Are they directly correlated or inversely correlated? If we look at a growing sentiment on Hive - something we can see by how difficult it is to fund a new DHF proposal - they should be inversely correlated: the more you spend, the higher impact on the HIVE's price, which would go down due to selling pressure...
In theory, they should be directly correlated. You need to spend more, to have more development and more marketing, and as a result, at some point, that will reflect positively in the price of HIVE.
Now, the caveats...
I wonder how did the AI come to this image? Maybe the presence of the words "inverse" and "correlation" in the prompt may have something to do with it, for creating very unrelated images. When I looked for something more specific, it generated some charts without any base in reality, so I thought I'd better add this unrelated image to the post.
First of all, as it's been pointed out before by people who have no interest in receiving DHF funding, that the daily volume of HIVE transactions have increased so much, that it's doubtful selling pressure from DHF proposals (which are the ones being incriminated, although not the only ones guilty of selling pressure), would have such a big impact, especially if they are done in a smart way, and not hit the buy orders with a ton of selling pressure, all at once.
Secondly, people who have their complains about the DHF are right too. It also matters what you are funding, maybe with how much too (I'd say to a lesser degree than what). If what you are funding has a very low, zero, or negative net benefit to the ecosystem, is more funding resulting in a higher value for Hive, and the expectation of a higher price? I'd say no.
So, to me, things are, in theory, relatively straightforward: more development and marketing funding results in added value over time.
In practice, the added value needs to be comparable or higher than the amount of funding, overall. Individually, it's difficult to make such estimations, as they may not be obvious in some cases or impossible to quantify.
Even overall, how do we quantify the added value? For marketing efforts, it could be the number of active users that are attracted and retained.
For development, things are more complicated, and not easy to judge by people who don't understand the impact or the difficulty of what's being built.
In my opinion, it's a mistake to correlate the price of HIVE with funding development or marketing spending, unless they bring a net negative to the ecosystem from all or most points of view (and selling pressure is among the last in my list at this point).
It's in fact the easiest thing to do to blame selling pressure for HIVE's price, but that is a general thing in crypto, and I sometimes have been contaminated by it too: to be influenced by market sentiment when judging the opportunity of an investment. And that is true at the personal investments level, but also collectively, when we evaluate something like DHF proposals. Just something I thought was worth mentioning... My opinion, of course.
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To me HIVE price is a mix of complex factors, many of them related to general crypto / economic sentiment and therefore outside our control.
I don't think marketing spend is a factor, although we're so appalling with our analysis of DHF spend that I suspect we don't even have a coherent picture of our total marketing effort, it's effectiveness and cost of acquisition per user. But if Shanibeer's figure of nearly 8K USD per user is right, we're doing something terribly wrong; in e-commerce, I expect COA to be in the $5-20 range.
My guess is we'd see a closer correlation between HIVE price and transaction volumes (both number of transactions and total USD value).
What I do strongly advocate for is far tighter control over DHF expenditure. It's purely a personal opinion, but I think that we need good costed business cases for every proposal with a definition of what constitutes success and how it benefits Hive. Developments improving the core product should be funded (if the business case makes sense). Marketing proposals should say how many new users they aim to attract and what COA will make it successful. As many proposals as possible should be in the form of loans. It really bugs me if I see a proposal asking for money which will then be generating revenue that goes to it's developers !
!BBH
That was my main point, that the price of HIVE moves independently from the selling pressure from the DHF and even regular users. Sure, if from that end we only see selling pressure and no value added, then at some point it will reflect in the price.
My reasoning for making this parallel was that I saw too many people thinking there is an inverse correlation between the two, hoping that lower spending would make HIVE go up.
I disagree that we need to keep a tight leash on DHF spending. What we need to be clear about is what we fund. We have three categories:
Regarding startup funding, I have some ideas how they could be better controlled or become beneficial for Hive if they succeed, and also to cut their funding if they go nowhere, but I need to put my thoughts in order and I'll maybe write about it soon.
I'm not sure we can use the cost of acquisition for e-commerce as a parallel for the cost of adoption of innovation. My calculation is just an assumption, other people might have better or more realistic calculations, my thoughts are that at least we would have a starting place and could adjust from there.
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I hadn't heard about the selling pressure, particularly as it is affected by funding DHF proposals, affecting the price of HIVE.
For me, the two things are separate.
The selling price of HIVE is affected by more global factors like sentiment towards crypto. The overall selling pressure of HIVE may be a smaller determining factor as well in the price of HIVE, but I'm not sure of the proportion that DHF funds makes in this. I imagine it to be negligible, but I could be wrong 😁
With regard to the separate issue of funding DHF proposals: yes, determining the outcome, even of marketing, especially in a short time is difficult, but not impossible.
There are some formula and we can make some assumptions - for example, as a starting place, I made an assumption that it costs about 7,850 USD to achieve a monthly active user. So for 180,000 USD funding, I would expect 23 monthly active users.
We can also make assumptions about how many people we have to be in touch with to gain 1 monthly active user (I haven't done that calculation, but I'm sure we could make some starting assumptions from the statistics provided by arcange and dalz), and I'm guessing that it will be in the tens of thousands.
We know from direct marketing, and from outreach that it takes an average of 6-8 contacts/interactions with each of the target audience to achieve the desired outcome: 1 monthly active user. For outreach work, I tend to go with a two year timescale to achieve the flow of new registrations that we're looking for - whatever they are.
Each of these phases requires careful planning, a lot of attention to detail, skill at building relationships, ensuring the support is there after adoption and so on. I would like to see realistic proposals that recognise the challenges and set out realistic outputs, time-frames, budgets and activities to achieve them.
If we don't have the skills on HIVE and looking at progress so far, I would query whether we do, then maybe proposals should be looking at purchasing the marketing expertise externally from people and organisations that do have the skills.
That sounds like a big number for 1 MAU. Perhaps the costs could be lowered by better targeting, if that's even possible? You started from the costs from Inleo, but there are other initiatives with lower costs, better retention, but also quite limited in the number of new users they attract (OCD Onboarding and Orientation Program, for example).
We will have the comparison with the Splinterlands marketing campaign, to see how it will work out by comparison, ran by a marketing superstar.
I'm sure costs could be lowered with better targeting, and it's great that there are other examples we can learn from. I think OCD's programme is quite interesting because it's organic and depends on word of mouth and learning from people who are "just like me" which is a very powerful influence. Health programmes use that model with great success.
I struggle, though, with the projects in Value Plan which seem to operate on a once only contact before moving on to the next mall/event.
Yes, Splinterlands is exciting!
Good point! One exposure rarely makes a strong enough impression even for awareness, not to mention for acquisition.
To be honest, I think we have a huge blind spot — maybe even the proverbial "elephant in the room" — when it comes to Hive being traded and its price.
Namely: It seems entirely likely that a large chunk of Hive held on exchanges are held by people who don't even have a Hive account.
Much like day trading in stocks, these people generate volume through TA, and actually know nothing about the asset they are trading, except for the fact that it meets certain criteria for volatility, market cap and liquidity. "Hive? What's that?"
My beef with the DHF has been less about the potential selling pressure than about the fact that it encourages a mindset of not "needing to succeed, at all costs." After all, you get paid, regardless of whether your dApp is boom or bust. No risk. Not much skin the game, other than pride. No particular incentive to create projects capable of standing alone in the financial sense, as "self-funding."
Perhaps the whole DHF thing would work better if the funds were interest free loans, rather than outright grants. That way, developers would have to actually build something capable of creating an income stream capable to repaying the loans...
=^..^=
That's VERY likely. Or if they do, they are not active. And the huge (and growing) amount of liquid HIVE on Upbit doesn't help.
I agree. But even in these cases, sheer volume can absorb selling pressure, if done the right way. Sure, if Hive loses major supports as it did, the price will go down. But that happens everywhere.
For startups, it is inevitable that many of them will fail or not meet expectations. The challenge is to know when to cut the cord and whether to fund it initially or not.
I doubt we would have much development in this case. Development is a risky thing (meaning it has a high rate of failure for startups or things going wrong during development of certain products or unsuccessful products even for established businesses), and a loan is something few would take to build on Hive, even if it's interest-free. We already have too little development on Hive. Maybe this should be an extra option, and loans should be much easier to obtain than grants for proven DHF proposal authors. Maybe they should even be encouraged to take loans instead of grants after a while, if they still need ongoing funding.
We don't have enough attention on direct user onboarding. INLEO is the only project that is asking DHF for marketing with collaborations with entire communities. Individual onboards are less likely to stick around due to lack of engagement. When and entire community comes aboard, we are going to have better success.
Yeah, we have seen the kind of pushback that proposal had. Probably partially deserved (but which proposal doesn't have bad sides?), but they also tried to resolve some of the points brought against the proposal.
There needs to be a balance between things, and we can't know for sure if the DHF is the reason for the all the selling pressure. It might just be a part of it, but that is money spent and I think it should be done wisely. I am not against the DHF existing, but I just think that some of the projects don't put out the results after being funded. Then they go for another proposal. So it makes me wonder if some of that money is being wastefully spent.
It's certainly not the only one that sells HIVE. It would be unfair to say that. Reward pool rewards, witness rewards, etc. are sold too by enough of their receivers, partially or totally. At least in the latter case we generally know where it's going - to pay for infrastructure costs, maybe with some profit for top witnesses.
I agree that not producing results and continuing to receive DHF funding and asking for more can be a problem. But we should also keep in mind that most people don't have the expertise or the willingness to dig and track what has been coded for development projects or their roadblocks, which are generally visible, at least for open source ones. It's not often easy to put out reports that can be understood by regular people about progress in development, that can make sense to them in a way that they can estimate how much work has been done and with what results. If you take Blocktrades reports (who doesn't really need to make them since doesn't take a DHF funding), often big chunks of them are hard to read or understand by non-coders, and may not say much about how much work was involved.
On the other hand, in big non-tech companies, I imagine when someone from a software department presents their progress, they need to make the non-coders in the room understand what they are doing and where are they at, or they risk losing their funding...
I think people often expect instant results from marketing and development spending, but crypto doesn’t always work that way. Hive’s price moves with so many factors,
perhaps it's sometimes just vibes and speculation but i still have a lot to observe
We rarely have immediate feedback in the price after marketing and developments. Marketing is more likely to have an immediate impact on price than development, but without the latter, they are empty words that will turn against you.
Price indeed moves because of different factors. The most obvious one is the correlation with the rest of the crypto market (which sometimes Hive doesn't follow).
So that's why Hive can behave a bit differently from the other crypto
Without going into other stuff...
I wouldn't say that's the case... Maybe we didn't have a "killer DHF proposal" that is worth funding? And also, if it is hard to get funded, maybe it's not worth funding at all. The statement is a bit subjective as certain proposals were easily funded...
And regarding the selling pressure... When the market cap is low, some very low sell orders can create pressure...
As @shanibeer said, the current selling pressure is more about global uncertainty and not stuff happening on HIVE
Most DHF proposals that got funded are "recurring" proposals from well-established "authors" with a track record.
I agree maybe we haven't got a "killer" DHF proposal. Well, maybe VSC, we will see. Maybe a few others, but only partially. The stabilizer one was very efficient both doing its job and creating profit for the DHF, but I would put this one in a special category.
That's the point, if we have a significant daily transaction volume (mostly on CEXes), that shouldn't matter as much, even for a low market cap as Hive. Of course, it matters if the seller is a bit smart about it and doesn't use a sledge hammer where a picolet would be better.
It's scary that proposals that add no value to the ecosystem can get funded. I don't see a way to prevent that from happening and the result is that the ecosystem suffers as a result. Marketing can only mean well for the price of hive if it brings new users who come in and buy hive. If it's users who are looking to earn free hive, they will just dump their earnings and the price of hive will continue to plummet.
I agree there needs to be a balance of offers where products inside Hive are desirable and people would buy Hive to take part in them, as well as the easy bridges to other ecosystems that allow people to come from there or to move there, with or without funds. Direct spending in businesses is a way to attract both customers and businesses to Hive, even if it may be a net negative on the HBD spent. At the same time, we can think of it as an expansion expense, or an acquisition cost. It would be useful if they could be integrated with other products on Hive though, in time.
When people are scared, we tend to say things that looks like it makes sense on the surface. It's just like I said in one of my post that we expect everything to be casual, on Hive, everything is not casual. We don't look at the general market sometimes, we just tend to believe it's all on us.
I've seen big Hive account that influences the idea that DHF will be the end of Hive, now even if they're not right, they are big, and we know big accounts holds influence. influencing a large following and this spreads a vote of no confidence from people who are following them, perhaps people who are following them who could be potential investors.
I know people who have left this place, because of the fear of the DHF, I'm sure you and I know these people. It makes sense to them that the DHF is why we're not up there with BTC. It's just something they hold on to.
Since it's their funds in the first place, they don't want to lose it. So that's understandable.
Yeah, but that's unfortunately the fear in people talking. Seeing the glass half empty, when they could see it half full. In the "right" circumstances, a realist becomes a pessimist, and an optimist becomes a realist. And a pessimist likely gets depressed. But times change. I did say in a comment on one of your posts that I wouldn't see the same mistrust in DHF if the price of HIVE was much higher and the sentiment in the market was greed or extreme greed instead of extreme fear...
Yes. The conclusion of everything is that is price is in a good place, no one will care whatever the DHF or value plan does. I think we're in a testing time. The whole market is. The only thing is a lot of people are already hopeless and broken and don't think we can get better again. However I have a feeling that this cycle is that cycle where everyone will truly learn and become better at their conviction in the next cycle
Haha, that does really sound like the bottom of the bear market, not like the final year of the bull market, doesn't it? However, it's not the first time when we had major corrections during the bull market, but it is the first time probably, when alts are in such a bad shape so late in the cycle.
Yeah. I think there are always going to be first times as we don't expect every cycle to mirror the he last. I think this cycle will be like a prerequisite for upcoming cycles. I guess we'll see in the coming months
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