Signalling for 20% HBD interest

2 mo (edited)
LeoFinance
2 Min Read
355 words

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I have updated my witness parameters to signal for 20% HBD interest. Previously I was signalling for 12% interest.

There have been discussions about increasing the HBD interest for a little while. One of the witnesses suggested it may be a good time to push for 20%, and I agree.

While I am only one vote and alone will not change the current interest rate, I am signalling for 20% interest for HBD, making HBD one of the most attractive options in the crypto space.

Currently the interest rate is 12% and it will remain so until the majority push for different interest rate. There has been pretty solid support for this change so I expect to see other witnesses do the same although full support may not happen for a while if ever.

There is some concern this may compete with locking up Hive (long term, 13 weeks) which typically results in around 8% curation rewards plus 2.8% vesting interest. Locking up HBD is only a 3 day commitment.

I believe most people who take advantage of HBD interest will also have Hive powered up. While the ratio may change with an increased interest rate for HBD, I am not concerned. As more people power down, powering up will become more attrac While 20% HBD interest may seem more attractive, you miss out from any potential runs (in either direction) Hive may have. This may be good or bad depending on where the Hive price goes.

Every since @smooth introduce the HBD Stabilizer, Hive has had some really solid economics and support. It has also resulted in locking up millions of Hive to be used for projects to improve the Hive platform. It has worked so well in fact, we have had deflationary periods in the the last year. This the also the result of the massive amount of Hive burned by @splinterlands creating accounts.

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Source: @dalz

I believe this change will make Hive very attractive to other options. Pair this with some marketing and promotion discussed by other witnesses, this could be a game changer for Hive.

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20 is really huge !
Really interesting things are going, that plus the Ads revenue from Leofinance !

That's the moment to bring investors and users ! !PIZZA

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2 mo (edited)

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How would it be sustainable? Would not everybody just dump there HBD?
Sorry im not 100% into the economics of hive and hbd. But like tera they needed a lot of money to topping up there treasury.

If you have some good links and infos for HBD, i would appreciate it.

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It is an additional inflation to the normal Hive inflation. In theory they could dump their HBD much like they can now. Also in theory, many may buy it to take advantage of it.

If it doesn't work out, it can easily be scaled back. It is a witness parameter and requires no changes to the blockchain, witnesses just change their parameters.

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2 mo (edited)

Terra is a bit different because they have a fixed treasury that came from a premine. Hive is inflationary by design.

Arbitrarily high interest paid on arbitrarily high savings would not be sustainable, but this isn't that.

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2 mo

And terra is kind of abusive from top holders. They start buy other cryptos in billions.

I would not wonder if they bust luna with it.

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2 mo (edited)

It's a little sketchy but supposedly a foundation that will benefit the chain. We will see.

I like the decentralized model better in most cases. For example, we could also buy other assets to serve as secondary backing/stabilizing, but it would have to be a proposal approved through DHF, with suitable safeguards (multisig, limited budget, etc.). A foundation basically run by one guy, eh, could work, but...

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2 mo

I agree. But that's more theory.

If the chain itself could control wallets, yes that would be good. But I don't know any way this could work. And if billions are controlled by a group of people, I mean, we are in crypto and know it better.

I think Luna Itself will blow up to an unstable tether version. So if big enough, it could start hammering things to zero ( not zero, but damage the market).

If peg from TUSD should not hold, we see panic.

If peg holds and bear market happens, Luna dies because of inflation.

I mean we know it better from hive.

We could know all agree nobody sells up hive hits 100$.

creating a bazillion HBD ( + 20% hype).

creating protocols/pools for trading HBD to other stable coins, supporting the peg with DAO fund.

At some point, funds are not enough to support the peg and it breaks.

I think this happens to terra this cycle.

Btw, do you know a way to short it without risking the collateral? :D

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I think Luna Itself will blow up to an unstable tether version

That may be the goal. After all, Tether has been very successful.

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2 mo

sure I think so too.

The problem I see is the unstable part. USDT has now a MC of 16,7B. If this shit starts winning like wave stablecoin, I'm really sure we see panic.

And the bigger it becomes, the bigger becomes the risk.

if some % comes into xxx- Millions of Dollar, we see the ponzi will break :D

I mean its the best magic trick ever.

Boost your coin, make a algo stable coin on it and start pushing the price with your printed dollars.

print more dollars and exit scam into other cryptos :D

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20% is definitely competitive, especially for a blockchain that has been around as long as Hive. I saw yield of 20%+ about 6 months ago for other decent/respectable platforms, but nothing much over 14% recently unless you want to risk liquidity pools for dodgy assets or maybe do full KYC.

I was wondering if I should make an investment into Hive, maybe I'll make it into HBD instead if this 20% pulls through.

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That's a great news. I have already been keeping my HBD in savings.

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2 mo (edited)

Thank you for this update of your witness' APR setting. Hope to see enough witnesses switch to it, to make it effective.

As for the competition between staked HIVE and HBD for the best APR, yes, there will be some moves from HP to HBD in savings if that happens. But at the same time, whoever wants to have a say in governance, proposals and curation will keep HP. And if some HP will end up in HBD savings, that means the curation rewards should increase for the remaining curators, increasing the attractiveness of holding HP and using it.

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20% is gonna be a changemaker for HIVE☺️
!PIZZA

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While I am only one vote and alone will not change the current interest rate, I am signalling for 20% interest for HBD, making HBD one of the most attractive options in the crypto space.

You are the first witness I see to vote for 20% interest. I saw a few people voting for 15%. Hopefully it will be increased from the current 12%. 20% would certainly make Hive Dollars (HBD) one of the most attractive options in the crypto space.

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Not the first to think about it though. I believe @smooth signaled 20% before I did, he was the one who brought it up as a good time to switch.

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Thanks for your opinion on this as a witness. 20% would be great and I suppose it would result in more HBD locked in, even by those who are transferring every cent out to exchanges.

I believe most people who take advantage of HBD interest will also have Hive powered up. While the ratio may change with an increased interest rate for HBD, I am not concerned.

Both have their advantages and a I say keeping a healthy balance between HBD in savings and HIVE staked is the answer.

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Yeahp, cool. @taskmaster4450 & @taskmaster4450le seem guilty to me, very guilty.

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Guilty of what? Wearing white after labor day?

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Wearing white after labor day?

what is wrong with that. Blends in nicely with the snow.

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No clue, I heard it from Dukes of Hazzard movie.

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Pearls of wisdom there. Hard to deny the lessons from the Dukes.

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I am guilty of a lot of things so there is a good chance you are right. Without the particulars, hard to either confirm or deny.

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Conspiracy to increase wealth of HIVERs by printing debt (HBD) on the HIVE Blockchain.

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To encourage the Power Up, and decrease the Power Down, I would also suggest an annual increase in the interest rate on HP by for example 1% (from 2.8% to 3.8%, 4.8% etc.). The bonus percentage will reset in the event of a Power Down.

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This would counter the fact the inflation rate is dropping yearly.

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The inflation rate of HIVE is secondary as set by the blockchain. That said one reason not to change it is credibility. A chain that keeps monkeying with its rate of distribution is not going to be credible.

With the conversion, the inflation of HIVE will be altered as people convert. Over the past year, according to @dalz, we actually saw a decrease in the amount of HIVE outstanding.

You bring up a good point which is worthy of exploring: providing further incentive to power up. But that has to be done in other ways in my opinion.

For example:

  • instead of burning HIVE on account creation, put that towards those powering up.

  • charge a small fee on conversion that go to the stake holders

If this is something that is serious, we can explore it. I am sure the community can come up with a lot of good ideas.

Time to apply some business building techniques to Hive.

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But that has to be done in other ways in my opinion.
For example:
instead of burning HIVE on account creation, put that towards those powering up.
charge a small fee on conversion that go to the stake holders

Really a great thought here. In fact this post made me to notice that HBD savings at 12% was still giving a higher interest to Hive curation.

The balance is really crucial.

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Yes, your proposals are absolutely acceptable. many users earn HP for free from their posts, and then use it to sell it on exchanges, after doing Power Down.

It is something that should be discouraged. So rewarding stakeholders is an extra stimulus.

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2 mo (edited)

I agree with the 20% interest rate. It is clear that there is very significant demand chasing relatively low risk yield in stables and 20% would put us at the top of the competition with the likes of UST.

In terms of locking up HBD over Powering up, I think I agree with you that the attractiveness of HBD may actually cause people to buy HIVE in order to convert it to HBD for lack of any real venues outside of Korea where liquidity is ample. I do think that there are probably some debates needed on whether the 5% fee to burn HIVE for HBD is on the higher side, as I imagine that is going to be the main method of obtaining a more substantial amount of HBD. Of course, an increase in the market cap of HIVE triggered by this will allow for more HBD to be printed with the current debt cap, and I am aware of discussions to also raise this, but I still believe the 5% fee for conversion leans on the higher side.

I also think it's pertinent to debate a potential rebranding of HBD to something that resembles "USD" a little more. It's such a small thing but I feel as though people feel less secure with things like DAI and HBD as opposed to UST, USDT, USDC simply because of the (un)familiar nomenclature to outsiders.

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2 mo

Rebranding is intersting idea ... USDH, USH :)

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Perhaps HUSD - Hive USD another option.

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2 mo

Yea that one is good, I just think Huobi got it allredy ... almost 1B in marketcap :)

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USHD

US Hive Dollar

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USDH is a great idea, jumping into the attention corridor of USDT and USDC

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2 mo (edited)

We'd have to decide if we are really committed to USD or not. In the past there was some discussion that the charter is really stable value and if USD deteriorated sufficiently we could switch to something else like a basket of commodities (I'd argue it should still programmatically inflate modestly, say 2%/y). In that case putting too much 'USD' in the name wouldn't make sense.

But on the other hand we could fully commit to USD and if USD really went bad we could create another coin (significant/infeasible development effort to do today at base level, but maybe someday).

On the other hand, I guess if the target changed the name could change again too.

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I feel uneasy about making too many or too large steps at once but I think modestly altering the name could be a small first step - just to re-orient people's perception of HBD. Of course I also don't know how much material difference it would make as I am simply going by my own "would be" initial impression of HBD, and that is, it is not as strong as a brand as something like USDH which might immediately give people a little more confidence.

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Question:

Where does the extra HBD come from?

Is it just new money added to the supply or is it taken from other funds already being minted?

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Great question Revise. I would like to know about it as well.

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It is a new form of inflation.

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I thought so - but quite insignificant ATM right with the HBD value being only around 6% of Hive (TMC) - so 20% of 6% = not much of an addition for quite a lot of publicity gain I think.

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2 mo

Its less then 1% aditianal inflation.... around 0.1% ... hbd in circulation is around 9.5M and around 3M is in savings

https://hive.ausbit.dev/hbd

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2 mo (edited)

Screenshot 2022-04-09 at 13.23.38.png

I went with this - I guess this includes the DAO... I'm talking worst case sceanrio, I get yer point though - use the figures IN SAVINGS!

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2 mo

Yea that includes the dao that is now at around 15M ... debt calculations excludes it

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DAO can't get interest because it can't go into savings.

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Its a new inflation, has been around 30k HBD per month in the last few months .... if we add this to the around 2M HIVE inflation atm its extremly low, aditional inflation for now :)

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In general I see that as a gamble, we might attract people to buy HIVE to convert to HBD. HIVE price might go up. In this case holding HP and HIVE in general might be even more profitable, hence I can see no danger in said competition.

While this group of people will dump HIVE as soon as they'll find the greener pasture, the spike in price might attract another group of people interested in blogging on HIVE. There is direct correlation between price and activity and there seems to be some threshold of earning which attracts masses.

The other side of the gamble is making governance model more vulnarable, however at this point it seems to be far fetched do I'm in favor of bringing 20% APR on HBD. You have my vote!

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I wish Splinterlands didn’t take most of my HBD away for needing things to buy hehe. I think 20% interest is pretty epic for us, let’s see if we can get the other witnesses on board!

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One of the best.

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The investors dilemma. Where to put your resources.

Hive is offering a lot of choices these days.

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Will it be too great of a dilemma? Is there such thing as too many choices? I support experimentation, sure. As long as we're quick to admit mistakes and correct them I have no problem with a little test. At the end of the day HIVE is diversified enough to afford some trial and error.

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I think there's such thing as too many choices. You don't want to be spread too thin and miss opportunities with what you have because you are spread out too much to find out news that could be beneficial.

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Dilemma indeed! I've been slacking on some of the other opportunities but hoping that I can make up for that with decent Splinterlands investments lol time will tell though!

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It’s the right decision, the only thing is missing is adding more visibility to what we are doing here

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This was specifically talked about and would be the one-two punch for this change.

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This is going to make HBD better than UST yields on Anchor since they fluctuate between 18-20. Also, you put your crypto into a contract that is prone to hacking. With HBD savings, your keys, your crypto.

I believe this change will make Hive very attractive to other options. Pair this with some marketing and promotion discussed by other witnesses, this could be a game-changer for Hive.

No brainer!

What can we do to make other top 20 witnesses signal the same 20%?

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Also, you put your crypto into a contract that is prone to hacking. With HBD savings, your keys, your crypto.

I highly suggest a cold wallet, which is perfect for this.

What can we do to make other top 20 witnesses signal the same 20%?

I'm pretty sure you will start seeing more signalling, this isn't my idea and I am not the first. I just wanted to put out a post to raise some awareness.

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I highly suggest a cold wallet, which is perfect for this.

How does cold wallet solve this problem? Once we deposit our crypto into a DeFi pool, it moves from our cold wallet to that particular contract. I feel dumb now, maybe I am missing something. 😢

I'm pretty sure you will start seeing more signalling, this isn't my idea and I am not the first. I just wanted to put out a post to raise some awareness.

Yes, I can see others signaling the same percentage. 20% should be the norm ;) HBD savings is going to be my top favorite savings account now.

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How does cold wallet solve this problem?

You can continously deposit into a cold wallet without ever logging into it.

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What can we do to make other top 20 witnesses signal the same 20%?

You can't make anybody vote how you want. But you can express your view to try to convince and also change your witness votes.

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I think at 20% and the safety of owning your keys so far less risk than any defi.

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Plus there is absolutely no third party risk.

The "counterparty" is the code on the blockchain. There is no application involved.

Plus the payout is in more HBD, not another token which brings another layer of risk.

20% with very low risk is what is being proposed.

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Thanks for the update. I have actually made a habit of checking the witness page about once a week to see who has the interest rate set where. 12% is already incredibly attractive. 20% will be even more so. At 20% HDB can compete against some of Defi, and HBD has the huge advantage of being stable and much more trustworthy.

Yes, I suppose it may soak up some of the money that people would otherwise use to power-up. But, then again, I think many of the tokens and the diesel pools (some of them have just insane APRs, like the PLN one) are already soaking up that money. It's likely the HBD savings takes money people would throw at tokens and pools more than money they would use to power-up.

Another huge advantage is a 20% rate could attract outside interest. It may attract new people to join Hive just so they can take advantage of that rate. Then while they are taking advantage of that, they may look around Hive and decide they like it. That's be a huge win if we can attract new people!

Anyway, thanks Marky for the update. I hope other witnesses follow suit.

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2 mo (edited)

Overall printing HBD should be considered as an act of balance from the witnesses.... with the main thing to consider the Hive debt.

At the moment HBD is in a great position with around 2% debt. Hive has been conservative in this regards for a long time. With the increase of the haircut limit in the next HF there will be even more safe room.

At some point if we get above 20% debt, probably will be a good time to reconsider the hbd apr.

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That has to be balanced with growth. If there are enough use cases forming for HBD and the token is being circulated, creating a thriving economy, then the debt level will not be a problem.

Obviously, if that takes place, the amount of HBD required will be enormous, meaning the demand for HIVE will increase.

As always, it comes down to building. If project teams are doing that and incorporating HBD in, then growth will offset it all. This is where I believe the foundation of Hive differs from many: we have builders here.

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I know there is at least one dApp that will be locking up a lot of HBD.

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It is a perfect solution for gaming.

Lock up some HBD in savings, earn 20%, and use the proceeds to fund some of the #Play2Earn. As popularity is achieved, and people are buying more NFTs, skins, or whatever, that money keeps getting pumped into the savings.

As it grows, so do the payouts to the players. A rather simple revenue source for the game.

I know there is at least one dApp that will be locking up a lot of HBD.

Only 1? LOL

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There may be more than one, I just know of one. I am actually thinking about using for my projects as well. It isn't easy though, because you don't get the 20% instantly and not many people want to wait a year to get it. It also comes locked up so you are constantly unlocking rewards.

Being monthly, that means that is the shortest term you can use it for your dApp users without dipping into your own pocket.

In fact, it is likely you will have to dip into your pockets to use the rewards for a dapp which becomes a nightmare in terms of calculating. For example, if you wanted to use HBD to support a weekly reward pool. That's about 0.38% gain weekly if you ignore the 3 day to unlock.

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That is all true. At best you will have to wait a month to get the first payout and build from there. You are right, the accounting could get rather wonky if not careful. Have to first develop some type of revenue stream then place it in the savings and start earning there.

Alas, first order of business is getting the option there for people.

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Being monthly, that means that is the shortest term you can use it for your dApp users without dipping into your own pocket.

Just draw from principal. The interest will replenish it at the end of the month when paid. The interest will be slightly lower of course, but not significant.

One risk is that witnesses reduce APR (potentially to zero) before it gets paid out. This should be made clear in the rules of the game/dapp.

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B20. This is the carrot that can become bait for donkeys that are not yet looking towards the Hive).

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So are you saying we are all asses?

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2 mo (edited)

Lol, you turned my phrase hard, although, probably, when you don’t see the interlocutor’s face, this phrase may look like this. I was talking about those who believe that the hive is a soap bubble and turn their heads away from it)
I don’t divide into those who invest in the Hive, or in LEO, or another coin of the bottom of the blockchain, these are people who meaningfully bet on something, but, one way or another, they are already in the Hive. It was about potential, new users, sometimes very stubborn in their fears.
Yes, I must take into account that in English there is no diminutive, affectionate mood for the word donkey, as it is in Russian. on which I think)

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That is okay. Most of us are asses. We accept it and move on.

In spite of that, we are building something pretty special so it is just a matter of time before the rest of the donkeys get on board.

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Before coming to the Hive, I did not notice such stubbornness in myself, yes, there is something in this and it’s not very bad to be a donkey)

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This is great News. I will definitely switch over to HBD for the 20% APR.

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20% starts to make me interested now. With 12% I felt no attractive sense to building HBD funds for passive income as I could most likely make more either through defi or simply through curation, and the interest on the hive. 20% starts to throw some of that out the window and starts making it an attractive option.

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20% is amazing, but 12% is pretty damn good and shields you from risk of Hive going down, but you lose the gains if it goes up.

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HBD savings eliminates any 3rd party risk that is associated with DeFi. Plus it basically negates any volatility issues that we see with other DeFi applications (i.e. token price crashing).

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Great Post!

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Interesting - I'm currently keeping almost nothing in HBD because 12% isn't attractive enough (compared with powered up hive, 2nd later tokens and other crypto stuff) - 20% would definitely get my interest though.

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I believe it's important, considering that many financial sectors are already playing around with well above 15% on savings, to remain relevant and attractive would mean that it has to cross that mark.

20% is a good signal, any chances hive Is getting an higher incentive for staking?

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One other question does this 20% to HBDs on savings go on being printed when the Haircut rule comes into play and HBD stops getting paid out as rewards?

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Interest isn't affected by haircut but if conditions called for it witnesses could consider changing the rate including to zero. That might or might not be a good idea since it would reduce supply but could also discourage people from holding their HBD and make it harder to recover.

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Cheers, if we were going to vary the 20% in any way it would need to be VERY clear I think under what conditions it can vary, easier to just keep it the same!

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It can vary under any conditions. It is not a "promised" rate. This should always be made clear.

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I wonder what the implications are of this for attracting new investors... It's an interesting stable coin HBD, that's for sure!

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What @smooth said

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2 mo

I agree, considering HBD is similar to UST, it should have a comparable APY.

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Someone mentioned the APY on UST is going down. Not sure if that is true but it makes sense considering the number of tokens out there and how they structured things.

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Do u have any thoughts on putting a proposal out to use 1M usd of the dhf to buy btc and then put it into a multi sig account that guarantees a 1:1 conversion to HBD on hive internal market thus partial backing HBD with btc? Bitcoiners would likely start to see hive as a btc side chain at that point. Especially if we had a way to tip content on hive with lightening (which is basically already ready with BoL’s V4V system)

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2 mo (edited)

I'd support this with a lower exchange rate, essentially a backup, maybe 0.98 or so. This would also have the advantage of avoiding depleting the BTC backstop quickly. Right at 1:1, a lot of BTC might get redeemed. At 0.98 , it won't unless there is real stress on HIVE/HBD.

In the event that the BTC does get redeemed, this accrues a small profit to DHF, which always values and can exchange between HIVE/HBD at 1.00

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Yes. Nice!! Also, assuming that the hive holders already have the btc they want, anyone else looking to empty such a btc pool would likely have already have had to buy hive off the open market to convert to HBD, likely pushing the market cap of hive up already.

The exchange rate should be set low enough to discourage someone using that peg for large orders and draining the pool, when they can get a slightly better usd btc rate somewhere else

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2 mo

Great idea, I would definitely support it.

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2 mo

marketing and promotion discussed by other witnesses

Would love to see or learn more about these discussions! Is there a link or are these private chats?

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If there was a link, wouldnt they be public chats then. 😁

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2 mo

Right! Which is why I asked if there was one.

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What is a super majority for this to get implemented, and will is just happen when this majority is reached?

Thanks in advance

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Needs 11 of the top 20 witnesses.

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A good move. This is something that is needed. We have a very low distribution and HBD and it is impossible to have a serious stablecoin with 9 million actually out there.

Adding in a time lock feature would really help. This was the idea behind Hive Savings Bonds. Nevertheless, since we need the HBD having the extra interest is appealing.

We also have pHBD on its way. This is something that is going to help the entire ecosystem. Set off some compeittion.

HBD is very low risk on chain. A strong 20% with minimal risk is hard to beat.

I hope others follow the lead.

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20% sounds great. I already put all HBD I earn from blogging into savings for 12% .. fatten it up and I might consider selling some of my other assets to deposit

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In regards to the concerns about the governance.

You might think this change may result in users powering down and buying more HBD. Which is true and real.
In this case, the HBD price goes up. When it goes over $1.05, buying HBD is not worth it anymore. So the conversions start to happen. HIVE to HBD. This results in the deflation of the liquid HIVE in circulation.

So as long as this goes on, we burn HIVE day by day, and the liquid HIVE is getting less and less in the circulation. There might not be any governance concerns because most likely the proportion of HP to liquid HIVE won't change that much.

This change with enough marketing power can result in higher prices for HIVE. And since HBD is stable, we won't have any over-printing issues like the old chain.

And this is not a pure financial change. It's mostly a marketing move.

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Interesting thoughts.

@geekgirl already mentioned this change you decided to call on.

Also, there is a lot more awareness in Anchor Protocol and Terra than I suspected. Very nice.

!PIZZA

- EVm

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I think it's a good idea.

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This approach assumes that people speculating on HBD or profiting on the new APR would contribute to anything long term. Quick liquidity? Sure. Volatility? Maybe. Quite a few new signups? For sure! But will they ever become active users and if they do...will they share anything to HIVE other than speculation on their investments?

I think the money will come with the active userbase. A website where people mostly talk about crypto, lots of text, that's not attractive to the larger crowds these days. Let's make an interface for reels on a loop too...

Instead of raising the APR for HBD, if more active "regular" users is the goal, let's assign 1% of the pool to external marketing or create a proposal for funding. Let's buy a few endorsements from Cameo, get a few celebrities saying they signed up. Get people in here to actually use the network and its many tools, then the money will come, then speculators will come. Offer something exclusively to speculators and that's what you will get, they will bail the minute someone else offers 21%.

I hope I'm wrong.

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I disagree, this makes Hive competitive to the biggest projects in the Defi space. Granted we need to work on our onboarding, but this gives us something to talk about.

We already have funds for marketing (DHF), we just have to use them on good ideas.

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I was not aware DHF could be used for marketing, thanks.

Part of me just feels like HIVE is too good already, at this point, with everything we have...I mean we have