DeFi the Savings Wallet and Supercharge the Second-Layer?

15 days ago
7 Min Read
1334 Words

I remember taking this shot. I remember the day very well, but the days to follow became a blur. It was taken on the day my daughter was born and, the day I almost lost my wife. Many people have faced these kinds of days, some people are luckier than me, some people less so. I prepared for the day knowing that there was a risk, so I did what I have done for quite a while - I imagined the worst of the worst in an attempt to prime myself just in case it happened, but I still needed to act. It isn't a fun practice, but it has been effective in dealing with a lot of negative over the years.

One thing I have never thought that much about though, is the inverse, where rather than the worst case, I spend time deeply imagining the best case scenario. I think this is because I have a pretty good understanding of the worst, as there are pretty well defined floors - but the upside is all an unknown. What's the biggest number you can imagine? What about that number, plus one?


On this note, I was thinking about the recent rise in price a little and what that might mean for my own future. From my perspective, financial success isn't a big lottery win, it is the ability to own and have access to several small wins that can keep on trickling in, hopefully to the point that I do not have to worry about money. I live in a very expensive country however, so what is enough is relative to circumstances. Perhaps one day my family will move, but that won't be for a long while I suspect.

Hive is pretty cool if looking at it from a way to generate various trickles of incoming value, of you consider that there is the ability to post to earn as well as voting for curation. I used to think that curation wasn't really worth it and I am still very bad at maximizing stake, but the risk of staking does come with the ability to generate some income. No one should ever forget that staking on Hive has a cost, which is why so few do so, as they can make more with the same value elsewhere. Until they can't.

Curating is Risky Business

I am one of those idiots who believes that Hive is highly undervalued and that in time, we will see an increasing floor on the price that will change the entire platform socially, as well as the economic capabilities users have. Currently, the feed price is at 25 cents based on the 3.5 day moving average of price, which gives me a vote of 2.50, 10 times a day. However, this allows me to earn about 1200 HIVE in curation a month, which means at the same price, my curation return is about 300 dollars a month.

This probably seems like a lot to some people, but as I said, there is a cost to this opportunity and if you consider an alternative where instead of putting it into Hive stake, I bought Bitcoin, Ethereum or put my earnings into mining pools instead, you can image there is a pretty high cost indeed. As said - Do not be jealous of people who are getting curation returns, as it has probably cost them a lot of opportunity to do so.

But, the reason people do it is that it allows them to have some influence over the platform governance as well being able to reward members of the community that they enjoy. They take part in this side of things (obviously not all take part well) because they hope to be able to influence the platform to improve the experience, the community and in doing so, the price also. If that floor price raises to for example 2 dollars, Hive will have a billion dollar market cap and instead of 300 dollars a month in curation, it will be worth 2400 dollars for me. That is almost my wife's salary covered. Of course, to keep that similar level, it would mean not selling my stake, which would be technically worth around 400K dollars. This creates tension between points.

Oh, by the way, a billion dollars does sound like a lot for Hive to be worth, doesn't it? However, a lot of people believe Bitcoin will reach a million dollars a coin one day. At that level, Bitcoin would have a market cap of around 20 trillion dollars, three times larger than the largest managed fund in the world, BlackRock. If instead of 2 dollars we said 4 dollars a HIVE, the market cap would be about two billion, which is 1/10,000th of the value of Bitcoin at a million dollars, 0.0001% of it.

At that value, the curation would be 4800 dollars worth and my account 800,000 dollars worth. Is that a best case scenario? That would also mean that 2000 Hive would be getting 48 dollars a month in curation. Yeah, I know, we seem a long way away from 4 dollar Hive, but that 2000 Hive Power is currently about 600 dollars on the open market, which would then have a payback period of six months at that point, but in the meantime, it would be earning Hive actively through voting, meaning that if it took a year from today to get to 4 dollars, that 2000 would earn about 300 more Hive in curation along the way, worth twice that of the buy-in. But, none of this is stable, so it can't be relied on, which is why there is a high cost to powering up to take advantage.

Adding First Layer DeFi

But, new capabilities are coming too, with more DeFi products entering into the space and if Hive starts to move, additional income streams will open up to use stake in new ways.

One thing I would be interested to explore is the use of the savings wallet as a DeFi pool wallet, where an account can use that as collateral, whilst still maintaining account control over it. It is better than it just sitting there doing nothing liquid and it would allow for the staking of liquids without having it actually able to draw on the pool or act on governance. That would likely attract some Hive back from the exchanges and could be leveraged by second-layer tokens, giving them utility. We already have a decentralized network, we already have a lot of holders and a lot of liquid out there, we already have the security on the blockchain, internal markets, exchange listings and feeless transfers. Still your keys, still your coins. Shouldn't this be a no-brainer?

While many people do not see the point in buying Hive, they do not yet recognize that Hive isn't a token like most others, it is a highly versatile token that can be applied in many ways to generate value. Not only that, it is on a network that is making it increasingly easy to build applications upon. So if, you imagine that the staking rewards in a DeFi wallet could earn tokens that can then be used in applications on the Hive blockchain or, integrated in cross chain solutions at very, very low cost, I think that the usecase of Hive as a platform increases to .... yeah, there is no known ceiling - Let's see what is up there.

While I don't have the technical knowledge to build on this idea or shoot it down, I would appreciate if people do spend some time thinking or perhaps sharing it out to those who might be able to investigate it further. I do think that we have all the tools and skills available to do something like this now and do it well, we just have to gather the will.

[ Gen1: Hive ]

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