This is a report for the Hive inflation for December 2021. Tracking the HIVE supply has always been challenging and this monthly post aims to provide an overview of the flow of inflation, conversions etc.

Let’s take a look!

Hive has its regular inflation that follows the following formula

Hive inflation = (978 - (head_block_number / 250000)) / 100 

It also gets rounded up at 0.5. At the moment the Hive inflation is 7.5%.

The thing is Hive has a double currency system HIVE and HBD and there are conversions between them that add or remove HIVE from circulation on top of the regular inflation. Furthermore there is HIVE in the DHF that is slowly being converted to HBD and also HIVE sent to the DHF is also converted to HBD. Because of this additional mechanics the HIVE inflation and supply can be drastically different in real time then the regular one.

To be able to follow the HIVE supply we need the following.

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HIVE Created:

• Author rewards
• Curation rewards
• Witness rewards
• Staking rewards
• HIVE from HBD Conversions

HIVE Removed:

• HIVE to HBD conversions
• 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

Next the HBD.

HBD Created:

• 10% share of the inflation to the DHF
• HBD Author Rewards
• Interest payouts
• HIVE to HBD Conversions
• Ninja Mined HIVE To HBD Conversions In DHF
• HIVE transfers to DHF and converted to HBD

HBD Removed:

• HBD to HIVE Conversions
• Transfers to null + null as post beneficiary

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When all the above is sums up we will get all the differences between them and how much HIVE and HBD was created or removed in a certain time frame.

With this said let’s take a look at the charts.

HIVE Created From Regular Inflation in 2021

First the chart for the regular inflation for HIVE in 2021.

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

These are the regular ways HIVE is created without the conversions. All the above are paid as Hive Power or VESTS, except in a case where the HBD debt is high and post start receiving liquid HIVE instead of HBD.

As we can see this type of inflation is around 55k HIVE per day at the end of the year. It has been slowly decreasing in 2021. The few spikes that we can see in July and then in October is where there were liquid HIVE payouts to posts because of the high debt for HBD.

The curation rewards take the biggest share of this type of inflation.

A total of 21.6M HIVE was created from the inflation above in 2021, out of which 1.7M in December 2021.

HIVE Created From Conversions

When we add the conversions from HBD to HIVE on the chart above we get this.

We can notice that the conversions are quite volatile with big swings happening at occasions. HBD to HIVE conversions are happening when the price of HBD is bellow the peg, bellow one dollar. When this happens if you convert HBD to HIVE the blockchain will still give you HIVE for the value of HBD of one dollar, does making conversions profitable to external markets.

In the last year the @hbdstabilizer has taken on the role of stabilizing HBD and a large share of the conversions are made from this account, but there are other accounts doing it as well.

In 2021 a total of 23M HIVE was created from conversions out of which 2.5M HIVE in December 2021.

Cumulative from regular inflation and conversions a total of 44.5M HIVE was created in 2021, out of which 4.2M in December 2021.

HIVE Removed From Circulation In 2021

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

As we can see the conversions from HIVE to HBD that happened at the end of August and begging of September have impacted the chart heavily. On a few occasions there was 2M HIVE converted to HBD in one day. On a yearly level the regular conversions are on the top with almost 25M, followed by HIVE sent to the DHF (14M) and then the conversion of the ninja mine in the DHF (13M).

Cumulative a total of 55M HIVE was removed in 2021.

Now let’s take a look at HBD.

HBD Created In 2021

Here it the chart.

The above is a chart for HBD created without the conversions. It includes to following.

• 10% share of the inflation to the DHF

• HBD Author Rewards

• Interest payouts

• HIVE to HBD conversions

• Ninja Mined HIVE To HBD Conversions In DHF

• HIVE transfers to DHF and converted to HBD

Here again we can see that the conversions are dominant when it comes to adding a new supply of HBD. The August and July period is when a lot of HBD was created. Around 17M HBD was created in this period. The ninja mined HIVE conversions are also adding significant amounts of HBD in the DHF, especially with a high HIVE price. Note that the HBD in the DHF doesn’t count as debt.

A total of 35M HBD was created in 2021, and most of it (more then 30M) came from the three types of conversions. HBD to authors accounts for around 2.3M HBD.

HBD Removed in 2021

Now let’s take a look at HBD removed. Here is the chart.

HBD is mainly removed when converted to HIVE, but also with transfer to @null and setting null as beneficiary on posts rewards.

HBD is being converted to HIVE when the price is bellow the peg. We can see that in the last period there is a lot of HBD conversions. Even with these conversions and the hbdstabilizers constantly selling HIVE for HBD (buying HBD 😊) on the internal market, the HIVE price keeps increasing. These conversions follow after the huge conversions in the opposite direction in august and September. There is a possibility that a balance will be find soon. We can notice that in December the conversions are already less then in November.

HIVE Supply In 2021

When all the above is added and removed we get this chart for the HIVE supply in 2021.

Overall, the HIVE supply in 2021 is deflationary! At the beginning of the year there was around 380M of HIVE in circulation and now there is 369M. A reduction of 11M.
Up until August, the supply was almost constant with a small fluctuation. Then a huge drop in the supply in August and September, from 384M to 357M. An increase since then and now we are around 369M HIVE in circulation.

HBD Supply In 2021

Here is the chart for the HBD supply.

Well, the HBD supply has expanded quite a bit 2021. Started with around 5M HBD and now there is 24M. It was almost 29M back in September. The expansion of the HBD supply is because of the HIVE to HBD conversions, and we can see that a lot of those were happening at the end of August and begging of September. In November there was reduction in the supply of HBD and in December it is up again.

Will see how it goes from here, but if the price of HBD increase above one dollar we can see more expansion of the HBD supply and contraction on the HIVE side.

Virtual HIVE Supply In 2021

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

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 quite a lot, mostly because it is tied to the price of HIVE. As the price of HIVE increases, the virtual supply decreases and the opposite.

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Supply Summary

Here is the new HIVE put in circulation by category.

HIVE Created

	2021
Author rewards	4,617,781
Curation rewards	9,723,263
Witness rewards	3,028,022
Staking rewards	4,191,461
HIVE from HBD Conversions	22,983,364
Total	44,545,912

HIVE Removed

	2021
HIVE to HBD conversions	24,765,032
Ninja Mined HIVE To HBD Conversions In DHF	13,369,027
HIVE transfers to DHF and converted to HBD	14,826,432
Transfers to null + null as beneficiary	202,781
New accounts creation fee	1,947,435
Total	55,112,727

HBD has expanded from 5M to 24M in 2021. Most of the new supply came from the conversions. Same as for HBD removed, it is happening when HBD is converted to HIVE.

Monthly and yearly balance

Here are the numbers for HIVE, HBD and virtual HIVE added/removed in November and for the whole year of 2021.

	December	2021
Net HIVE Created	1,803,291	-10,489,076
Net HBD Created	795,086	19,584,340

And the balance of HIVE, HBD and virtual HIVE on Jan 1 and Dec 31, 2021.

	Jan-01	Dec-31
HIVE Supply	380,208,202	369,827,477
HBD Supply	4,993,134	24,531,355
Virtual HIVE Supply	424,674,851	385,839,679

I personally don’t like the parameter for the virtual supply, since it is directly dependent on the HIVE price and can be volatile.
The standard HIVE supply is my preferable metric, and we can see that it has decreased for -10.4M in 2021, while adding a 1.8M in December 2021.

All the best @dalz

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