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HIVE Inflation Doesn't Mean Shit

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@markkujantunen
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@ats-david wrote piece entitled A vision for Hive.

I was writing a comment to the post when I realized it was becoming long enough to warrant a standalone post, so here goes:


Witness rewards must remain relatively small for DPoS to remain decentralized

In DPoS, stake distribution will become centralized over time without a large reward pool in addition to the witness rewards. The overall inflation of the base layer token cannot be significantly reduced if the goal is to avoid centralization. PoW does not have that problem because mining is expensive and miners are forced to sell continuously.

Better financial products is a great idea

As for building better financial products on Hive, I generally agree with those ideas. HBD could be vastly improved by having a MakerDAO type of CDP loan issuance mechanism in place.

The content creation use case will die off as will the community if it will no longer be monetized using base layer tokens

If the content rewards are taken away and replaced with second-layer tokens that have no speculative value, you will find that the social activity on this chain will die down in short order. If you want people to shill this chain on Twitter or elsewhere, large stakeholders will be forced to pay them out of their personal wallets instead of a global reward pool. If the content creators here will be forced to monetize their content using traditional means (earning tokens with near-zero liquidity doesn't count), the vast majority will go to platforms with orders of magnitude more traffic and thus better chances of finding an audience large enough to earn on monetized attention. The monetized social side has always been part of Hive's identity from the start. To move earning on content creation to a secondary layer where only worthless and illiquid tokens are earned is practically radically altering the identity of the project.

HIVE inflation rate is meaningless

The general theme of that proposal seems to be reducing inflation and burning tokens. As counter-intuitive as it seems, it was never the inflation rate that held us back when we were on Steem and it will not be now that we're on Hive. HIVE is given value to by liquid token holders whose trading activity gives it monetary value. Do you hear them complaining about the inflation? No? I thought so. They do not give a crap about some measly 8% inflation as long as the volatility is 100x in the space of one BTC mining reward halving cycle. And they won't give a damn about some measly 10% passive rewards any delegator can easily get using DLease.

Inflation is meaningless on the crypto markets right now. Look at how Ether has rallied despite not having a supply cap like Bitcoin. This space is crazy speculative and it will remain so for a long time. Do not fixate on a small differences in inflation rates. Such things are totally irrelevant at present.