With HBD At 20% Interest Will Everyone Abandon Hive Power?
The results came through last night. The consensus Witnesses voted to increase the interest on HBD that is placed into savings. It was 12% and was increased to 20%. This is a very aggressive rate for a stablecoin.
We see a lot of excitement over this and for good reason. HBD is being positioned to really have a major impact upon the Hive ecosystem. This is another step in what, hopefully, will be a string of actions that take place, all putting HBD at the forefront of the stablecoin market.
With this recent move, many are worried that the attractiveness of the ROI will mean that a lot will sell their Hive Power and rush into HBD.
While there might be some who do that, it is not likely to be very many.
In this article we will detail how things work and why this might actually drive more people to power up HIVE.
Before going any further, there is no doubt that we need to consider ways to incentivize staking HIVE. This will be the topic of another article.
Hive Power Is Gas
This is probably one of the most overlooked, and unique, features regarding Hive Power. It essentially acts as the "gas" for the blockchain. If one is interested in engaging, he or she must have Hive Power. There is simply no way around it.
With the next hard fork, we are going to see the ability to delegate Resource Credits. This will do a lot to put idle RCs to use. It will allow the applications to delegate the ability to operate on-chain.
However, the bottom line is someone still has to have that HIVE powered up. Whether it is an application or individual, Resource Credits come from Hive Power.
Therefore, if the shift to 20% is attractive to many outside investors, they are going to require a Hive account. Along with that, to conduct transactions means some Hive Power has to exist somewhere. At this level, obviously not a lot is required. However, if the project becomes highly successful, it could mean a lot of accounts.
HBD Is Not Speculation
We discussed the transition away from speculation to fixed income. This is where Hive can position itself very well. HBD paying 20% in savings is a fantastic start in this area.
That said, just like not all are cut out for speculation, the reverse is also true. Some people enjoy the game of buying and watching something run up in price. The idea behind a stablecoin is aimed at the opposite.
This move by the Witnesses have many believing the future of Hive just got a lot brighter. For this reason, it stands that the native token (HIVE) should appreciate in price if activity grows. Therefore, selling all of one's HIVE for HBD means this opportunity is missed.
Of course, many people will take a blended approach. Few put all their money in Tesla or Amazon in spite of their outstanding returns the last few years. Yes a portion does find the high flyers but other types of investments receive funding.
The same is true with Hive. Many will load up on HBD while also having Hive Power in their account.
Governance
Here is a big one. Do you want influence on the Hive blockchain? Then the only answer is to have Hive Power. HIVE is also the governance token.
With it, we determine the fate of Witnesses, proposals, and help to direct the reward pool. All of these are features of having Hive Power.
Does anyone foresee the larger accounts powering down a huge part of their HP holdings to garner 20%. While it is an outstanding return, this is not likely the largest payoff in the end. Again, there are so many different characteristics related to Hive Power that we have to step back to understand all that it does.
Of course, many of the larger accounts believe in the future of Hive. For that reason, they, I am sure, will see the potential for massive price appreciation.
20% is a wonderful return on a fixed income investment. Nevertheless, it does not compare to the 5x or 10x that HIVE can do if things really start clicking.
Those who are serious about the future of Hive understand the importance of governance. It is vital to have people involved who are dedicated to the future of this ecosystem. The Witnesses are the ones who drive the chain. Here we see people who are technical in nature. At the same time, we need to put people in place who are concentrating on growth and the appeal outside the system.
Hive Power is still a very important component to the functioning of Hive. It is a mistake, especially for smaller account, to take all their HP and switch it to HBD. They are two different types of investments. Having a voice in what takes place is essential.
It is imperative that Hive has a lot of smaller accounts looking to double or triple their HP in a year. When one has under 1,000 HP, that is possible.
People Will Not Abandon Hive Power
The bottom line is the benefits of holding Hive Power are still in place. Certainly we should look at ways to make powering up HIVE even more appealing. That said, it seems few are going to move all their assets from HP to HBD.
When people look at it from purely a ROI perspective, then we could see that behavior. That is not the majority of the Hive ecosystem. Many are dedicated and emotionally invested in seeing us succeed. Earning a few percent on one's money isn't the most important factor.
Should people put money into HBD? This is not financial advice but certainly it is a great return. Therefore, putting liquid capital in there is a great idea. However, we all know Hive offers so much more than just a ROI.
Those who are thinking long term understand there is so much here. After all, was HP the best return on Hive over the last couple years? Perhaps money might have been better off in Splinterlands as opposed to Hive Power. Yet, in spite of that, there was still plenty of money locked up in HP.
I have a feeling that many will be surprised. This move by the Witnesses might, over the long term, actually push people to stake more HIVE. It could have the exact opposite effect of what many believe.
That said, it is great to have options. And HBD placed in savings just became a more attractive option.
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