What are you playing at?

One of the things I enjoy about Hive tokenization is that there are lots of dynamics in play, all creating different kinds of games and in so doing, economic tensions of supply and demand across the platform. There are so many of these, that it is unlikely that any single person can play them all, let alone play them well, but it is fun to take part nonetheless.

A simple example of this complexity is the value of HIVE and how it affects the system. To make it easy, I will use a HIVE POWER (HP) base of 100,000 and the current blockchain price of HIVE, which is 59 cents.

A 100,000 HP generates a vote of around $3.30 which can effectively be delivered 10x a day to distribute about 33 dollars worth of vote value, with rewards split 50/50 between author and curator when paid out after seven days. That means that each side will get about $16.50 in value each day.

However, not all things are equal.

The author rewards can be paid in 100% HIVE POWER or what is most commonly done, is 50% HP and 50% HBD. The curation reward is always paid in 100% HP. This means that there is an asymmetry in play, as the author gets some liquids, while the curator reward is entirely subject to the 13 week powerdown schedule. But there is more to it than that.

Using our 100K HP with HIVE @0.59, with one vote of $3.30 we can see what is going on.

Each side gets 1.65 each and the author has chosen a 50/50 payout.

That means the curator will get 1.65/0.59 = ~2.8 HP The author will get 1.65/2 with each half being HBD/HP = 82.5/0.59 ~1.39 HP and 0.825 HBD.

Seems normal. But, the blockchain treats reward HBD at the value of 1 dollar, regardless of the actual price. What this means is that at the current price where HBD is $1.22 on the market, that 82.5 cents is saleable at one dollar. This means that the author is actually going to get about 18 cents more value, or 11% more than the curator in terms of value from the vote.

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There are good sides and bad sides to overpriced HBD, with the bad meaning that it ends up creating more HIVE inflation - the good side being that there is now a mechanism in place that uses the overpriced HBD to actually lower inflation. But we aren't going to get into that here.

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Moving on.

Now, everyone wants high-priced HIVE so they can sell for massive profits, but because of the dynamics of staking into HP and voting, there is also potential to earn 10+% through curation. But, the higher the price of HIVE, the more HBD is printed - but not the more HIVE.

Let's go exxxtreme with our 100K HP and up the price 100x to 59 dollar HIVE.
(I would have 15 million worth!)

Instead of a 3.30 vote value, we now have a $330 vote value.

At 50/50 payout.

The curator will get 165 dollars worth and the author 165 dollars worth. But - how much HIVE POWER is that?

The curator will get 165/59 = ~2.8 HP

Oh. It is the same!

The author however, will get 165/2 with each half being HBD/HP = 82.5/59 ~1.39 HP and 82.5 HBD.

See what has happened?

While the exact same amount of HP is paid out, the HBD is 100x more.

What is happening is that while the rewards pool is worth 100x more, the amount of HIVE tokens in the pool is exactly the same. However, when paid out and converted into HBD at 1 dollar, there are 100 more HBD tokens.

What does this matter?

Well, the rewards fund at 59 cent HIVE value currently is:

That means that at 100x more value, it is worth $47,500,000

If you imagine a post getting a 100 dollars today at 59 cents, that would be a 10,000 dollar post at 59 dollar HIVE. That isn't likely to happen very often, is it? This means that voters will adjust their vote value percentages downward, meaning that they will distribute less HIVE per vote, even though they will be distributing a lot more HBD. This also means that votes will be distributed far more widely on many more posts.

For example, if I had a 330 dollar vote (at 59 dollar HIVE it would be close to 1000), I am not going to put 100 dollars myself on some random picture of someone's lunch, I will give it what it might be worth, not much. Let's say I give it 2 dollars though, that would mean that in HIVE terms where HIVE equals 59 dollars, they will get about 0.03 HIVE, but they will earn 1 dollar in total, with 50 cents being in HBD.

As you can imagine also though, it is going to be incredibly hard for a single person with any kind of significant stake to distribute appropriately, so curation becomes a full-time job and likely there will be many curation services that will blossom to distribute to grow the network more, as some try now. And, grow the network it will considering that at 59 dollars, the Hive Blockchain one way or another, would be distributing over a billion dollars in rewards a year.

Yes. Insane.

But we are a long way away from there, but on the way to that point,

it is going to require tens and potentially hundreds of millions of users to connect to Hive one way or another, whether it be through the many games that will spring up or the increasing number of staking options that will develop. The thing with Hive is that, because it is a general purpose blockchain, it can be many things and many things to many people. It is because of this that there are so many tokenized and gamified options already and, it is only going to increase - this was just one of them and, there are dozens of considerations that are connected directly to this one aspect as well, like conversion to and from HBD, Resource Credits (and the coming delegations), pooling, account creation and what I suspect will increasingly happen, investing directly through voting to raise capital. There are endless possibilities that will develop, as demand increases and prices shift.

One thing doesn't change though.

The higher price goes, the harder HIVE is to obtain, whether it is through rewards or on the exchanges.

The current increase in price overnight will retract back toward where it was, but I suspect that in the future, a move like this that has everyone so excited, will just be a tiny blip on the large ramp up. I don't know if it will ever get to the 59 dollar "extreme" I used here, but if it does, many, many people who are here today, are going to never have to work again of they choose. Though I suspect that for many, what they will be doing with their new found financial clout, is fleshing out the industry even more.

In my opinion, part of the proof-of-brain model on Hive, is finding games that we enjoy and are good at playing. There are so many aspects to explore on Hive and they are only increasing in numbers - and value.

Taraz [ Gen1: Hive ]