The Hive bathtub is filling up and it might flood the entire house
I was taking a shower and my mind was wondering around and it stopped to he falling Hive price, while I would still see an active community. So I kept wondering that happens and I found the answer in an analogy with how a bathtub is filling and how it drains in order not to overflow and flood the entire house. So I will try to put thing in a simple comparison to my own understanding. Here we go.
Let's consider the Hive supply as the water and the Hive demand as the drain in a bathtub.
When there is normal inflation mostly from the programmed rewards, that opens the faucet and water runs.
But what happens besides this is the following:
- DHF funding opens another faucet (1,250 HBD/day which @ $0.04 = 31,250 Hive/day)
- HBD stabilizer often opens another faucet as well (12,000 HBD/day which @ $0.04 = 300,000 Hive/day)
- HBD interest opens another faucet (10% from 20%)
If we would be in a bull market and the drain (demand) is large enough, nobody cares. Big spender! 😎
But as we are in a bear market and we spend much, the drain (demand) becomes tiny... it shrinks and the bathtub fills.
The result is that the Hive price (water) eventually has to adjust downward to find enough buyers. Otherwise all the house will be flooded and we remain with nothing. Nada, zero!
So my conclusion is that the combination of HIVE inflation, HBD interest and HBD stabilizer pushing to protect its peg like there is no tomorrow cumulated with DHF spending, are what create persistent sell pressure day after day. And until there are taken more drastic measures against these still high spending in harsh bear market conditions, this will continue to happen.
A picture is worth a thousand words.
This is a vivid illustration of the current situation of Hive👍.
You mentioned the bear market in your post, so I guess it would a good idea to also include one or more interconnected bathtubs to take into account other indirectly related factors to the price of Hive, such as the supply, demand, and price of Bitcoin, Ethereum, and other crypto coins and tokens, just like multiple communicating vessels (bathtubs) that represent the entire connected global crypto market.
For sure this can be extended to external factors, but I think there are things we could do and must in our own kitchen. Continue spending in the bear market and that might put us out of business.
I think I got your point.
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I really don't understand why is the DHF still active. It's a huge pressure only to finance salaries for people who don't put solutions on the table. The HBD stabilizer is the only value I see there. DHF projects are living la vida loca without the need to grow up and be self sustainable because we are stupid enough to pay for it.
Indeed it seems that DHF funded many proposals that didn't bring value back into the system. And those remaining with UI development... I think we have stable versions on such apps, now with AI vibe coding things should be much cheaper, so at least those proposal prices should be lowered if not removed at all.
I am not sure about the Stabilizer part. Because the budget is so big, so I ask AI to clarify it and it goes like this for your ref.
True, the HBD Stabilizer has its purpose but if it needs to fight selling pressure it ends up generating more and more Hive. That increases inflation, lowers the price and the pressure continues.
12 000 HBD & HIVE 0.05 = 240 000 HIVE
...
12 000 HBD & HIVE 0.02 = 600 000 HIVE
That's seems very high to me.
It's time for a change. I don't know what, but something.
I would fully stop DHF funding as the apps those are funding are mature enough and they should find their own way of living not have a salary from HIVE.
Next HBD Interest can be lowered much more, I would put it at same level with HIVE inflation which should be around 5-6%.
But there are the big guys to the top that they would need to want to do this and initiate it. I feel that our destiny is still in the hands of few, thus not sure how decentralized we ended up.
I feel like if projects were really thinking about the future they would have been slowly growing their HP so they could earn via that and not be dependent on the DHF. The same thing happened back on Steem with the grants from Steemit. Projects had every opportunity to be self sustaining, but they didn't and when the grants stopped they collapsed.
Nice comparison. Lol..
I agree that the community is still active, despite the price fall. But, I think it is still a grey area there and we should work to at least maintain the current price.
We should protect the tokenomics forehand and if we would succeed that even bear markets would be bearable.
I am unsure of how that can be achieved. But, I think that users mostly keep HP untouched which is 50% of their post post earning. Initially, I thought that alone was holding the price from rapidly falling.
Adding to this, a lot of cool and genuine people have been chased away for dubious reasons and Korean speculators got broke.
Did you find that $ZEN? Some elections coming soon so may need your holder vote!