What is the Price of 20% APR on HBD Savings? .:. Late Night Blogging
I have no idea where to start with this very important topic and to not hurt your feelings... 😃 Certain things in life can bring us good, but in the long term, they can harm us a lot more... It is hard to recognize these things, especially in today's age when people rarely think in the long-term, and even if they do, they think in like 2-3 months "long term"... That's not long-term thinking... I know that in crypto everything over a week is considered as a long-term, but that's more a joke than a real statement...
I remember the time when 20% APR was implemented (and supported) by Hive witnesses... Everyone was thrilled about the news, LUNA was doing the same percentage (yes, it was alive in those moments), and after having the HBD savings percentage at 3% (or it was under?), this was a piece of excellent news!
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As crypto is a volatile asset (everyone says that but sometimes, I'm not that sure about that), people run into the "safe haven"... the good old USD... In our case, HBD... Getting 20% APR on something that's "safe" is AWESOME! Instantly, everyone forgot that HIVE went from 12 cents to over 50 cents in less than a year... yes, it went back to 32-33 cents, but that's still 3x more... or 300%... But, let's be honest, that happened in 2 years, so the APR is "only" 150% (+ 3% HP + 8-9% curation rewards per year)... But, let us forget about that...
What was the main purpose of a higher APR on HBD savings? And what is the purpose of HBD in the first place?
No, it's not to make rich HBD whales even richer, but that's what's happening too... 😃The general idea was to have a "stablecoin" integrated into the main blockchain to make e-commerce and future developments easier on HIVE... It has sense, as it is easier to pay some developer from the outside in USD if the person has no idea about the HIVE... And it's okay to build a game where HBD would be the "main token" and attract more players from the "outside" and lure them to HIVE...
Also, another use case would be the creation of different DeFi platforms that would use HBD as a stablecoin... We saw that with Polycub (in a certain way), or with Dieselpools, but we need more platforms with different ranges of products... And HBD wasn't the highlight of those (current) platforms... It was present, but not as a cornerstone...
Those were good ideas and making a higher APR on HBD was a nice incentive to make them even better... But, did we get that result? I don't want to be pessimistic about this, but the main purpose of higher APR is mostly viewed as "put it in the savings and harvest 20% APR"... Most HBD tokens are LOCKED in savings and rarely used for any of those mentioned ideas... Maybe to sell them to take profits...
Why not 10%? Or 7%? Or 50%?
I mean, I know that 20% APR was decided to counterpart LUNA's 20%, but one of the reasons why LUNA crashed was exactly that as it wasn't sustainable... Today, having that 20% is making people (outside the HIVE) afraid to invest in it... It doesn't matter if it is sustainable or not... People are emotional and react without having any knowledge... Even if that is right or wrong, it is like that...
So why not a lower %, or a bigger %? Let's go back to the general idea... We need more liquidity and that's why we are "printing" more HBD for funding projects, using HBD in transactions, paying stuff, etc... If we want that, and we have only that haircut rule, we can print at whatever rate we want (if the goal is to have more supply)...
At what price are we printing 20% APR on HBD savings?
You know that saying... If there is no product, you are the product... There is no free stuff and always someone pays the price... Now, we are coming to that point which was the main trigger for creating this post... The question from Discord...
Why should you buy (HIVE or any other HiveEngine token) if less than <20% from HBD?
The question sounds confusing, but it's just perfect! Let's start with HIVE... It is the main token of this blockchain (the network is called like that... can't say it's not! 😀) and it's the "engine" of the blockchain! By powering up your HIVE to HIVE POWER, you are getting many different advantages on the blockchain, starting with Resource Credits, which give you possibilities to execute transactions on the chain, to earning additional HP from inflation, curation, etc... But... If you ignore all the "second layer effects" of having HivePower (that many people are unaware of... I mentioned them many times in my previous posts), you get to those numbers that I mentioned at the beginning.... 3% from staking + 8-9% from curating, which leads to max 12% APR on your HivePower... That's less than 20% APR on HBD savings... Why would I stake HIVE at all?!
We have many similar examples on the Hive's "second layer" better known Hive-Engine... We had many tokens that were giving your 50-60-100% APR on staking them, or just by HODLing them in your wallets... That attracted many people as it IS HIGHER THAN 20% ON HBD! What happened to ALL of those tokens? They went down in value (compared to USD, HIVE, or BTC) as they weren't sustainable and people lost money... Even by having 100% APR... 100% of nothing is still nothing!
Lately, I saw some people trying to experiment with different tokenomics in the hope that they can create a sustainable APR for their investors, users, players, etc... What is a sustainable APR? You can create hundreds of % in a hyperinflationary environment, but it is extremely hard to do it in a healthy economy... If you want to "give" value to people, you have to "earn" it somewhere... If you don't do it, you are creating a Ponzi which isn't sustainable in any scenario... So, what are the "real APRs"? In my opinion (you can have a different one), it is around those that we have on HIVE, or other chains, between 4-10%... It is possible to create a project with that APR!
But, we are coming to that famous question... Why should you buy (HIVE or any other HiveEngine token) if less than <20% from HBD? Because of that simple question, many of those QUALITY (and sustainable) projects are not growing and attracting other investors... Higher APR on HBD is killing small projects on the second layer...
The third aspect is that, if we move the focus from people to HBD/USD, we lose price movements of crypto, moving attention back to stablecoins, USD, and all that we have escaped... The question is... Did we move to crypto as we want to change things, or we moved to earn more fiat money by speculating?
I suppose that I could write a lot more about this topic, but I doubt that it would keep your focus... 😃 So, let's leave it here with one thought...
Are we shooting ourselves in the foot by having this high APR on HBD savings?
Tell me what you think in the comment section... Maybe I got it all wrong...
PS. I will skip this week's #MyHiveGoals post as I don't want to dilute this important topic...
Thank you for your time,
~ph~
PPS. This isn't financial advice!
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I have to agree with you. We raised the percentage to have a competitive edge.
Since LUNA is dead AF, we can go back to the 10-15% range.
I don't know where the "sweet spot" is, but I would say that it's important to start the discussion about it... But, we have to cover all possible views and aspects of the change before diving into it...
Yes. For sure.
For now, 20% seems fine. Because HBD's Marketcap is currently 6.574 % of HIVE's Marketcap.
We can start to worry when it reaches around 20%.
So, why not 50% APR? That would be great. 😀 We could earn faster? :)
I think it is a good time to look at the % rate for HBD. If we look at the figures from the Stabilizer for just 2023 ytd, it has already inflated the supply of Hive by 2M according to the last stats and this will grow exponentially as we see the interest payments growing quickly too.
source
I do understand that we are still "in the safe zone", but that doesn't mean that we should strangle HIVE and other tokens...
The amount of Hive created by conversions from HBD stablilizer isn't really a measurement of how much inflation HBD or HBD interest creates.
That's not to disagree that HBD APR needs to be reviewed (I think it should be lowered to something marginally better than USD inflation rate, a modest incentive to save in HBD), just that the above isn't really a measurement of the net inflationary impact of either HBD or HBD interest.
I presume the best measure would be the total interest paid, converted to Hive. But what % is actually converted I'm not sure.
It's impossible to fully track what is done because all HBD in an account is inherently mixed (unlike with a UTXO system like Bitcoin), so the best we can do is measure how much HBD is created by interest, measure the overall impact of HBD on inflation, and take one as a proportion of the other.
That makes sense. The overall impact we can see with HBD Interest converted to Hive.
3.5k HBD per day and growing.
Which is what most of Joe Public think crypto is!
Seriously? I did not even think HIVE and LUNA were in the same league!
On a personal note I am loving the 20% and just hit 300 HBD in my savings. I was mega surprised when this got raised to 20% and I still am surprised it is still at 20%
As I have no say in what it should or not be, I won't worry about it.
Make hay while the sun shines is my motto.
I know that you are loving it and everyone loves to get 20% doing nothing... But, are we ready to pay that price for sacrificing a "better good"?
This could be easily said also like: The end justifies the means, by Niccolò Machiavelli... I liked to quote him many times when I was a teenager and my thinking was long-term, as for the afternoon... 😂
But, running a business, and having an "unloyal" (or better said illegal) competition, made me change that opinion... HBD with 20% is competing with everyone else with a huge advantage... It can make damage to the whole ecosystem... I would rather sacrifice my $100 today for $10000 tomorrow...
Like I said I have no qualms if it is reduced as I still think it is an unbelievable rate. But as for the competition and competing with other chains. Hive is small scale and whilst I love it, I don't see who we are competing against.
It should be set so as not to harm the Hive ecosystem I agree
To be honest, we are not competing with anyone OUTSIDE as there is no such blockchain as HIVE at all... Which is great...
The thing that I see (I could be wrong) is that HBD is killing HIVE from the inside... I know it sounds weird and awkward, but HIVE is a complex ecosystem and IMO, at the moment, it is "out of the balance"...
There is no 1 person who decides what is good or bad, that's our most important tool is a discussion about different topics before making decisions... And I'm glad that we are doing it! 😃
I agree and that is why I thought it was odd that was the reason given for setting it to 20%.
If projects on hive are suffering then yep it needs to be looked at.
Yeah I think we are, as you said all APR comes from earnings in the end, and in this case I think the price of HIVE iteslf is suffering because of it, HIVE is what is backing up the value of HBD, Hive Backed Dollars is the name, so with a very high APR for a very long time it will eat the value of HIVE, at the time when it was implemented and for a short period it could have been good to give HBD a boost, but for the long term it needs to be at a sustainable level.
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The conversion mechanism should fix certain issues when the price start dropping HBD for HIVE... But, even if that part works, I still think that HBD is taking a lot of value from HIVE... And that makes more damage at the moment than we can even measure... The social aspect of the network is going into the background and that is the purpose of HIVE... Isn't it?
The things we build on top of the blockchain, including social, is the purpose in my opinion, and the monetization is there to pay for it and incentivize users, which leads back to the value of HIVE being under pressure due to too much focus being on earning interest on HBD rather than building value for HIVE itself, the fact that the price of HIVE has not dropped more is a show of strength though, so with less pressure from HBD interest it might have gone up quite a bit instead.
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I 100% agree with what you said! Also, the point of tribes and communities was to take part in the "onboarding" process, but it's hard to create an incentive for staking HIVE (and tribe tokens) if you have another competitor on the chain which has an "unfair" advantage... I'm not hating HBD, but it would be nice if it would be treated at least equally to HIVE...
Curation rewards for HP and interest on HP works out to about 12% right now, so to be equal then 12% APR on HBD in Savings would then make it about equal.
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That was a long post :D Sonner or later, we have to decrease the APR, Don't know when, but it is going to happen. we will who people will reach to that.
It will happen, for sure... as we will reach that haircut value... But, the damage will be made in the meantime... I already see way too many people highlighting HBD, going all-in (which is understandable btw), and ignoring other important values of HIVE... Social, human aspect... Supporting others with upvotes, leveraging value, appreciating others...
It's is something they have to look into before it is too late , thanks for sharing
Yeah... agree... We need to discuss about important topics and this one is important for sure!
In terms of numbers, that's right. It doesn't make any sense. Especially when people are willing to sell their souls for 20% (that's figuratively lol). But not in terms of the projects I'm going after). Good thing I don't have to explain to you about Liotes and ALIVE or say BRO. I can only briefly and small amount overflow into HBD on a bull run. But I will still stay in those projects.
It's harder for new projects that will either offer very little or depreciate very quickly...
I would lower the APR of HBD by 19% percent to begin with. Then more and more. BUT.
Perhaps this percentage also serves as a defense against shit projects and second layer Hive shittokens...
Great question to ponder, to shake your brain!)
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I mean, you can do 20%+ on your project if you based your income on HBD... But, from my perspective, that's just a step back from creating a healthy ecosystem, isolated from traditional, failed finances... It would mean building on the rotten base which is the opposite of why cryptocurrencies and Bitcoin (and HIVE) were created!
Yes, I generally agree. And I bet we'll return to this issue soon.) Gotta be prepared for this event.
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Totally unsustainable, drag on the Hive price, literally no way it can be anything else, it needs bringing down to 10% IMO, which is much more realistic, and then probably down from there too in the medium term.
Agree with you! The HIVE price is "paying the price" in my opinion... HIVE lost one of its use cases when HBD savings went to 20%... More experienced HIVE users know the real value of HIVE, but newbies look at APR in the first place... and that's pointing out to HBD! So, they go there, missing the whole point of growing the account, growing their stake, their voice, and making a difference... All that for 20% on USD... 😞
I'm guilty of stacking a few myself but reluctant to hold more than $5K
I have just over $34 savings. I shoul buy a lot more, 20% is so incredible !
Hahahaah... Yeah... 20% yearly will make your rich :)
As I always mention in my account progress posts, I plan to convert some of HBD to HIVE if the price of HIVE drops below $0.30.
Hehehe... I didn't call out anyone, just saying my point of view... I also have some HBD in savings, but I would rather have more HIVE without having to balance around the price... 😃
If the goal is to create enough HBD so that it could actually be used as a transactional stablecoin the I don't think that has been achieved yet. Not even close. I agree that at some point HBD interest must come down (slowly). I just think that time is now. Demand for HBD will create demand for hive (for conversion if nothing else). I believe we've actually seen that with a deflationary effect on hive. The point being that I don't think the HBD interest could be hurting the value of hive. As far as other tokens are concened, it's not the responsibility of hive witnesses to create value for those. That's up to the token creators.
I agree with some of your points... Yes, HIVE is deflationary and if it would be as you are saying (people running to convert HIVE to HBD, etc), it would push the price of HIVE up... Which didn't happen... On the other side, we have ETH that is deflationary as HIVE and the price is still holding nicely... I know that we can't compare these two, but still...
I agree on this too, but... It's not the HIVE witnesses' concern to "overvalue" HBD and harm the complete ecosystem... 😃 20% HBD over 12% on HIVE is favoring second tokens over the primary one...
Over the long run, hive is held pretty steady. It's approximately the same price now as it was two years ago. If you look at how much hive has been converted and even at how much HBD is in savings, it's really not that much in the scheme of things. Other factors have a bigger impact on price.
Not sure what you mean by overvaluing HBD. It's supposed to maintain a value of approximately $1 which it is doing. For HBD, maintaining that loose peg is what is important. The value of hive itself could go up a lot or down a lot. That's dependent on it's utility more than anything. More apps that use hive will equate to more demand and more value. Nothing else is really going to do that. Of course, HBD as a useable circulating stable coin would help if that could ever be accomplished...
I have probably used bad wording... was meaning about favoring HBD APR over average HIVE APR... 20% APR on HBD over 12% APR on HIVE...
Anyways, the whole debate is more about a different valuing of things... SOme people prefer stablecoins and "safe return", others prefer real crypto, more risk, and better returns (or losses 😃)...
I’ll have to go read some more of taskmasters posts about the % to learn more. I’ve wondered though when it will change. I do not see many articles like this though calling for a change. I think it will stay at 20% till we starting seeing more people call for the change. People will call for it when it stays tk hurt us in other more easy to see ways.
!PIZZA
Agree... and you can notice that not all Hive witnesses support 20% APR on HBD... The biggest one, blocktrades is asking for 12%...
Discussion about expected and realized goals is always good... ;)
I don't think we are killing ourselves but it does put pressure on the Hive Engine tokens to add value. If they can't provide that value and the return, then it's better for things to go into HBD or Hive. HBD is backed by Hive and the current marketcap of HBD is still quite small. I don't think the amount in the savings affects the inflation as much either.
That's what guys from FED thought when they printed trillions of dollars... 😂
Just kidding... we will see real effects in a few months...
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BEER.I can not agree. The amount of HBD is very small compared to Hive and does not affect Hive inflation too much. In fact this month HBD was reduced if I didn't look at it wrong.
20% is a lot? No! It's little. HBD is not a dollar but a very high-risk collateralized currency, this must be clear.
Is 20% sustainable? I don't know but it is more sustainable than a year ago. The American Bond has risen a lot so now that 20% is less interesting than a year ago.
In fact, I think that having HBD at 20% instead of a 5.25% USA 1Y Bond does not make any sense for an investor.
I think I've already gone too far.
Hehehe... We should push it to 40%! We had a lot of margins, so why not? 😃 20% is just a number that was thrown in almost randomly... So, there is space for changes... up or down... people can/will decide... or witnesses... 😃
I wouldn't compare HIVE with American Bond, or anything else from traditional finance... lol... If we go down that road, we aren't better than them... :)
It's debatable. Would you feel the same way with HIVE at 1$?
20% APR for HBD is a high bar set for small projects on Hive-Engine during the bear market, but will it be the same in the bull market, especially if they are correlated or surpass the evolution of HIVE?
I agree that real use cases for HBD are slow to come out. But they will.
Personally, I use HBD in savings as a temporary holding until I buy HIVE. At least during this period. May be different in the late bull market.
It is debatable which was the point of creating this post... The debate is good!
It's interesting how people that are all about HBD felt hurt by this post (not talking about you), and almost everyone thinks that I'm against HBD, which isn't true at all... I'm just for fair play and fair competition between HBD and HIVE...
If it would be pegged, maybe I would have the same opinion... But, in any case, HIVE has so many more use cases and underline values than HBD... So, not sure how I would "feel" about it in that case...
That is true... I have to agree with you on that... I suppose that HBD's use case at the moment is to be an "exit" for weak hands to go out from HIVE... It will be interesting to see how things develop in the bull market...
Hehehe... I do the same... And maybe collecting some money for HiveFest... And I will probably use it in the bull market for taking profits... And all this means that I do USE HBD and I don't hate it... lol... It's more that APR is bother me... I mean, it's nice to earn profits on it, but my main focus is HIVE as I do want to see it thrive in the long run...
Thanks for an awesome comment that made me think in a bit different way! :)
What I meant with HIVE at $1 was for HIVE to rise 3x from here, while HBD evidently remains relatively constant but with its 20% APR. :) Besides the obvious better return for HIVE in this case if one buys HIVE now, that would also reduce the debt level and amount of HIVE burnt to convert to HBD.
Maybe in the future, we would do ok in the crypto space without stablecoins at all. But as long as we spend mainly fiat currencies (and even those differ from one another), we probably will need stablecoins pegged to them in crypto.
Otherwise, my main focus is on true crypto, and I don't consider stablecoins true crypto. More like a bridge between the two worlds.
Glad to hear that we are on the same page... 😉
And the rest of what you said, it will probably happen... that HIVE will pump up... If I wouldn't believe in that, I wouldn't accumulate HIVE at all... and would go to HBD like the majority of people... 😃
But, I have a feeling that we like to be in a minority, in general... 😂 The big truth is that, in the end, you always have just a couple of winners and a lot of losers... which means that winners are the minority... We have a chance... lol...
I regret not being as active when HIVE was around $0.10. Similarly, many will say the same about $0.35 in years to come...
Oh, yes... Many people will say that... Or, why did I collect HBD when HIVE was low? 😂
Nice sharing. At the end of the day I think the utility and the demand is more important than the APR or any burning mechanism, which are just "artificial" and short term boosts for any tokens. Like you rightly mentioned - 100% of nothing is still nothing.
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Yup... I know that I sound like a broken record, but I see a lot of use cases for HIVE, but it's hard to see the forest from the huge HBD APR 20% tree...
It will be a great ride when we finally go out from this scary bear times...
Yeah looking forward to the great ride hehe!
I recently saw an acidyo poll on twitter where they asked people what they would do if the APR of HBD dropped below 20% and most of the person answered that they would just change hbd to hive... and I think that would help the price of I have grown much more!
Wow! It's nice to hear that other people are talking about the same topic... Also, it's another proof that people do run after APR, ignoring the real value of assets...
Thanks for sharing this info! It made my day!
This is the tweet!
https://twitter.com/oAcido/status/1651869108626141184
I use HBD to help diversify my crypto portfolio. It is but one of the projects that I have my funds invested. However in looking at how many people actually are holding HBD in savings in any quantity, it is only a couple of thousand with over 50 HBD. I have only 44 HBD in savings earning the 20% and there are only 2280 people on the Hive platform with more HBD in their savings. Based on this, I do not think the 20% APR is influencing many people to put their funds in the HBD savings instead of other projects but I could be wrong. I do know from the old saving "not to keep all my eggs in one baskets" I do think the price of Hive being as low as it is has several speculating that it will increase back and provide an APR much greater than the 20% for HBD. The question there is how low will it go before it starts back up?
Well, nobody knows the answer to "when Moon?", but I can't "classify" HBD as real crypto... For me, it will (and is) serve as a place to take profits to... When we finally go out from this shit and go up, I will take profits and put them into HBD... If we will have 20% APR at that moment, fine... If not, I will do it either as, in a nutshell, it's USD and I don't expect too much from it at all... If the APR is enough to cover the current inflation, it is OK... 😃
There are some huge whales that went out from HIVE into the HBD and they collect a nice amount of profits... It is easy money and we can't blame people for doing that... I'm just worried that it pushes HIVE into the shadow as it is a "battle" where HBD's almost double APR kills the "fair play"...
From what some of the big proponents of the stable coin are saying, is that it’s important for the future where it will be used. Get the base out there now so it’s ready for prime time type of thing. I don’t know how much I agree with it yet but hopefully it won’t turn out to be a fail. I haven’t gone all in like some have powering down and selling it all for HBD which I think is foolish. I’m more comfortable playing it safe and putting a few HBD into savings per month so we take advantage of the rate but don’t lose our shirts if SHTF.
It's interesting that most people who commented on this post were thinking that I'm somehow against HBD, which isn't true at all... I'm doing like you, having some HBD, but keeping most in HIVE... If HBD APR goes back to 3%, I will still keep the same ratio for me, HBD is like fiat, and unfortunately, we still need some...
The whole point of the post was to start the debate about it... Why it's good, why it's not good, etc... But, it turned out into defending 20% like your own life! 😂 I have no idea how people survived without that 20% before the change. 😃
Except for the point that you stated (preparing HBD for "future use case"), I didn't see other constructive opinions and views about it... Also, it's true that we have some heavy market conditions at the moment and it's hard to see the big picture... So, we will see what happens... If we break something, hopefully, we would have a chance to fix it...