In contrast, what does the HIVE blockchain gain from the members who store their money in HBD savings? Absolutely nothing. We are literally giving them away our money for free.
We do not print HBD to reward any activity; we do it to slowly increase the supply, which is crucial for it to become the real stablecoin. And by slowly, I mean slowly. It's just $1.5 M yearly. We spent more from DHF, not even talking about author/curation rewards.
Essentially, HIVE saving account is literally the best market product, if you want to quickly become billionaire quickly and with no risk.
That's not exactly true, as investing in HBD poses a risk. It is loosely pegged to USD with HIVE as the backing asset. In some circumstances, you won't be able to convert it back to HIVE to receive USD equivalent. So, after all, you might have a loss.
In my opinion it rather appears to be a case of financial mismanagement, lack of investment market understanding.
That's only your opinion, I see it differently. Although I am not a top 20 witness, I can say that my motivation to keep it at 20% is that the amount of HBD in circulation is extremely small and not enough to become a significant and recognizable stablecoin in the industry. We need to print a lot of HBD stably to make it better. Our current circulation amount is prone to market manipulations.
To add urgency to this discussion, consider that part of our token’s price drop is likely due to the millions of dollars given away in recent years to HBD savers.
That's most likely not true. There's no sign it might have been connected at all. We are printing even more as a posting rewards and spending a lot from DHF, which generates a lot more sell pressure than savings APR, which, in fact, mostly stays in the savings.
Do you think it makes sense for a stablecoin that isn’t backed by actual dollars? While I applaud the unique mechanism that keeps HBD pegged to the dollar, not having a real dollar backing each coin (assuming all parties issuing a stablecoin actually have a dollar for each coin in existence) might also mean that the amount of HBD printed should stay more relative to Hive’s user base rather than trying to match the scale of other stablecoins.
Backing by the "real dollar" means there's a single entity you need to trust that emits new tokens and keeps the backing assets in their accounts. Our solution is much better in my opinion.
Completely agree, I was more wondering about whether it justifies the 20% APR.
I'm honestly curious to be clear and don't mean any offense. I'm trying to learn more about the witnesses and the processes behind Hive these days but can't find so much information about the reasoning behind the 20% APR on HBD
You would need to ask each witness because everyone sets it independently. There were multiple discussions on and off-chain regarding this. I think the idea to set it to 20% emerged yet before Luna collapsed (as they also offered 20% APR). Since then, some witnesses keep it at 20% (because there's no sign of it's negative effects) and some already changed that to lower value.
@engrave Thank you for taking the topic seriously, encouraging me for writing an article and joining the conversation.
I propose that we view HBD interest rates as a reward for providing a service. We are distributing $1.5 million $ annually without any return. There are numerous strategies to increase supply, and I believe that giving away such a substantial sum to passive actors is one of the least effective methods.
Let's compare our approach with other stablecoins. For instance, does USDT offer any interest rate? On nexo.com, you can lend your USDT at approximately 10%, which can be seen as a simplified interest rate. However, this involves considerable risk: you need to own USDT and lend it through a third-party platform. In contrast, we maintain a 20% interest rate without leveraging these funds at all.
The fact we spend more money on DHF is not an argument to disregarding 1.5 million dollars I deeply believe we can use it very effectively elsewhere.
I agree on that point. At the same time I believe that owning HBD poses less risk then owning HP, that is why I believe interest rates on HBD should be accordingly smaller.
I put it to harshly. I am sorry for that. It was an acapit I wanted to calm down concerned readers.
1.5 million worth of additional HBD is a potential additional supply. Even if the current price drop is not related we are adding to the inflation in the future. ( Let's not make FED mistakes :) )
Between lines of your message I read that you want to promote and create our stable coin to compete with other networks. I believe it to benefit us. At the same time I believe the approach we take, high interest rates, is not the way.
If you are still interested in my points, I can prepare another article where I compare our stable coin with competitors and do my best to find our and theirs strong sides, weak points and a way to use them. I understand how hard it may be.
Feel free to elaborate on this in next post, I will be happy to read it.
Of course, it's not an argument, I just wanted to say the sum isn't as significant as you see it.
Yes, that was discussed multiple times, and many different views exist. I don't believe HBD APR cannibalizes investments in Hive Power. Stablecoins and their APR (if any) offers different promise and different group of people are interested in such an investment.