How is the HBD stablecoin interest being actually calculated?

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The Hive blockchain is being dynamited by the HBD interest rate awarded for locking your tokens in the Savings account as it reached 20% APR. That is pretty competitive amongst the other stablecoins out there and it makes sense now than ever maybe to hold HBD rather than converting it to Hive and second layer tokens. But while the interest rate is pretty appealing for the regular investor, I wonder how it is really calculated and if it compounds at any certain point.

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The HBD interest is rewarded to the users on a monthly basis and compounded within the savings amount that will count going forward. Still, there is one piece of information still missing from the calculation and that is if the interest is paid to the amount provided at the beginning of the monthly period or if it is calculated based on the progressive amounts that might be added to it. Let's try to take an example to make more sense of where I want to get.

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At the beginning of the month, I have 1,200 HBD added to the Savings account. If I keep that during the entire month with no additions then the interest paid after 1 month should be the result from the following formula: 1,200 * 20% / 12 = 20 HBD.

Now let's say that each day I am adding 10 HBD to the Savings account. The question is if the interest formula will take into consideration these new additions to the Savings account or only the initial amount that was present in the Savings account at the beginning of the month.

On top of that what is worth mentioning is the compounding effect of the interest which can push the 20% APR to a higher level. If we would do a calculation for 1 year it would push the interest even up to 21.93% which is not to disregard at all.

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So if anyone has the answer to the above monthly calculation I invite him or her to leave a comment on this post. Is not mission-critical, but as each amount counts up it would be great if the calculation will consider those as well, maybe on a daily basis. Let's try to find the answer together!

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So the interest is paid based on the amount at the beginning of the month or does it considers also the additions to the Savings during the month? I mean practically, not theoretically.

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The formula goes like this:

20% annual return over a long enough period of time will make you rich regardless of starting amount.

Higher the amount, less time required to get rich.

Add in a few bucks along the way and watch numbers get even bigger.

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The question is if at the beginning of the month I have 1200 that would get me interest at the end of the month of 1200*20%/12=20 HBD.

But if in the middle of the month I add another 100 HBD will I get the interest at the end of the month still 20 HBD or more?

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The APR doesnt account for compounding but interest is paid upon whatever is in the account, whenever it enters.

Since we can only claim once per month, the compounding of interest can occur only monthly. But it feeds into the APY.

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You will get 20 HBD for the initial starting point and, in your example, half a months interest on the 100 HBD.

So it would be higher than the 20 HBD. But you would claim it all at the same time.

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That is cool getting interest also on the residual HBD that I've been adding during the month.

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There is interest on everything that goes into your HBD savings. The difference is the interest is only claimed once a month, hence is not in there until that point.

But anything you add throughout the month earns interest.

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I was really confused until I read this thank you

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It requires thinking like a banker. LOL

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Yes, that is true to be something you must be able to think like it, I need a bit more education. Thanks for taking the time to answer my Basic questions 👍

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Haha! Just an epic answer!

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On the one hand, knowledge is power, but on the other hand, the dream should not have borders) Thank you for the detailed explanation of the staking economy.

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What does that even mean?

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Sorry, there is a typo here after the translation into English, the letter key sinks, the dream should not have borders, but it turned out - the sword should not have borders, thanks, I'll fix it now.

If this needs explanation, then the desire to bring your future income to some kind of framework, constants, slightly depresses the sense of adventurism that gold miners had in the Yukon. You can make a plan for the extraction of gold sand, but you can actively search for trophy nuggets) ... in general terms.
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Ah yes. Simply replace Meme coins for gold in the Yukon. LOL

There is a transformation taking place. While we are always going to have speculation, there will be a more sensible approach by many. This is why I feel the fixed income market is important for Hive. This can be a big breakthrough since that is where most focus their attention.

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MEMA coins, this is a separate, slightly funny and sad story that goes beyond the history of world gold mining). As Dmitry Medvedev said... There is no money, but you hold on! similarly, the MEMA coin justifies its existence ... or its owner)

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Good question!
Maybe we'd just follow the unclaimed interest daily and after adding some HBD, follow it few days again and do the comparison.
Btw, here's a good APR to APY calculator that I've been using: https://www.aprtoapy.com/

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Cool tool and explanation between APR and APY: one not factoring interest compounding and the other considering it.

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Didn't think about it in this way. This is a great question and maybe @taskmaster4450 has an answer?

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It is correct about the APR versus APY. The APR is 20% but the APY is higher because the interest is claimed monthly.

As for the daily contributions, they will be factored in throughout the month.

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The rate of payout increases as more is added.

Hard to see unless 10 HBD are added to a 100 HBD account. Then you can see the increase.

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Regular compounding, over the long term, can really increase the numbers. Play with a compounding calculator and do $1200 at 20% over 20 years versus the same thing but compounding monthly (instead of annually). The numbers get a lot bigger.

Add in more during the month and even bigger money.

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I just played with an interest calculator (and blogged about it)

starting with 100 HBD and adding 50HBD per month would net you over 1,000,000 HBD over a 30 year span.

Its exciting because those numbers are do-able for many of us.

we really will be minting millionaires.

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Very interesting. I didnt go out that long.

Amazing what a 20% annual return will do. How many want to be millionaires within 30 years? It is a long time to wait (I will likely be dead by then), but if one plans on being alive then, might as well be a millionaire.

What happens if one does 100 HBD to start and 100 per month?

Bet the numbers get very big.

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They get HUGE.

I will be 70 in 30 years. Would love to have 1.2 million HBD paying a 20% interest rate.

In an account that is United States recession proof.

In an account that I can take to "Mexico" if I need.

Its a lot of money, even for Southern California Standards.

Once can dream, but the dreams sure do look close.

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It just shows what sound building and time can do. Nothing more than a rate of return along with time. Then compounding can take hold.

Warren Buffett threw up 20% for about half a century. That is why he become one of the wealthiest people in the world.

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screely1650636462964.png

Your calculation is correct mate. 🤞🦁

Source: https://www.aprtoapy.com/

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If you didnt link to the site, you could have played that like you figured it out in your head.

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Ah! Crap! Missed the chance to do a little showoff. 😂 But honestly, I have been really bad at math all my life. Such tools are a blessing for people like me. 🤞

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You dont have to keep telling us this stuff. That is the great thing about the Internet, we have no idea.

You can make like a math wiz and we wont know.

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Haha. What if we get on a live stream together and suddenly you ask me a tough math question thinking that I am some kind of math wizard. Won't look good if I use a calculator then. 😂

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I never ask a question I dont know the answer to so I wont ask you much more than basic addition.

Use your phone and make it look like you are answering a text from your mom.

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Claiming monthly will get even higher interest. If add in 10% of your initial investment every 3 months, then you compound and repeat that cycle. I think that's great way to savings !

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It really is making it so that I want to keep my HBD right where it is.

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Check the terms and conditions.

lol

Look at the small print.

I am curious about the answer too and will be reading through your comment section.

I am so super excited about this high APR that I just wrote about how easy it would be for us all to become millionaires.

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I believe what you add daily are also factored in so they earn interest too. I'm also adding HBD everyday but in different amounts.

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It is good to know that HBD it considers everydays deposits, I find on the Hive BlockChain that we the Hive members reap all of the benefits of Interest and inflation rather than the banks and other institutions keeping it all for themselves.

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It is good to know that HBD it considers everyday's deposits, I find on the Hive BlockChain that we the Hive members reap all of the benefits of Interest and inflation rather than the banks and other institutions keeping it all for themselves.

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It is good to know that HBD it considers everyday's deposits, I find on the Hive BlockChain that we the Hive members reap all of the benefits of Interest and inflation rather than the banks and other institutions keeping it all for themselves.

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It is good to know that HBD it considers everyday's deposits, I find on the Hive BlockChain that we the Hive members reap all of the benefits of Interest and inflation rather than the banks and other institutions keeping it all for themselves.

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