Magical Math Moments - ECOBANK token

As many of you may know, we have been playing with numbers for a long time. Numbers are fun, and sometimes they even go up! Of course "number go up" is one of the greatest feelings of all time, but sometimes number go down, and (as long as there is some value behind the numbers somewhere) sometimes number go down is a good thing too, because then number can go up more, later.

You can read more about ratio trading in my article A Story about Being Underwater.

And with that out of our system, today I do want to spend a little more time talking about the numbers of what is now the 28th deepest Liquidity Pool on Hive-Engine: the HSBIDAO:ECOBANK pool.

What does it mean, tho?

While writing, we became the 27th deepest pool on the protocol - well on our way to overtaking the SWAP.BLURT:SPORTS pool soon; and this is the backdrop that will lead us into the discussion on the meaning of possible normal and abnormal changes in the ratio of these two tokens over time.

Let's start with the two tokens themselves, because each has its own story.

Ecobank - Colombian Real-Estate

You can see all the historical posts on the @ecobanker feed, this project is backed by not only the assests contained on the account, but two real properties near me in Colombia. We are working to develop these assets into the future, as any long term project should.

Important to note, these assets are denominated in Colombian Pesos, but we can simplify and think of these tokens as indexed to a fiat dollar. And we hope and plan that the real estate assets will become more valuable in the fiat index over time, though responsible development of the assets - pretty normal stuff!

HSBIDAO - HP community Fund

Hive SBI, or HSBI has recently released its own token, allowing people to participate in the program from the curation side of the equation instead of the voting side. I like the idea of a growing HP fund, but it can get quite tricky to manage all the intricacies of HP all alone, and since the program votes thousands of users across HIVE, has robust tools to monitor use spot any abuse, and has an incredibly competent manager in @josephsavage - in my mind there is no better low-stress exposure to HIVE and HIVE Power than through HSBIDAO.

While good management increases the HP backing per unit, similar to the ECOBANK case with the fiat index, we can simplify to index HSBIDAO to the price of HIVE - which as you may know is quite low right now at 7 cents.

So: one token anchored to Colombian land, one to HIVE Power. Now let's talk about what happens when you pool them.

Impermanent Gains?!

As the ECOBANK token has crept up in headline "value" over the last few days, we might talk first about the forces and effects that happen as HIVE falls in price, say from 7 cents to 5 cents.

The effect is linear assuming no movement in the pool, a 28% drop in HIVE price would result in a headline price of ECOBANK 28% lower, 47.5 cents.

Now this headline price, within a few percentage points in either direction, is what investors can base their assumptions on, whether coming in or out - the lower the price gets, the more participants in the ECOBANK project, including the fund itself, are incentivized to buy (or buy back) tokens at a discount to NAV. Falling HIVE price gives that opportunity here, and the deeper the liquidity pool gets the more opportunity there will be.

The way to do this is to spend fiat on HIVE (through Binance, one of the most popular exchanges in Latin America, this is very easy), purchasing HSBIDAO tokens and swapping for ECOBANK. Long term, through a variety of mechanisms, this locks up more HP, or keeps more HP locked up, in HSBI's community curation.

What if HIVE goes up?

I'm glad you asked. What if tomorrow we woke up one day and HIVE was worth 30 cents, what would that mean? Ceterus Paribus again, assuming no one has swapped yet, it would mean ECOBANK token showing $2.72 per token. If HIVE was at 60 cents it might show $5.55 per token!

You get the idea, at some point someone is going to sell ECOBANK tokens, and capture those fiat numbers into something else, ideally something productive, even including the fund itself as a participant, just as in the flip side above.

HIVE up? 😅

I don't want to misconstrue that I think HIVE is going to go up anytime soon — I just want to mention the case as a positive one. I think much more likely what we have created is a vehicle that would absorb lots of HIVE during a time frame where HIVE is plumbing the depths of all of its mechanisms, reminding us all how it works.

Whether HIVE climbs or crawls, the pool creates structure: a reason and mechanism to buy at lows, a mechanism to harvest at highs, and a quiet accumulation of real assets on both sides.

I think its a very positive development. Soon to be 26th deepest pool on hive-engine and growing 🔥

Freedom and Friendship