The Hive Decentralized Fund Keeps Growing | A Look At The Historical HBD Balance And Where Did The Funds Come From
As a decentralized ecosystem the Hive Decentralized Fund (DHF) plays a vital role for Hive. Being able to self fund from a DAO exclude the need for VCs therefor pushing the decentralization of the network even more. The DHF has been around for a while but ever since the HF that created Hive its role has become much more important since there no central entity to do the heavy lifting and push the development.
The Hive Decentralized Fund (DHF) is fast approaching the 10M HBD holdings now. It holds a lot of HIVE as well but those are not available for use. Since the inception of the Hive blockchain the funds under management in the DHF has gowned from under 1M HBD to 8.5M HBD at this moment.
Let’s take a look at the data.
The account that holds the DHF funds is the @hive.fund. Only 1% of the HBD holdings in this account are available for daily payouts and funding. At the moment this budget is 85k HBD per day. Projects can create proposals for funding and if they are voted out from the community, they will start receiving funds.
There is only one way funds can exit this account and that is for proposal who have been voted from the community to get the funds. But when it comes to funding, or how funds are added to the DHF there is more than one way.
Funds added to the DHF:
- 10% share of the inflation
- Ninja mined HIVE conversions to HBD
- HBD transfers to the DHF
- HIVE transfers to the DHF
- DHF as posts beneficiary
The core source of funding for the DHF is the inflation, but in the recent history a few more significant sources of funds were added. The most significant would be the HIVE that was transferred from Steemit Inc to the DHF. At the time of the fork March 20, 2020, there was more than 80M HIVE put in the DHF. Later with another HF this HIVE was put in a slow conversion mode with 0.05% of it being converted to HBD. At this rate the full conversion will end in 5.5 years. This to avoid price shocks.
Another significant source of funds are the transfers to the DHF that are made by the @hbdstabilizer. This account is receiving fundings for the purpose of stabilizing the HBD. It trades HBD or HIVE on the internal market to maintain the peg and then it sends the funds back to the DHF. Depending on the price of the HBD it sends back HBD or HIVE. When HIVE is sent to the DHF it is being instantly converted to HBD at the feed price, making this funds available for use. The stabilizer send and receive funds, but overall it has been a net positive with more than 1M HBD added to the DHF in this way.
At the end there are the funds from post beneficiary. Whenever someone makes a post and set the DHF as a beneficiary, the rewards are paid to the DHF adding more funds to it.
The period that we will be looking at is March 21, 2020 to November 26, 2021.
Let’s check the charts.
Funds From Inflation
As mentioned, 10% of the inflation goes to the DHF. Here is the chart.
The amount of HBD added in this way is corelated with the HIVE price. 10% in HBD is not the same when HIVE is 2$ or when it is 10 cents. We can see the spikes in the chart, those are basically whenever the HIVE price went up. In 2020 there was a period when only 1k HBD per day was added from inflation. In the last days this is more then 10k HBD per day. In total a 1.8M HBD was added in this way.
Funds From Ninja Mined HIVE Conversions
Here is the chart for the HBD added in this way.
We can notice this funding started at the end of October 2020. This is when the HF happened that enabled this. These conversions are also heavily dependent on the HIVE price. At the beginning there was around 5k HBD added per day and now it is around 50k HBD per day. A total of 6.1M HBD was added in this way.
We can notice that these funds are actually bigger than the inflation itself. A five time bigger on a daily level. Thing is they wont last forever and will end in about four years time. Also as time progress they will become smaller in terms of HIVE. At the moment there is 67M HIVE left to be converted from the 80M plus when started.
HBD Transfers To The DHF
Here is the chart for the HBD transfers.
These are usually excess funds from the @hbdstabilizer. When the peg of HBD is close enough to the dollar if there are no needs from funds, the stabilizer sends the funds back. It doesn’t hold or accumulate them. A total of 5.6M HBD was transferred in this way.
We can see some spike here and there, again this is dependent on the HBD price. In the last period we are seeing 100k HBD per day sent back on some occasions. Although the stabilizer is doing most of these transfers there are some small amount from other accounts, as everyone can sent HBD to the DHF.
HIVE Transfers To The DHF
Here is the chart.
These transfers as for the HBD transfers are mostly made by the @hbdstabilizer. When the price of HBD is higher than a dollar the stabilizer sells HBD, receive HIVE and sent that HIVE to the DHF where it is being instantly converted to HBD at the feed price. A total of 7.2M HBD was funded in this way.
From the transfers above we can conclude when was the price of HBD above one dollar 😊.
If we combine all the above we get this.
Note the inflation in blue. It has been a small share for HBD added to the DHF. The conversions from the HIVE in the DHF (orange) has been a significant income for the DHF. As for the transfers go, we can see a lot of spikes created from HBD and HIVE transfers, but a lot of these funds are send back to the stabilizer, so the are almost nulled. This said the stabilizer has been net positive and has added more then one million HBD to the DHF in the period.
Payouts From The DHF
As mentioned, this is the only way HBD leaves the DHF. Here is the chart.
At first sight this chart might be a bit confusing. We can see the continues growth in payouts from February 2021, but this is mostly because of the stabilizer and the pegging of the HBD. These funds are sent back to the DHF.
If we exclude the stabilizer the daily payouts from the DHF are similar as before, or somewhere around 2k to 5k HBD per day. Some of the projects that received funding are @peakd, @ecency, @keychain, @howo for blockchain core development, @arcange, @lordbutterfly for marketing etc. More than 40 projects received funding in the period.
HBD Balance In The DHF
Here is the chart of the HBD balance in the DHF over time.
As we can notice when Hive was created the DHF had only around 400k HBD in the account. This amount slowly increased and from March 2021 it started growing rapidly. This is mostly due to the increase of the HIVE price. Since then, it has been growing nicely and we are seeing even bigger growth in the last days. I expect in the next month the DHF to have 10M HBD in the account, meaning 100k HBD daily available for projects. I once asked @smooth what he thinks what is a good amount of funds in the DHF for development and he mentioned somewhere around 100M will do. As things progress in the last period I see this totally achievable in the next few years.
A larger balance in the DHF is an assurance for the projects that are currently using it that the funding will continue without issues, and it will attract more developers. Seeing more than 40 projects received some form of funding from the DHF is great but having 100 is even better 😊.
One of the key gainer from large DHF fund has been HDB itself. With more funds in the DHF, the @hbdstabilizer has more power to maintain the HBD peg on a daily level. As the funds continue to grow this will cement HBD further, that will improve its overall usability.
All the best
Posted Using LeoFinance Beta