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RE: Is 10% APR on HBD Savings Too High?
I think 10% is about right at the moment. I remember one objection to lowering the interest rate from 20% was that it might create a run from HBD to HIVE causing the price of HIVE to crash, and we did indeed see a decline in the price of HIVE as the HBD interest rate came down, but I think there may have been other factors influencing the decline, not just lower HBD rates.
However, the good news is that the HBD debt trend has dropped back to just above twenty percent when it had seemed almost inevitable that it would keep on rising and kick HBD off its peg.
Source: https://hbdstats.com/
That was also helped by the recovery in the price of HIVE, so I think it was right to reduce the HBD interest rate from 20% and to do so in a series of steps rather than a straight halving to 10%.
If the reduction on saving interests is too abrupt, people don't have a choice to get out of it and look for better returns. That would have a drastic price impact. On the other hand, every percentage that we pay, means a direct devaluation of hive because every HBD can be converted to hive. So with low hive prices, each HBD represents a lot of hive. Lowering interests is in my opinion the correct way for a long term strategy and doing it slowly is to avoid a big drop in price.
Agreed! I think we managed to navigate the series of reductions from 20% to 10% reasonably well. From here, a gradual reduction in steps of 0.5% seems feasible.
!BBH