HBD Interest now 15%
The experiment with 20% interest rates with the Hive Backed Dollar seems to have come to an end with now only 8 of the top 20 witnesses signalling 20% interest rates.
The rates are calculated based on the median interest rate value signaled by the top 20 +1 witness. Even with this drop, it is still one of the highest rates for stable coins on the market. While at 20%, the rates did not attract the expected capital as desired and instead caused huge damage to the Hive eco-system and this is an attempt to divert course before a forced de-pegging would occur.
It will be interesting to see the balance of HBD over the coming months to see if there are any changes to holders or if the rates drop further as 15% is still way higher than other stable coin returns that are available elsewhere.
We don't seem to have had a cycle like last time yet and although quite some time into a bull market, Hive has suffered like other older tokens, but doesn't rebound so well when the market goes up, instead making lower highs. Is this the market or mostly the tokenomics to blame?
Changing the rates from 20%, to 15% might not have too much effect on any potential inflation or sell pressure, plus combined with the impact of the DHF daily selling pressure, there is still quite abit of inflation and sell pressure created. Are more drastic actions needed? Some on Twitter seem to think so.
The high rates have caused many dis-incentives for people to hold Hive Power as the expected NGU didn't materalise and supporting the $7.6m of HBD debt plus a DAO with spending on trivial things hasn't helped.
It has taken a long time for the Hive witnesses to change course and the question will be is if this will be enough to win back the trust of users to power up Hive again? As HBD was promoted as the key component of the ecosystem instead of Hive and yet HBD has been a flop in the crypto space for quite some time.
Thanks for reading.
Credits:
Title image created with Hive logo. Screenshot from HBDStats.com.
Let's connect : mypathtofire
Let's see how this change will turn out in couple of months.
People should chill, it's just 5% drop and still 15% is relatively too high compared to anywhere else.
I believe APR of HBD should be adjustable depending on cycle.
Like in last year binance was offering 20% Apr on usdt but now it's less than 5% when market is down.
Should try same with HBD to see how it makes progress.
This would be a better way to go about it. The High inflation is only continuously hurting the Hive price because of all the sell offs that have to happen to keep HBD stable. 20% is not sustainable and hasn't been in a while as we have seen. It can make sense if Hive was in a bull market, but it sadly is not.
Yes, it's still a great return and better than other places. This is a good suggestion that could be considered.
You have to take into account though the problems that are being caused in the ecosystem just to have that high of an inflation rate, which you addressed in the post. Something needs to be done or the Hive token price is going to become unrecoverable
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Thanks for the thorough analysis.
Thanks for checking it out.
The decrease in interest rate saddens me, personally. But i wonder why would other hivers want to lower the rate when it would affect their interest earned too.
Good question! Well some want to lower it because they care about the future of the Hive community and don't want to see it fade away to become like Blurt with a worthless token value. There are others/insiders shall we say that have a nice cash cow going and want to try and preserve that for as long as possible as it is at risk of ending because they have been milking it too hard.
It's still too high IMHO because of the inflation issues. The 20% was brought as an answer to the UST fiasco in 2022 and was never lowered. It was meant to be an attractor to the blockchain, but when I talked to people outside of Hive, they all looked at the 20% as a scam, because of what happened with UST and it's 20% + earnings that were 'promised'.
Yes, after the UST fiasco, people are sceptical of such high rates. Even though it was popular and wanted by most of the community.
But the problem is when it stays high during a bear market like we are seeing, it just keeps us there. If the APR were lowered to 5% to lower the sell pressure, then we might have a chance to break above these levels and stay there. I don't think the 20% works with Hive under $1
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It's a badly needed change, and glad to see it finally. You can't keep things at exorbitant rates forever or it will cause a lot of damage. It really probably should be lower yet, but it's a start in the right direction!
!BBH
I agree, it's still market leading, so the impact should be minimal.
Greetings Steeve!. Thanks to your post is that I learn about this change... Like others around here, I think the APR percentage should vary depending on the movements, but wow, it's been years pretty much the same, and I definitely think this should have happened sooner. I don't know if it's too late for Hive, but at least the next few months could make us notice a favorable change or not, we'll be waiting for it 😉✌️
Hey Jesus. Yes it seems we start to adapt to the market in this area and will see how things develop!
Henry Ford once said, even when he would give away gold for free - if nobody knew about it he would not get away anything of it. Same here. It was never really marketed. So if a flop, a self-made one.
Let's say it was successful and the HBD bag was 2, 3 or even 5 times bigger, would the 20% be sustainable from the HP holders? A 20% CAGR is growing very fast too.
Only time would have told. But in the meantime I agree, less is more.
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We were told 20% was sustainable.
I would rather the focus is back on Hive Power, that is a win for everyone.
Hive is not hip new or trendy and as you put it only takes the rebound lower highs.
I am in no position to do anything to change things, but I think things need to change before it slides into oblivion.
I agree with you Ed on those points. Also I am not in a position to change things, but also recognise newer chains with shiney smart contracts, AI and other things are already here and more are coming..
o.o so u powering down still or whats your plan now ;c
My plan is
o.o wut do u mean nothing
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Hmm I actually didn't notice the interest for HBD has dropped to 15% until Hivians start to write about it recently. Looking at my wallet and the pending interest, I did a rough calculation and it seems to me that the 15% has being going on for at least a week or two. I remembered it went down to 19% earlier this year as well and then it went back to 20%. For me, am not making changes. It's still 50/50 split between Hive/HBD for my posts.
Its just been for a few days now, but the way the interest is calculated, if you claim interest now, it will be at 15%, even if for 25 days it was at 20%.
I see, interesting, didn't know that. Thanks for sharing!
should we vote for other witnesses instead ? to get the 20% again ?
If that is all you are worried about is the 20% APR and not the actual inflation issues that it causes and the negative effects on the price of Hive to keep it at a 20% inflation rate, then sure, move your votes. But it's been too high for too long and is not sustainable unless the price of Hive goes up, which it is not. It should be closer to 5% in this bear market.
Damn, this dude is logical AF!
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Well since i don't follow the financial part of hive , it's jut a question if that is the way to go or not .
And since Steve has a better eye on those kind of things then me , and brought this up it only seemed like a question that manny others would wonder ;)
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I think the concensus among the witnesses has changed that it will be lower in the future because we are very close to losing the peg anyway. But yes, 3 more witnesses are needed in top 20 for 20% rates.
I’ve definitely had my fair share of gains during the 20% time…if it’s hurting the overall standing of things here, I’m ok with letting it roll back. I use Hive more for memories and socializing, not so much as a source of income so the change is fine with me.
Interesting, hopefully, they'll lower it further. Hmm, Now I wonder how much long Hive will exist (one of your comment replies). I am probably the only one if not one of the very few who did not hold on to their HBD but sold it periodically because I felt like 20 % was... too much. Stupid, I know, but this is how I am 🤗
Unless they stop the value extraction, the death spiral will continue.
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