What gives Hive-Engine tokens value?
With the prices of Hive-Engine tokens like LEO dropping, we take a look at what gives them value.
You’ve no doubt seen the Hive-Engine community tokens that you earn alongside HIVE, simply by adding tags like LEO, CTP, HUSTLER or POB to your post.
But unfortunately here on Hive, there still seems to be a common lack of understanding when it comes to what gives them value.
“Why is the price of insert Hive-Engine token dropping”, is a common question that gets asked over and over.
But conveniently ignores the real question that needs to be asked:
“What gives Hive-Engine tokens value?”
Of course, the price of your shitty community token is dropping because there are more sellers than buyers.
Duh.
So let’s flip the question on its head and set the story straight.
This blog takes a deeper look into why Hive-Engine token prices are dropping, what gives them value and ultimately what needs to change in order to make prices go up.
What Gives the HIVE token value?
Let’s first start by talking about the Hive crypto (HIVE) token.
HIVE is the utility token of our network.
In order to interact with the Hive blockchain like posting or playing games, you need to have HIVE tokens staked.
So as long as there are social or gaming dApps running on the network like LeoFinance and Splinterlands, people require a HIVE stake to use them.
This creates a base demand for HIVE.
We're seeing this happen in real-time when new players create a Splinterlands account, what they’re actually getting is a Hive account.
They pay their $10 for a spellbook and then Splinterlands team creates a Hive accounts with a couple of bucks worth of HIVE powered up so they can play.
By now, there’s no doubt you’ve seen the stats showing HIVE being taken off exchanges in droves?
Thanks to the popularity of just a single Hive-based dApp, almost all liquid HIVE is being bought and powered up so nerds can play cards.
It’s this demand to use dApps on the Hive network that gives the HIVE token value.
Simple.
But what about layer-2 Hive-Engine tokens?
What gives Hive-Engine tokens value?
Hive-Engine tokens are a little different.
You see, network fees on Hive communities like LeoFinance, are all paid for in resource credits based on your staked Hive (HP).
Residing on layer-2, Hive-Engine tokens aren’t actually required to interact with the Hive blockchain.
This means that the same basic demand that we see exist for HIVE, doesn’t exist for any of the Hive-Engine tokens.
All having a Hive-Engine token like LEO staked does, is gives you influence over how content is displayed within that specific community (via their front-end).
Why is this valuable you may ask?
Well, in the LeoFinance community, you have access to thousands of unique visitors every day via their leofinance.io front-end.
They’re visitors who you know are all interested in the specific niche of crypto trading and investing.
Access to this niche community is extremely valuable.
So let’s just say you’re an entrepreneur selling a crypto trading mentorship course.
You could pay for Facebook ads to targetted accounts.
Or you could take a stake in the community via the LEO token and ensure your content is always front and centre of the leofinance.io community front-end.
LeoFinance not only provides access to a segregated, niche community, but the LEO token allows you to buy an ownership stake in it.
What will make Hive-Engine tokens go up
We are however still extremely early in the game.
Hive communities like LeoFinance are still largely business-free, instead simply consisting of community members sharing opinions and having fun.
Regular people posting personal crypto diaries and offering advice to other members of the community.
All being paid LEO from the rewards pool for doing so.
This week alone, we’ve seeing numerous posts about how regular Joe opinion writers are now ‘making a full-time income’ from blogging on LeoFinance.
This is awesome to see and should be encouraged.
Because without them and the audience of interested readers within the crypto trading niche, potential businesses wouldn’t have anyone’s attention to sell to.
But to make said full-time income, they’re dumping all the LEO they earn onto the market.
And without anyone to buy it, the price is just slowly bleeding out.
To make the price of Hive-Engine tokens like LEO go up, we need to start attracting the attention of buyers.
Showing businesses and entrepreneurs that taking a stake in LEO and getting their content front and centre on leofinance.io, will make them money.
Because it will.
Final thoughts on the value of Hive-Engine tokens
One last point that needs to be made is that tokens behind targetted, niche communities like LEO, should have more value than tokens behind generic communities like POB.
Ask yourself why an entrepreneur or business would want their content displayed at the top of the generic proofofbrain front-end?
Does anybody pay for Facebook ads served to random groups of people?
Nope.
They pay for TARGETTED ads that only a very specific community can offer, like LeoFinance with the trading and investment niche.
Generic communities like proofofbrain just can’t offer that targeted audience and therefore their tokens won’t ever have the same value.
So the next time you’re asking why prices are falling, think about what actually gives Hive-Engine tokens value.
Access to an extremely targetted, niche community of readers.
Best of probabilities to you.
Direct from the desk of Dane Williams.
Why not leave a comment and share your thoughts on what gives Hive-Engine tokens value, within the comments section below? All comments that add something to the discussion will be upvoted.
This Hive crypto blog is exclusive to leofinance.io.
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You're right about niche based applications like leofinance and how it differs from proofofbrain. We might still be early in this tribe thing, it's relevance to me is that it's helped a lot with how people find traction on the blockchain. Maybe now, value to the token should be the next thing.
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That's true.
There are certainly other ways to 'value' something other than money.
General communities such as pob do offer exposure and show people that making money on Hive is possible.
Thanks for sharing your thoughts mate :)
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This, i didn't knew anything about crypto until i came to Hive, is a good place to learn, even for those who don't want to put their fiat inside a exchange yet, they could use a few Hives for start in this world.
Here are some good users that posts useful thing about the ecosystem that are important to know, and its something you can only find it here, when we go popular would be on cointelegraph.
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In terms of HIVE's token distribution via a rewards pool for posting/curating content (our mining), it's truly genius.
Literally means that anyone in the world can start from nothing and start earning then using crypto.
Compare that to say Bitcoin mining and how technically savvy, not to mention rich, you need to be to start earning.
Long live Hive, the people's blockchain.
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This post makes a lot of good points, if we get a few more great apps then Hive should moon!
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But not even that.
Purely from the existing social community front-ends, there is a huge opportunity for businesses/entrepreneurs to take advantage of a very targeted audience.
By taking a stake in the community token, they're not only paying for ad space as they would on Facebook, but they're buying into the community itself.
LEO example:
Just browsing the new post feed today on LeoFinance, I came across a post from a company called 'Fomocraft', talking about the launch of a new research division.
This is exactly the type of thing that I'm talking about where the value of the token is tied to being able to put your message in front of your exact market.
LOTUS example:
Another example would be a supplements drop-shipper taking a stake in LOTUS and using the Natural Medicine front-end to promote their brand and products.
As they've taken an ownership stake in the community via buying the token, they have an incentive to not spam and be respectful.
This model is so much more than just buying ad space.
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I would probably note that some tokens like LEO also have other applications they have made. It isn't just the community aspect as LeoFinance has CubFinance and LeoFi as well. We can add Project blank to that list when it does come out.
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You're right that there are other ways to give a token value.
LEO is certainly the unicorn of the Hive-Engine token ecosystem and can do the following:
With consistent traffic and DeFi users, both these have the potential to put a hard price floor under the LEO token.
There's just so much potential here.
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This is best post I’ve ever seen on understanding hive-engine tokens.
Thank you so much dear.
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Just happy I could help.
We are a community here on LeoFinance after all :)
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I think part of the problem is the return. 20% curation compared to 200% if you swap for DEC and stake for SPS, which you can do for no fees on Hive-Engine, or a 100% curation return on POB.
I've also put a bunch of mine into the bleo-BNB pool that's a 70% ish return, swapped some for CUB for a >100% return.
It's just not rational from a financial perspective to hold Powered Up Leo ATM.
But in the long term, LEO should maintain its value for sure I agree.
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I just don't think people here consider that Hive-Engine tokens need demand if they're going to be able to continue selling them to make a living.
Gaming:
To be fair, Splinterlands is different to the classic Hive social communities that I'm talking about in the post.
DEC has value because demand is always coming from players who need it to buy in-game assets.
Even with all the players dumping their daily DEC earnings, there are always others there to soak up that supply because that's the game.
Social communities:
Now compare that to LEO (or whatever layer-2 token pertaining to a social front-end), we don't see that same steady demand.
But I'm highlighting that when it comes to targeted niche communities like LeoFinance, the value is there for businesses.
By buying the Hive-Engine token, you're essentially taking a controlling stake in how your content is displayed in a community full of your target market.
Think paid Facebook ads, but instead of just burning cash, you're taking ownership in the actual community.
This is EXTREMELY valuable for businesses within that niche and will be an ongoing source of demand once our secret gets out.
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Oh I agree entirely, we just have to get the traffic flowing towards us!
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This is a great marketing tool we can use for any businesses considering pacing ads here or even signing up for a Hive account. Why throw money away when you can take part in profit sharing?
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Ha, as long as there are users who do not understand this basic concept and only complain that prices are going down, we will always have low prices.
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I hope that you're just staking all the LEO that you earn then? ;)
Right now, we're not seeing huge demand from businesses.
But if you agree with what I've said here, you know it will come.
The attention of our extremely targeted community is too valuable for it not to.
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Great article. Thanks for posting!
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Which aspect did you enjoy the most?
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Complex topic served up in an easily digestible way. Basically, I think your article touched on a lot of good points in an easy to understand way. I especially liked the Splinterlands reference as that is exactly how I was first introduced to the Hive community.
Ah awesome :)
I admit I underestimated the ability of games like Splinterlands to take Hive to the next level, but what they've done is nothing short of amazing.
Looks like you're the perfect example of someone who comes for the game and then with their new Hive account, goes and explores the entire ecosystem.
Thanks for stopping by :)
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That's exactly what happened lol Keep up the good work!
Interesting post! I still don't know what can make the LEO token attractive.
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We just need to take advantage of the very specific niche community we are building here.
That's where the value lies.
Businesses will discover that value soon enough.
Just be patient :)
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Very helpful to my understand of what is going on with all these tokens.
With this in mind though, I wouldn't count out the generic tokens. I remember the early internet being millions of niche websites and that eventually evolved into a few generic platforms where niches could grow inside them like reddit or facebook or even my arch-nemesis, Ethereum.
It could be argued that hive engine itself is that platform but the problem is that it allows for an unlimited amount of coins for every purpose where a single generic platform coin split amongst many communities could create more scarcity and competition between communities for resources.
As you said, its very early and I barely know what I'm talking about. It's just a possibility that stood out to me.
Great article!
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You're right.
I'm a little biased toward the niche communities due to my LEO stake, but really we just don't know whats going to happen.
Just gotta keep stacking all the income generating assets we can get our hands on and wait :)
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General purpose communities can bring value to their tokens, too, but they would need to do more than niche communities. After all, how would general purpose communities differntiate themselves from one another? That's an extra layer of effort needed.
Then there is the numbers game. It would make sense for a general purpose community to have more members than a niche community, yet there are many niche communities-- especially LeoFinance-- whose membership is multiples greater than that of some general purpose communities.
Both niche communities and general purpose communities have their place here. They just need to find ways to add value in order to attract more demand for their tokens.
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Excellent and fantastic article and this is why hive engine users in particular i always felt weren't the smartest crayons in the box. Let me explain. As you point out in this article. Hive engine isn't really rooted in the hive blockchain or connected per se unless you consider hivep. in fact you're also trading against other cryptos that come through the exchange. So it's more like hive engine is on it's own servers and can just as easily integrate into any crypto.
Not that hive engine itself is a bad concept. It's good to have some community based projects that can in some sense tokenize to get that effect. However, this is not rooted in the hive chain etc., So the value of these tokens in a sense are mostly created from their own value however it could be some syndicates form that use the rewards pool on hive to fund projects which has occured however, that can also be bad in a sense in that you could end up eating hive's lunch depending on if it's a matter of the project bringing value to hive or hive bringing value to the hive engine token.
Let me take your other example to bring it home. So you give this example how you can take these front ends like maybe leofinance. The value comes from like ad networks and attention value of the user of the platforms own promotions. So the value of what you're probably going to get from that would be connected to metcalfe's law.. or the value of the network being relational to the number of nodes or could be actual users as explained under the rule.
So the value in essence will come from attention value. In that you're on a network that collectively gives value over in some form to the project. The problem with both hive and what would be the theme of hive engine tokens is that hive probably only has a few million actual users.
That means not many people will see any of this content and information. So would the tokens achieve any significant value. Maybe, but to be realistic on average it's probably likely many of these projects will never see 40-50k users. So that would mean value wise they probably won't perform well as an ad network.
In comparison to like Google and Facebook. Networks with billions of users. Networks like disneyworld where everyone in teh world loves disney no matter what land. These vast projects are valuable based on their network effect. Is it possible for cryptos other than bitcoin to achieve that or ethereum? Maybe but very very difficult.
The last part and most important part is what is it we call the value being moved on hive engine. Well i'd call that just a standard auction market. So you have net asset value and you have market value. What are the differences. So net asset value or nav is much like the actual book value which doesn't change based on market auctions or manipulation etc.,
You then have auction market value. Which is speculator driven. You could have one guy manipulating the market.. some market maker doing something or another. So the prices could become inflated or even show valuations that aren't accurate. The true value would lie some place maybe inbetween but obviously smart investors know the difference between the smoke and mirror of what happens in especially crypto markets.
So are there any projects on hive engine that i believe will ever actually hold true value. Well so far i can think of only 2. The first is splinterlands which interestingly enough is not a tribe. Most tribes don't hold much value. The other is also not a tribe bitcoin myk which my belief is it has more value than every token on hive engine besides splinterlands. These 2 videos i'm about to post are very explanatory as to why. I would continue to write but it would turn into a book. So the 2 videos when will bitcoin myk become worth billions.. and Bitcoin MYK will be bigger than google adwords are good explainers to why tokens on hive engine don't have much value and won't. Why splinterlands and bitcoin myk does and will.
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one without basic understanding might just scan through but patience and understanding was needed inreading this post. nice post from you once again.
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@forexbrokr This is HUGE! I love the thought and process you mapped out for entrepreneurs in this one! More people are catching on! This sentence says it all:
Keep up the great job on promoting this process!
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Cheers :)
It's a cool way of thinking about communities on Hive and their respective tokens.
There are still numerous opportunities going unfilled in some of the most popular niche's.
Just waiting for someone with a vision to build out the community and economy.
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After your comment on my thread last night, I read through some of your posts. When you talk about ad space, where would that be? On our profile banner or some such? I may have misunderstood, but it seems there is also potential to monetize external clicks?
These are interesting points; I appreciate you directing me to them last night by talking about the burn token business... I don't know much, but I look over white papers anyhow. I keep reading stuff I don't understand, knowing I will eventually. The concept of tokens that need to be dedicated to a burn pool is beginning to make sense to me! Thank you for helping connect a few dots :)
This particular post that you commented on here, is an old one.
My thinking at the time was that communities would generate demand for their token, because it affords stakeholders influence over how their content is displayed.
For example, if a crypto project wanted to put their offer at the top of leofinance.io, then they just need to take a stake in LEO and upvote it there.
But the reality is, that right now at least, there just is no demand for having content displayed at the top of your community.
And as such, there is still an extreme imbalance between those selling the tokens that are being printed as rewards and those willing to buy that excess supply.
The end result being the LEO price grinding lower on its way to zero.
With that precursor in mind, I've this week written an updated blog that talks about maximising the value of content on Hive's layer-2 to support the price of LEO.
It can be done and the easiest way to do it is with ad revenue.
When I'm talking about ads, this is completely separate and unrelated to any Hive blockchain rewards.
Completely ignore the blockchain for a second.
So right now we have leofinance.io displaying ads on all of its pages, thus generating USD revenue to the domain owner (Khal).
But as content on leofinance.io is all user generated, he has a responsibility to the community to give that revenue back.
To do this, I'd encourage him to use the ad revenue to buy back and burn LEO tokens.
With enough consistent traffic, this will put a price floor under the LEO token and ensure that the LEO supply always being printed for rewards doesn't outweigh the demand.
Because there's always the ad money consistently buying as much as it generates.
Under this model, there would be a real incentive to take a LEO stake and to focus on overall quality - Not just your own blockchain rewards.
Suddenly the biggest monetary incentive would no longer be to spam throwaway content in exchange for HIVE rewards in the 7 day window.
Now the monetary incentive would be there to actually work together for the good of the site and create/curate high quality pieces of content that actually drive traffic.
Right now, the key to all this sits in the domain owner's hands...
Ask Khal:
"When ad revenue buy/burns?"
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