Introvert Talks - Has HBD Depegged?

"Introvert Talks" is meant to be a new initiative or theme, where I myself as an introvert, just talk about reflections and thoughts about my life, or maybe share more personal stuff. :)

This is my weekly post under this "Introvert Talks" theme and let's see where it takes me and us.

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We need to have a good talk about Hive Backed Dollar, or HBD.

As with the naming, it is "expected" that HBD should be trading similarly to a USD stablecoin and be worth around 1 USD, apart from minor fluctuations every now and then due to market movements.

However, since the start of this month, I did notice some material movements to the price of HBD. While there are quite a number of price sources, here's just one from CoinMarketCap. HBD is currently trading around USD 0.91. Unlike typical fluctuations where the price will return to the peg after some time, the 9% "steep" (relatively for a "stablecoin") discount has persisted for quite some time now.

At the same time, I also noticed that HBD interest had a slight dip from 15% to 14% APR. I remembered the days where it was at 20% APR, and in 2024, it went to 15%, and as of now, it's at 14%. From a big picture perspective, 1% less APR is not that significant, especially when compared to a 9-10% discount in the value of HBD itself.

So the question is has HBD depegged? If yes, how and what caused it to depeg?

I am definitely not a Hive expert. But with AI now, actually one can just input questions and get all the answers. Even when the answers might look complicated, one can always ask the AI to simplify and explain in another way. Personally I used more of Google Gemini these days as I had subscribed to the Pro version.

While I don't intend to copy and paste the responses here, because after all, they have a disclaimer at the bottom that says "Gemini is AI and can make mistakes.", and I am not 100% sure their explanation is accurate as well. You can try it on your own if you are interested. But I could broadly understand the big picture, of how HBD fits inside the Hive system, and how, and why, we are getting liquid Hive (and Hive Power) instead of HBD (and Hive Power) for our curation rewards these days.

Ultimately, my key takeaway is that under certain criteria or circumstances, HBD would not keep the value of 1 USD, so we should not always expect the peg to be maintained all the time.

Of course, by the nature of the setup, it should be more stable as compared to a crypto coin like Hive (which can move 10-20% up or down in a day), but we need to be mentally prepared that HBD can trade a discount in certain market conditions. Which means we can still go lower from the current levels of 0.90-0.91 if the conditions persist. But as part of the Hive community for so many years now, we of course would like to see the community thrive, and hopefully, see Hive as well as HBD trade at decent price levels. I guess time will tell.

For me, nothing much has changed.

It's still accumulating assets on Hive through my hobby of writing and engaging, be it Hive or HP or HBD. That said, being so used to the 50% HBD and 50% HP reward system, I did had a random thought if I should swap the 50% liquid Hive portion into HBD manually to maintain the "same" system all these years. Ignoring the implications on the tokenomics, it's just one extra manual transaction to revert back to old 50% HBD and 50% HP system. I guess the key inertia for me is probably laziness - imagine I have to do that for every curation reward of a post or comment, and the values are not that substantial either. In addition, Now that I have a better understanding of HBD, and knowing that the peg is not guaranteed, I guess it's not a bad choice retaining the liquid Hive as it is, weighing the risk of downside of the price of Hive versus its potential upside.

Of course, this being a "Introvert Talks" post, it's more about self reflection and sharing. So this is not financial advice. After all, it's probably more insightful to hear from those with much more Hive Power than a user with just around 11,000 HP. Hehe!

So that's all I have! If you have any thoughts about the latest HBD situation, feel free to share them too!