Announcing the Second HBD Bonds Sale! | A 100 days lockup for +10% premium on the HBD Interest

This is an announcement post for the second HBD bonds sale for 12k HBD. The first bond sale was successful and was paid out to the first buyers a few days ago as the maturity date was reached. Thanks to all that put their trust in the project and participated in the very first bond sale.

I will be continuing this practice with another bond sale.

Ever since the introduction of the HBD interest, the debate about what should the HBD interest be is ongoing. The HBD bonds have kept coming up in all the debates and has been pointed out to as a possible solution for the APR. Provide a different interest rate for different lockup periods. For example, 10% for a year, 20% for two years, 30% for five years, etc.

This is the inspiration for the HBD bonds experiment I’m trying to introduce here. Also, the bond market is the biggest financial market in trad-fi so why not try and experiment with it.

TL;DR

Send funds in 1000 HBD or 200 HBD batches to @hbd.bonds, wait 100 days, receive 10% premium APR. Need the funds earlier than 100 days? No problem, just ask, and they will be sent back to you within day, but with no interest earned.

How will this Work?

First things first. I will be managing the funds, and this is not a trustless project. By sending HBD you are putting trust in me to manage them and execute as stated in this post. I’m doing it out of curiosity and hope to learn some valuable lessons on the way, giving feedback for a possible on chain solution and maybe build and iterate in the future.

A 10% premium on top of the current 20% for a 100 days lockup

To make this project attractive enough it will be paying out a 10% premium on top of the current APR for the HBD in savings. It is currently at 20%, meaning a total of 30%, for a 100 days lockup. If the base APR falls, for example to 15%, then the cumulative will be 25%. The only guarantee is the 10% premium, not a fixed APR rate of 30%.

Users will be sending out HBD to a dedicated account @hbd.bonds.

The bonds sale is capped at 12k HBD.

The account will be paying the interest for the first 12k that it receives. The tranches are set to be in $1000 and $200. A 10 sets of $1000, and 10 of $200. Users can purchase more than one package, meaning a $2000, $3000, or $200, $400, as long as they are in the amounts as stated above. Any funds that will be received with different amounts will be refunded back. Any excess amounts will also be refunded.

Where will the Yield Come from?

The old question where will the yield come from? The short answer is I will be making up the difference, investing the 10% premium. For a 12k HBD, the 100 days interest at 20% is 658 HBD, while for 30% is 986 HBD. So, I’m risking a 329 HBD for the project. Buyers will have a cost of the 100 days lockup and there will be a soft penalty for early withdrawal.

For simplicity a 1000 HBD will earn 55 HBD for 100 days with 20% interest, while with 30% interest it will earn 82 HBD. A 27 HBD more.

Note on the 30% cumulative APR. I don’t control the base APR that is set by the witnesses of 20%. If this changes in the period, so will the cumulative APR. The 10% premium is guaranteed, so if the base APR is said 18%, the cumulative will be 28% etc.

Early Withdrawal Penalty

Any buyers of the bond are free to request the funds back prior to the expiration period of 100 days. But in this case, there will be no interest paid. The users will simply receive the HBD he/she putted in with no additional interest back. Any earned interest from early withdrawals will go towards the payouts of the premium for the users that will wait for the bonds to expire or reach maturity as it is known in the finance world.

Any user who asks for early withdrawal of funds will receive the funds between 24 to 84 hours (1 to 3.5 days). If there are incidental withdrawals I will cover up for early liquidity, but I keep the right to wait for the withdrawal period out of savings of 3.5 days in case there is a lot of requests for early withdrawals.

Sale Period

The sale will last until the bonds are sold or a maximum of 10 days, starting from today February 26 till March 6th. The interest and the maturity will start calculating from the day the funds are sent.

As mentioned, it is on the basis of first come first served. Make sure to send funds that are 1000 HBD or 200, or a multiple of those. The sale is with a cap of 12k HBD. Also, I’m setting these batches of 1000 and 200 for easy management of small number of accounts, since it will all be processed manually.

If in the sale period, the bonds are sold less than 50%, meaning less than 6k collected, I will be dismissing this project and return the funds back.

Updates and Communication

I will post updates here, at the bottom of the post about the progress on the sale and when it will close. You can check the wallet https://peakd.com/@hbd.bonds/wallet for live updates and see if the 12k cap is reached. Still the official info will be here, since there might be funds refunded. Any request for early withdrawals needs to be made here in the comments, or on the future update posts, tagging me @dalz, as official channel, and then additional users can contact me on discord as a reminder, user: #dalz3699.

After the sale ends, I will make another update with the list of the bond holders, the expected payout and the maturity date when funds and interest will be paid. If you participate in the bonds sale follow me and @hbd.bonds for updates.

What’s Changed this Time?

The first sale was for 10k, while this one is slightly increased to 12k. The minimum participation was 100 HBD, while now its 200 HBD. The lockup period was 90 days, while now is 100 days. This is due to the fact that claiming HBD is once per month, and there is a lag between claims, interest payouts, so not all funds are available at the 90 days mark.

In the previous sale all the HBD was put in savings and them me making up the 250 HBD difference. Around half, or 125 was provided from posts rewards, while the other half is from me. This time I will use part of the funds to invest in Bitcoin. A total of 1500 HBD (12.5% of the funds) will be invested in Bitcoin, 500 HBD each month, making a sort of DCA on a monthly level. The risk from the price of Bitcoin going up or down will be taken again from me, and the bond buyers will receive as promised. If the price of BTC is lower, I will just need to hodl more, and if its higher, any excess profit will be put in used for future bond sales.

Having in mind that only 12% of the funds will be put in BTC, and the other 88% will remain as HBD the risk here is relatively low and acceptable.

Sustainability

I have written a whole posts about ideas of sustainability. In short, the options are inflation, trading, fees, lending, staking, ventures. For more details visit the post.

In the first sale I have partially implemented fees with the early withdrawal and now I’m going after the trading option with small steps. Inflation is also partially implemented from the Hive inflation and the posts rewards. A real boost for this can be issuing new asset, aka token for the project, but this is far in the future for now. I want the project to have some assets and success behind it, before doing this.

The real challenge here is scale. Funding a 10k, or 20k bond sale is not an issue and I can personally easily fund it. The challenge is funding a 1M bond sale. If executed correctly and with time (years), the project might get there eventually, but we will need to wait and see. This project showcases another use case for HBD, as it will not be possible if HBD is not there in the first place. The long term vision is a dedicated web, trustless with smart contracts in the background. Will we get there? I don’t know. The advantage of this project is that is cyclical. If everything is ok, I can iterate, improve and continue, and if not, users will be paid out and just stop making another sales, with no consequences for the users.

If you want to support this experiment please join, and let's start building the way forward for more finance on Hive!

@dalz

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P.S. I’m tagging the participants in the first sale, as some of them asked me to do it.

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UPDATE 1: