Stability and "Pumpability" of HBD in Crypto Bull Market
Hive-backed Dollar, Hive Dollar, or HBD. It is the stablecoin of Hive ecosystem that is created via HIVE coins. Each HBD keeps a certain amount of HIVE inside to be created in the first place. Though it may sound a bit risky remembering some catastrophic events in crypto, we are way over-collateralized with HBD.
If you want to know about the collateralization rate of HBD, you can use the witness Ausbit's website to see the current debt limits. As of writing, the market cap of HBD takes 4.6% of the market cap of HIVE that backs this stablecoin. If you want to trade HIVE / HBD, you can use HiveDex by Mahdiyari, as well 🔥
Final note: LeoBridge by LeoFinance made HBD cross-chain. To use pHBD on Polygon and bHBD on BNB Chain, you can use this amazing project.
Though it is a functional stablecoin, what if it does not keep the peg stable?
Remembering the Past Performance
HBD was a strong stablecoin during the bear market thanks to the hbd-stablizer project initiated by smooth. This project helped HBD gain more strength and enabled it to be seen and used as a stablecoin by thousands of people.
In the greedy bull-market times, it is quite likely to see stablecoins losing their pegs on the positive sides. For example:
HBD lost its peg and reached up to $2,50 in 2021.
As Hivers / Hivians know very well, Asian pumps are huge in ecosystem. So, if we see massive volumes for HBD on centralized exchanges, there will be more pressure on HBD on Hive ecosystem to be transferred and pumped on Asian CEXs.
Both Stable and "Pumpable" with 20% APR!
Imagine someone tells you that there is a stablecoin that does not drop below $1 but it may reach up to $2.50 - $3 if there will be buy-pressure in the overhyped crypto market conditions. Besides, this stablecoin gives 20% APR in saving / staking program. How would you feel about it?
Since 2021, we have stress-tested the stability of HBD against some minor pumps. Each time it was able to stabilize itself but we also made some profit for holding a stablecoin 😅
Honestly, it is like there is too little risk to be depegged downwards but it is possible to go upwards in the bull market. This is an amazing narrative 🙃
Exceptional Narrative Unlocked
No project wants its stablecoin to be deppegged. We have seen several blockchains lost their reputation and credibility when the "stable" coin went to 0. Yet, it is the first time I see a stablecoin that only goes upwards.
- 20% APR
- Over Over Collateralized
- "Pumpable" 😅
The Risks of Pumpability
TLDR; I see no risks.
Imagine I have 10 HBD and someone wants to but them for $20. I'll definitely accept this offer. As a consequence of this trade, 10 HBD will be moved to a CEX.
The same guy wants to sell 10 HBD for $15 to me but I do not accept it. So, this guy will try to sell it for lower price in the market. In time, the buyers an sellers will come to the level of $1 per HBD.
What if HBD is oversold in a CEX?
As we accept it for $1 in our ecosystem, the person who buys it for $0.95 - $0.98 will make an arbitrage to receive free money per HBD. There are already many people who would be eager to buy cheap HBD for 20% APR for it 😉
In the end, HBD hodlers are secured at $1 level but/and they have the potential to sell it for a higher price if overhyped crypto conditions occur as earlier.
Mathematically, $1 ≤ HBD < ∞
As a HBD stablecoin holder, I adore its $1 ≤ HBD stable situation as well as potential too sell $1 for more than $1 in the bull-run 🙃
Posted Using LeoFinance Beta