playing an important role in the overall tokenomics, making conversions and trading on the internal market. Because of this additional mechanics the HIVE inflation and supply can be drastically different in real time then the regular/projected one.

To be able to follow the HIVE supply we need to take a look at all the different ways HIVE is created, author, curation, witness rewards, conversions etc, then net that out with the HIVE burned from conversions, accounts fees, null transfers etc. To get the virtual supply we need to do the same for the HBD supply as well.

HIVE Created

Here is the chart.

The chart above includes:

  • Author rewards
  • Curation rewards
  • Witness rewards
  • Staking rewards

These are the regular ways new Hive enters circulation, and all of them are through vested HIVE.

Thing is the conversions are playing a major role in the ecosystem. Here is the chart again, including conversions.

We can notice that the HBD to HIVE conversions are the dominant in the chart. Thing is this work both ways and a big part of them is converted back to HIVE, especially through the work of the stabilizer.

The regular inflation is around 65k HIVE per day. In January there was on average around 380k HIVE per day from HBD conversions, although as noted most of them are converted back to HBD.

HIVE Removed From Circulation

Here is the chart.

The above takes into consideration six different ways of HIVE removed

  • Ninja Mined HIVE To HBD Conversions In DHF
  • HIVE transfers to DHF and converted to HBD
  • Transfers to null
  • Null as post beneficiary
  • New accounts creation fee
  • HIVE to HBD conversions

The HIVE transfers to the DHF are now dominant. These are transfers made by the stabilizer. We can see a few spikes in the HIVE to HBD conversions back in August 2022 and one smaller one in September. These were due to the increase in the HBD price.
There is another one that happened just at the end of this month.

Historical HIVE Supply

When all the above is added and removed, we get this chart for the all-time HIVE supply.

Up until August 2021, the supply was almost steadily increasing with a small fluctuation. Then a drop in the supply in August and September 2021.
Since then the supply has been slowly going up, with some small downtrends occasionally.

HBD Supply

Here is the chart for the HBD supply.

This is a chart starting from 2022.

The light color is HBD in the DHF. The HBD in the DHF is not freely circulating HBD and only enters circulation when payouts to the DHF workers are made.

HBD is being created and removed in a various way, but the conversions play the major role here in both directions. Other ways HBD is created is DHF proposal payouts, author rewards and interest.
Overall, the HBD supply has went down in 2022, with some uptrends in the summer.
Now we can see at the end of the chart that there is another increase because of the recent appreciation in the HBD price.
In January the HBD supply has increased from 9M to 10M HBD.

Virtual HIVE Supply

When we add the HIVE equivalent supply from the HBD to the HIVE supply we get the chart bellow.

When we zoom in 2022 - 2023 we get this:

The light color is HIVE that in theory can be converted from HBD at the current market prices for HIVE.
We can see that the virtual supply fluctuates a lot, mostly because it is tied to the price of HIVE. As the price of HIVE drops, the virtual supply increases and the opposite.
In 2022 the virtual supply has increased because of the drop in the HIVE price. The base HIVE supply has increased slowly.

Monthly Inflation

If we plot the monthly inflation, we get this.

We can see that in the period, the highest monthly inflation was in November 2022, with 1% added in that month, and the lowest has been in July 2022 when HIVE was deflationary.

January 2023 has ended the year with 0.35% inflation, or bellow the projected one of 0.55%. This is mostly because of the restored demand for HBD and the negative conversions done from the stabilizer.
A reminder that these are monthly numbers, to get the yearly equivalent we need to add the monthly ones.

In terms of absolute numbers the HIVE supply in January has increased from 395.1M to 396.4M, adding 1.3M more HIVE in circulation.

Again a note here that most of the HIVE to HBD conversions happened at the end of the month, and becouse of the 3.5 days that takes for them to fully be realised, the converted HIVE to HBD will be higher and the HIVE supply will further drop.

Yearly Inflation

The yearly, projected and realized inflation looks like this.

2022 ended slightly bellow the projected one, and we are now entering 2023 again with a similar trend. There is still inflation but it is lower than the projected.

Net HIVE Created By Category In January 2023

Here is the new HIVE put in circulation by category for the month.

This is a summary for the whole year.

We can notice that the conversions are negative for the month with almost -800k HIVE. This is the main reason for the lower inflation. Note that the HIVE to HBD conversions happened on the end of the month so this number will probably be higher.
On the positive side, the curation rewards are on the top with 900k for the month.

The HBD in the savings has kept growing throughout the 2022 and this is another important metric that has helped the overall HIVE supply.

The inflation for 2023 is set to 6.5%, and it will be interesting to see how things go in this year. The HBD supply has already contracted in 2022, while the HBD in savings has increased, leaving a small amount of liquid HBD. We can already see the effect of this in January as there is now HIVE to HBD conversions going on. Will see how the year progresses. As always, we will be closely following the process here with the monthly reports.

All the best @dalz

Posted Using LeoFinance Beta