HBD stablecoin - Is the 20% APR compounding interest daily or monthly?
The algo stablecoin from the Hive blockchain is Hive Dollar (HBD) which provides great returns by simply putting the funds into the Savings account. It has passed quite a bit of time since the Hive Witnesses voted and adopted the 20% APR for HBD and I think we all appreciate the steady revenue from it. The interest for the HBD in Savings is paid on a monthly basis, meaning you can claim it after a month has passed since you held the funds there.
While the HBD interest claim is available once a month, there is still one question that remains which is not clear to me: how the interest compound is calculated? I am trying to find out if the interest is compounded daily or monthly in line with the interest claim. You get my confusion as if the interest would have been paid daily that the compound would have been daily, but as the interest is paid monthly it is unclear to me how the compound is calculated.
Is the HBD 20% APR compounding interest performed daily or monthly?
If anyone knows the answer to this and can share it I would be grateful, and if he/she can point me to any Hive documentation reflecting the calculation would be better. Nevertheless, HBD Savings is a great and solid financial instrument that offers steady revenue for any individual or business from the Hive blockchain.
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https://reddit.com/r/LeoFinance/comments/106ingu/hbd_stablecoin_is_the_20_apr_compounding_interest/
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I believe it is yearly
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If we compound the interest after we claim it, that will make it monthly and provide a yearly APR of 21.939% (much better than 20% APR with ~2% more).
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I just did the calculations based on my own account's interest payments.
You are paid interest daily on based on a 20% annual simple interest rate.
You can claim and reinvest interest earnings monthly.
This means that the actual annual rate of return is a bit higher than 20%.
Right, the claim is monthly and thus the interest is compounded monthly as well. It would have been better the compound to be daily based on the amount in savings, while the claim is kept monthly, but probably that would imply an algorhythm with more calculation. 😀
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APR means Annual Percentage Rate so that should be yearly 😃 yes that is 20% early if that would is monthly then it would be around 240% yearly, not 20 % what do you think?
Its not 240%. Its simple interest of 20% annually compounded monthly.
as you said, the as amount will increase so the interest will increase accordingly. so we are really earning more than 20 % and that seems to be a really good and fair deal.
if there is no monthly claim system then sure it would be like investing 100 USD and getting 120 USD by the end of the year right? HBD is sure different.
I think this shoul be helpful for you 😅 HBD Savings is at 20%! ~ Why You Should Get In Now ~ The Power of Compound Interest
Good article and I must confess that I use excel to track my data on a monthly-based interest compounding. But it might not be monthly (even if the claim it is), thus the current question.
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It's 20% APR, divided by days in a year, added to your claim balance and then compounded monthly if only you claim.
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👆
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Yeah, might be compounded monthly, while accrued per each block (at 3 seconds each) as @smooth emphasized on that. That would mean that whatever you add to your Savings during the month, will provide interest right away.
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Laughs even if it's yearly it's still a pretty good APR system, I am thinking of putting in a few usd into savings.
It doesn't have to be an insane amount, I just don't want to miss out on it😂
Even if you put in 1 HBD you’re better than having none. Let the funds work for you!
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The way the market is calculated and the HBD still stable. There have been many stablecoins in this market going to down. And it's getting 20 percent APR on it, if you're staked your coins. I am also thinking of buying some hbd and putting them in a savings account. I also think its yearly APR.
Yearly and with compounding monthly you get a slight better return.
Have some !BEER for the math.
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That's for sure, but while the claim is monthly and that's clear, the compound can be daily/month or even somehow different.
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Autoclaimstake like on kingdoms would be lit and on a daily basis.
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View or trade
BEER
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Great question!
Adding to my own HBD FAQ content.
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Yeah and I am still seeking a clear answer, the comment from @smooth got me thinking if there is a more complex algorithm behind it. If cannot get an answer, probably I will try looking in the Hive code itself :)
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I think it just works out to 20% per year if you claim it monthly. I don't really see how you can compound it more than monthly because you need to wait 30 days between HBD claims.
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You can have the compound daily and claim once per year. These are two different things IMO (compound vs claim).
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Yes but if you don't claim the HBD in the savings, does it count towards the interest generated? It makes me wonder sometimes.
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It is simple interest accrued every block (i.e. 20% ≈
0.00019%0.0000019% every 3 seconds). However, you can only claim it every 30 days so that's the point at which it could compound (interest earned on previous interest).Hmmm...maybe I am missing something if I do some math based on this.
0.00019% per 3s = 0.0038% per 1min = 0.228% per 1hour = 5.472% per 1 day which is too high to be right.
Or is there different math on it?
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Yes you're right, off by 100x, fixed.
Right, understood now, and thanks for the detailed explanation. I think most of us (me included) were mistaken about compounding (once per month as it happens once you claim) vs accruing which as you say (and it makes sense) happens per each Hive block.
That means that people that add more HBD into Savings during the month, should have a bigger accrued interest at the end of the month.
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Correct
Ohh nice, I always wanted to know this but never got a clear answer.
Comment section for the win!
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