20% APR For Hive Dollars | Decentralization In Action

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Most of us already know that Hive blockchains has been paying 12% APR for all HBD held in Savings. This is a really good deal for a stable coin. Banks can't afford these rates. However, in crypto world there is competition among stable coins and there are options that pay higher than 20%. Some of us would like to see the APR increased. To increase APR Hive blockchain does not need a hard-fork. This is simply achieved by majority of top witnesses configuring their APR parameter.

While 12% APR seems like a norm now, it is still a new thing and when witnesses first started updating their APR parameter they were hesitant to play with high numbers. These interest payments started with 3% last year. Then changed to 7%. Then changed again to 12%. Now there seems to be some activity going on to push for 20%. Wow!

Our witnesses are very protective of the blockchain. They don't like to change things too fast. They do prefer to consider all possible outcomes and potential risks before acting. That is a great thing. If now some witnesses are actually updating their parameter to 20%, I am sure they have done their due diligence before making such changes.

I personally think it would be great to have higher APR. Hive Dollar has proven to be able to function as a stable coin. There is a great demand for stable coins in the world. This became obvious during the Bitcoin Convention 2022 talks as well. So why not Hive? Hive is a great chain with a lot to offer. HBD is only one of the features Hive has. Increasing APR to 20% would definitely make some noise in crypto space and may also serve as a marketing strategy. Moreover, I believe 20% is a balance approach. Because this would also drive interest in buying HBD. There aren't a lot of them in the market. Those who want a lot of them, will have to buy Hive and convert them to HBDs via Hive conversion mechanism. This will be good for Hive price as well, because it will create more demand for Hive.

You can see the parameters witnesses have set on hiveblocks.com/witnesses. Ten of the top witnesses have APR set at 12%. Four of them have at 15%. One at 13%. And four more below 12%. There is one top 20 witness who has APR at 20% - themarkymark.

Among backup witnesses, there are four who have set APR to 20% at ranks close to top 20 - smooth, engrave, threespeak, mahdiyari. If we scroll down we can see three more witnesses with 20% APR. As you can see there is interest even among witnesses for higher APR. It does seem like 15% could be easily be achieved, but not sure if it would be high enough to make Hive Dollars competitive in the stable coins space.

I don't remember seeing 20% a week ago when I was preparing the report on monthly interest payments. This does seem like a beginning of the movement. There has been a lot interesting discussions about HBD on-chain and off-chain lately. Maybe more people are realizing that higher interest for HBD will be a good thing for Hive. I am thinking/hoping to see more witnesses start signaling 20%, more stakeholders start sharing their thoughts and positions on this. It is going to be interesting to see.

Hive is a decentralized blockchain. The governance is done with stake-based voting for witnesses. If more stakeholders like to see 20% APR, they may start switching their votes to witnesses who have APR set 20%. I doubt stakeholders would make such decisions based only on this criteria. But as long as these are capable and trustworthy witnesses, they may just earn these votes. If you are a backup witness and was hoping to get some more attention, perhaps changing APR to 20% can help? That is, if you believe it is a good thing for Hive. Everybody should make their own research and educated decisions, be it witnesses, stakeholders and investors.

I would like to see higher interest for HBD, not because I would like to earn higher passive income, but mainly I would like to see HBD to be noticed by the world because it is a great solution for stable coin needs. I also think more attention on HBD will drive more interest to Hive blockchain. I also like such experiments, social and financial aspects of them. It is interesting to see how people make decisions in a decentralized space. For these reasons, I will be changing my witness votes as well. At least for now, to participate in this decentralized process. Decentralization requires participation.

What do you think about 20% APR? Let me know in the comments.

Posted Using LeoFinance Beta



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20% sounds cool. i must admit i didn't go deep on any of HBD APR and effects on the whole chain, so i am not sure what to think :D

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I think you should think it is a good thing. :) Because it may attract more interest to Hive itself and create more demand for Hive.

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Hi GeekGirl;

I could be off the mark in my thinking, but isn't the preference to have HBD turned into HIVE and powered up? Does the 20% APR make powering up a whole lot less attractive?

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These are just two different kind of investment opportunities.

One should buy Hive for 100% to 1000% returns. While holding Hive, it might be better to power up, participate in the network and earn more Hive in curation rewards.

HBD on the other hand is more of a low risk investment with lower returns. There is no limit how high Hive coin can go, but HBD is pegged to $1.

Both serve two different purposes. But both being attractive investment options, it makes Hive even more interesting.

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Thanks for the time in explaining that, that makes perfect sense.
Tim

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this, for me, is the main factor. HBD has less utility for users and therefore HP will always be more attractive for those who use the platform.

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I am not the best at how this works, but from my understanding increasing the APR on HBD would raise the price of Hive because as she mentioned, people would have to buy Hive and then use the conversion mechanism since there isn't enough HBD in circulation to meet a high demand, so buy pressure on Hive and I think converting it burns it. Plus, HBD having more in circulation helps it be more stable and ergo more businesses might be attracted to Hive because they can take payments in a stable coin.
But please correct me if I've got any of that wrong!

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Between the both of you, I feel like 50 times smarter!
Thanks so much for your input.

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Eso es excelente mejor que un banco y solo hay que transferir los Hive dolar a ahorros dentro de la wallet según entiendo..

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I like 12%
I think we should raise 1% every 3 months until we get to 15% to compete with economies worldwide raising interest, but I am skeptical about making it more than 15%

Hive is too new and we don't know how the economic decisions will play out over here in the longer terms.

Banks worldwide are raising interests so we should, but not too much and too fast. For now I think 12% has been working well, I would like to see what happens at 15% but I am afraid that 20% this year would be unpredictable.

If governments keep raising interests, then yes, maybe 20% would make sense, but for now I think it would be too extravagant.

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I don't see any downside for raising to 20% at this time. I think quite the opposite. But my thoughts change as I learn more.

I see more positive outcomes for the network. If we find out something is wrong, the parameter can always be reverted back to lower APR.

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My reasoning follows the reasoning of central banks, as far as I understand them.

HIVE Backed Dollar (HBD) is, as the name suggests, backed by the HIVE currency. So if we print too much HBD eventually some people may cash out. It is a balance of market caps because HBD is designed to eat HIVE value to sustain itself.

For HBD to grow in market cap (circulating supply) more HIVE has to be used as "collateral" to back the HBD. So it is not just HBD inflation but also HIVE inflation.

When governments wants people to spend less and save more they raise the interest rates, the short term benefit are control in prices and increase in the value of the currency, in the long term the money will eventually flood the markets and monetary maneuvers have to be taken to control prices and prevent generalized losses (by the way that is why capitalism has crisis like every ten years)

Applying central banking logic to Hive, by raising interests rates people are incentivized, for example, to burn HIVE in exchange for HBD and save it, instead of spending it, in the short term this definitely helps hold prices and maybe even push them up, but eventually people will cash out their HBD to HIVE and I don't know which financial tool we would have to minimize the impacts.

By the way, reasonably high interest rates are awesome to promote Hive and onboard new users. We were raising interest rates even before banks were doing the same, which gives us an edge, we raised first which I think brings trust to us because we might achieve stability easier and sooner, central banks were very slow and conservative to raise rates.

By the way, vote me for witness, if you have a spare vote, I love learning and promoting discussions exactly like this one, so that I can learn from others points of view! Thank you!

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didn't read all your post..

but selling HBD doees not necessarily mean that it puts selling pressure on Hive as one can trade HBD directly for other coins/tokens. This should be even better with the planned liquidity pool of HBD and a USD stable coin on polycub

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HBD is backed by HIVE, that is what it means. Imagine a situation of a bank run. There is already native function on the Blockchain that, when the value of HBD is below $1, it is profitable to call it and what is does is burn the HBD and print hive out of thin air.

If HBD is at 0.5 cents and HIVE is at 1 dollar and you have 10 HBD and sell it on the market, you get 5 dollars, but using the peg function you burn the 10HBD and get printed 10 dollars in Hive, because for the function 1 HBD is always 1 dollar, which in this example would get you double of what you would get by selling, but it would be by printing, by inflation.

Luckily HBD doesn't fluctuate that much anymore, but it doesn't mean it never will, and the market cap switching and consequences is a tough subject for me because Hive is very new and I am not in the fields of economics.

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those are valid points; I just wanted to mention that if I sell e.g., HBD for USD on polycub in the near future it at least won't put direct selling pressure on Hive

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I totally get that, I was considering the backing of HBD because in the end what pegs the HBD to the dollar is the promise of printing $1 of HIVE per HBD independently of HBD price in the outside market

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(Edited)

"For HBD to grow in market cap (circulating supply) more HIVE has to be used as "collateral" to back the HBD. So it is not just HBD inflation but also HIVE inflation."

No. HBD inflation = HIVE deflation. This is how we reduced more than 21 million HIVE from circulation in September last year. 1 million HIVE also got burned in the process. I think more than 8% deflation. (this is only from September 2021)

Also, this is a marketing push to draw more interest in the Hive blockchain.

Edit: HBD printing as interest is not the same though. I considered HIVE -> HBD conversion in this comment since the HBD supply is low enough that we can ignore it in comparison to the newly printed HBD from conversions. So overall more HIVE is burned creating HBD than the newly created HIVE from HBD to HIVE conversions. This is true if we can bring on enough users. Then we can adjust the interest rate later to not have inflationary problems.

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Interesting, so are the witnesses willing to increase that apr, I thought that having it 20% would be harmful but with your explanation seems that doesn't need to be like that.

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The 12% was better but with the way things are currently... 20%

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I'll be honest the 12% doesn't really attract me 90% of the time unless Hive is over $1 then I'll pack it. Under $1 though I end up just buying Hive for curation rewards and so forth lol. 20% might change that though but is 20% sustainable? I feel like it would need to be part of something bigger with liquidity pools etc to actully hold that kind of value of interest on it.

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I think it would be sustainable, because it would increase demand for Hive and increase Hive's price. As Hive appreciates in value, HBD becomes more affordable for the network to print. I don't know much though. I just would like to see how this experiment would work.

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What do you believe to be the limit on HBD interest rate? If 20% is better than 12%, why not 30%, 50%, 100%, 1000%?

HBD interest does come at a cost to Hive holders, it both directly increases Hive inflation and it encourages risks related to Hive inflation. At the moment high interests are likely acceptable due to low overall savings rates, but there are ways that could quickly change.

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I think 20% is balanced approach. Since HBD is pegged to USD, 20% would mitigate the loss of purchasing power in USD. I believe current USD inflation in terms of losing purchasing power is about 15%. Have HBD APR slightly above it, makes sense to me. But wouldn't go higher than the double of USD inflation rate.

At this time, the limit I would put would be 30%. Anything above that will get risky. Anything below is manageable. These risks can even be lowered by introducing longer lockup time as suggested by Taskmasters HBD Bonds idea.

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(Edited)

What data are you using to suggest that USD is losing purchasing power at a rate of 15% per year?

US CPI is only 7.90% (exceptionally high at the moment, but way below 15%). Core inflation is 6.40%. Even producer price inflation is only 10%.

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CPI is not a good indicator for overall inflation. It doesn't take into account everything. Now if you double it, it may represent more of a reality. :)

Better indicator of inflation was M2, which Fed discontinued after the massive printing during pandemic. Even M1 is, I believe around 13-14%.

More over, 15% is my personal observation.

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(Edited)

M1 and M2 measure supply. This is tangentially related to price inflation/purchasing power and is absolutely not a superior metric to those that actually measure prices directly, regardless of the particular limitations of those metrics. It would be akin to saying that the change in supply of Hive from yesterday to today was a valid metric to measure the change in Hive price.

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(Edited)

There are two issues to the rate one being absolute cost and the other being diminishing returns.

On the absolute cost, it is minimal at 20% given the low amount of savings but wouldn't be minimal at 1000% (of course I know that was hyperbole).

In terms of diminishing returns, 20% is a widely available "high/promotional" rate on stablecoins right now. UST is paying it and a major new one, USN, is rumored to be planning the same soon. Anything much below that falls into the category of why should I bother with Hive and anything much above that is a waste of money since anyone seeking yield would find 20% enough. A case could be made for a slightly higher rate, say 22% or 25% to account for the fact that Hive is tiny and obscure. Still going too far is a waste of money when you're already offering something competitively attractive.

"Sustainable" (nonpromotional; derived from demand for loans) DeFi stablecoin rates are probably more like 10% or a bit less. We're vaguely competitive at 12% already but perhaps not enough to offset the fact that Hive is more obscure and more difficult to access. Again, some premium makes sense to attract usage and attention, but going too far is a waste of money.

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And yet, how underrated HBD is! I mean come on crypto folks, Don't they see the stable gem here? HBD is an underrated asset, only people who are in Hive ecosystem, know it and trade probably. For the rest of the world, it still needs to be discovered.

Personally, I still see HBD at $5, I might be silly to predict that but need to be positive 😀

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That's why raising the APR would be a good thing. 20% would attract many more people outside the network.

HBD won't go to $5 lol. It is pegged to $1. In theory it could go higher than a $1. But that would be super risky for any investor to buy above $1. Because it is intended to stay at $1.

Hive on the other hand could go to $5 and beyond.

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Yes, definitely @geekgirl that will attract more new investors and new bees as well to the Hive ecosystem.

HBD won't go to $5 lol. It is pegged to $1.

Yet its ath was 4.21 a year ago. You can call me a silly optimistic guy 😬

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I assume the %20 push is to get more Hive locked as HBD to get it back to peg? 20 is a pretty high rate, paying in a stablecoin, I don't see any other platform able to match this in CEFI or DEFI right now, could get people to flock in and drown out the premium

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Depends on how it would affect the Hive price.

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bear market can kill the idea of 20%. I know up only forever.

But every HBD that's printed will become at some point Hive again.

Even the reason for that is only a liquidity issue on HBD.

Think about we hit 5$+ for a medium timeframe, print a shit ton of HBD in posts + 20% rate + conversations.

maybe increase peg to 30% in the same timeframe.

I mean I don't hold large amounts of Hive power, but everyone that is a whale can get fucked by inflation ( 3 months can be a pain).

IMO hive should wait what luna does in bear. Because if Luna breaks, we see why.

Did you see Kwon tweets? This guy buys with his own stable coin Billions of Bitcoin. I mean he doesn't do this because he likes his stablecoin or terra that much.

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I don't know the negative side effect of that.. Depending on hive price

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Honestly, I think an increase would do. 15%? Yes. UST (Terra) looks sweet with good % but I think they're working on how to back it up with BTC. I'd love to see HBD interest increased but I think 20% is too much for now. Moving it between 15-17% would be nice

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What is wrong with 20%?

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I think it's an uncharted waters for most stable coins. It will be funny to get HBD interest to 20% when we only just got to make it stable recently. This is just my opinion. Jump from 12% to 20%? @geekgirl. Come on😂. 15% is cool, maybe after that, it can be moved to 17%

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Absolutely I can go for some of that.

20% and I'll just keep throwing some more funds into savings and allowing it all to grow up.

Thank you very much for your amazing content and have an amazing day.

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I personally feel we already have enough mechanisms for people to make money on their investment. But at the same time, we haven’t really broken through to the outside world yet so if this could help I guess it’d be worth it. I thought the 50/50 rewards were a bad idea too and they turned out to be good for the chain so I’ll stay quiet on this one because I want more users in this ecosystem first and foremost.

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we already have enough mechanisms for people to make money

This is my objection. What can't HIVE do? At what point does it become too good to be true? Let's pay some celebrities to endorse HIVE through Cameo or something, we might see quicker results like that. HIVE has pretty much everything already, plenty of features and ways to make money. Plenty of room to get creative too...

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The 22%APR is a good thing and will always want to make everyone do it because of the gain there

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This is definitely an awesome way to have more HBD saved up

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20% sounds like a good plan. It can, like you said, create more interest in the stable coin from outside.
Even though the 12% is already just great. Where do we get that high APR on savings. In a bank definitely not.
Let’s see how the next days/ weeks go.

Interesting to watch…

Posted Using LeoFinance Beta

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What do you think about 20% APR?

I think, it makes the investment in HBD more attractive - it may open a whole new segment for outside investments coming in. Now that many governments are putting higher tax on crypto, this would be very attractive even after tax. For example in India, people have to sell out a 30% tax so getting 14% after paying tax would be very tempting for people to invest their white money.

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(Edited)

Inflation is going up in so many places. Interest rates are going up as well. We should act accordingly as a blockchain just to stay competitive to legacy systems.

For sure going up with APR to at least 21% (to stay competitive with other blockchains) could cause a spike in price and interest in Hive. However it's important to remember about the basic rule.of the Internet: if there is something new and it succeeded, every next copy is a lesser success and recognition is never the same.

Just an opinion.

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(Edited)

I have seen in @taskmaster4450le's posts that APR for HBD might be increased incoming months, but never thougt of an increase to %20. A %20 interest rate for something equal to USD, you can't find it anywhere. I also think that it would be great to have higher APR. I have been transferring my HBD to Savings since APR became %12.

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20% would be amazing and I hope it works out. Even though there is a push for 20%, I still don't think it will get there so fast. It might move up to 15% if more of the top witnesses increase their rate.

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I honestly find HBD better than HIVE in this matter, raising benefits by a high percentage may cause problems of Hive Power diminution in my opinion

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With high possibility of a rise in Hive price in future, it is difficult to reach this high rate of interest this year

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If or when HBD will provide 20% APR sure will attract a wave of investors as simply this is quite appealing. It could become a real contender in the stablecoins space.

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That's cool, but I don't like the point there is no poll in proposals on it.

Those things should not be a decision by top 20 alone. Sure we vote for them but thats not the way it should be IMO.

Maybe I'm alone with that viewpoint. But not every stakeholder looks weekly into this and maybe disagrees with that.

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This is how DPOS works.

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yeah but some vibe check would be IMO not bad. I like it too, but it gives inner circle feelings :D

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Increased interest rates don't come for free. It's at the cost of Hive inflation and inflation related risks. At the same time we rely on the witnesses as stewards of this setting, to be responsive to market changes. While the overall rate of HBD savings is low, such interest rates can be sustained, but we could easily and quite quickly reach a savings rate where 20% interest means a substantial increase or risk related to Hive inflation.

Another case where we rely on witnesses as stewards of a consensus setting is the price of Hive accounts. When demand for Hive accounts rose earlier this year, along with the cost of accounts due to the price of Hive, witnesses allowed no changes to the base price of a Hive account to allow for the continuation of onboarding of a large number of users.

I am not totally confident that witnesses will be responsive enough to bring down interest rates when they need to in the future.

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I'm not really sure why no one wanted to change the account fee, but there has always been more discussion and recognition of the need to adjust the APR (or at least for a long time; I think back in 2016-2017 the account fee was adjusted more regularly)

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It is true interest payments ultimately come out of overall Hive inflation and dilute stakeholder vests. The same is true for all Hive payments & rewards: witness rewards, content rewards, HDF, etc. When we look a the numbers we can see HBD interest payment for the month of March was only $26,500 HBD. If nothing changes and approximately this much is paid out every month, this will cost Hive about $300k HBD a year.

By comparison, Hive distributed more than $10 million in content rewards in 2021. If you add witness rewards and dhf funding these numbers go even higher. Probably would add another $3-4 million.

All of these dilute Hive investor holdings. However, we still invest because we know this money is well spent and will lead to appreciation of the value of the underlying asset Hive.

It is not easy to tell how 20% APR would change things. We can't tell until we try. If this doesn't attract more investors who would put in their money into HBD, nothing changes, no harm done.

If all of the sudden a lot of big money start flowing in, the price of HBD will go up because supply is low. If HBD price goes up, hbdstabilizer will capitalize on this opportunity and make millions for DHF.

Another option for HBD investors will be to buy Hive and convert to HBD, this will create massive demand for Hive which should lead to price appreciations.

In both cases, I think stakeholders will be happy.

Regarding the account creation fees, I think this fee should be in HBD, and not in Hive. This way the fee will always be predictable, and parameter won't have to be adjusted every time Hive prices change significantly.

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It is true interest payments ultimately come out of overall Hive inflation and dilute stakeholder vests. The same is true for all Hive payments & rewards: witness rewards, content rewards, HDF, etc. When we look a the numbers we can see HBD interest payment for the month of March was only $26,500 HBD. If nothing changes and approximately this much is paid out every month, this will cost Hive about $300k HBD a year. Also, the entire point of increasing HBD interest is to increase demand for HBD savings, the expectation should be that making HBD savings more attractive would increase the amount we pay out in interest. The more successful, the more inflation.

The difference between the inflation caused by post payouts, witness rewards, staking rewards and the DHF versus inflation caused by HBD interest rate, is that the former are all subservient to the base rate of Hive issuance. They all combine to form the "7% per annum" or whatever the rate is now. HBD interest is an entirely separate source of inflation unbound by the rest of the consensus rules around inflation. HBD interest creates inflation at a rate which can change based on market factors and witness decisions, it can increase or decrease based on changing demand for HBD savings (which can also happen suddenly, there is no theoretical limit on how quickly the $2.8 million UpBit HBD could be put into savings) and changing witness policies.

Under current conditions, with sufficiently low savings rates, inflation from HBD is still low, but that can change quickly, and the compounding nature of HBD savings interest is likely to increase HBD savings rates over time. I do think 20% interest as things stand is not likely to substantially increase inflation in the short term, my concern is if it will be reversed when it may happen in the future.

Particularly I am concerned because there is a lot of ponzi-ish thinking in the crypto space, including in Hive. The supply of HBD is effectively a loan being taken on by the entire Hive community (both liquid and staked holders). We are currently getting a nice benefit that the vast majority of HBD has 0% interest, which effectively means HBD speculators are providing a loan for free. Since USD depreciates in value over time, it can be fair to think of it as a negative interest rate loan (HBD speculators are paying us to take their money).

The economics of 20% or higher interest are very different. To justify taking such a loan, the money loaned must provide value that matches a 20% gain over a year. A company can justify that if it can be invested into producing products which generate sufficient value (eventually revenue from selling the products) to justify the cost. The justification for Hive stakeholders paying that rate is much less clear - in principle growth in the network increases the value of the network, and perhaps the underlying token - but the mechanism by which taking on a 20% interest rate loan gets us that growth has not strongly been laid out. Comparing us to the corporate bond market, the index of junk bond yields (ICE BofA US High Yield Index) rarely go above 10%, currently only 4%. This is what companies rated as "junk" are paying on loans.

By paying more than the rate of inflation, we are subsidizing the growth and network effect of what could itself be a valuable product if it is more widely adopted. But the higher a rate we pay for that growth, the more we are moving into Ponzi-ish territory where we can't actually justify the rate we are paying.

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which can also happen suddenly, there is no theoretical limit on how quickly the $2.8 million UpBit HBD could be put into savings

Sure, but even if that happened the inflation from HBD savings would still only be around 0.2%, or $700K out of $10-13 million overall. This just isn't that significant.

You would have to see a dramatic change in supply of HBD relative to HIVE and the proportion of HBD in savings for the interest to really become significant. At that point (or along the way) witnesses should (and I think would) reassess.

Also, I think witnesses might reassess if exchanges started using savings without paying it out to customers. One of the reasons to only pay interest on savings was to support higher APR while reducing the windfall to exchanges

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700K out of 13 mill is 5%, it's not earth shattering but it's not trivial either. But I see your point, it's unlikely to happen at a rate that witnesses would not respond to.

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I meant the contribution of the interest inflation to overall Hive inflation would be 0.2%.

$700K over $380M market cap.

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I understand your concerns. However, we don't even know how much this HBD interest will be utilized. We need more data to evaluate it more. We can't get this data without trying.

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(Edited)

Regarding the account creation fees, I think this fee should be in HBD, and not in Hive

I agree with this. It likely wasn't originally because SBD didn't 'activate' until after the first post payouts (3-4 months after chain launch). And then SBD/HBD didn't work very well. So there was never motivation to do it. It also doesn't seem like it is ever going to be a high priority change for development, but I won't say it can't happen.

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Another case where we rely on witnesses as stewards of a consensus setting is the price of Hive accounts. When demand for Hive accounts rose earlier this year, along with the cost of accounts due to the price of Hive, witnesses allowed no changes to the base price of a Hive account to allow for the continuation of onboarding of a large number of users.

Almost 2M Hive was burned as the result of this. The 99.5% of this was Splinterlands who were getting $10 (I believe) selling spell books, so they were able to easily eat that cost while profitably providing new accounts. This massive burst of new Splinterlands users was handled with free account credits for a while. The 15,000 users/day were mostly bots and settled down to much less now after Splinterlands made some changes to make it less advantagous to game the system with thousands of accounts.

The significant spike over $3 was very short lived. As a witness it is in the best interest of everyone to not make rash decisions based on potentially short term issues.

Onboarding non-Splinterlands users was mostly handled with free account claim credits and were mostly unaffected.

That being said, ~$3 for an account (which costs the blockchain resources for eternity) is not unreasonable. Most legtimate users will easily make that back on their welcome post (something that was extremely unlikely in the past, I made $0.03 on mine for example).

I personally considered making changes to the account creation fee, but it wasn't a high priority to me or anyone else. Especially with how resource intensive new accounts are. It's also fair to say 99% of the new accounts were basically spam.

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(Edited)

I agree with most of this except that I think the free account credits are facilitating much of the new account spam. Were it not for that, a fee of 1 HIVE or such would likely be sufficient to be a minimal barrer to legitimate accounts while deterring most spam. I have no idea, however, about the long term resource usage. It's definitely an issue. I think we'll hear more from @blocktrades at some point when they report on their review of RC calculations. They've already said that new accounts are a very expensive operation.

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(Edited)

Most of these accounts were paying $10 for a Splinterlands spell book (requirement for all new splinterlands players) as they were bots used to play the game to farm rewards. So there was a barrier to entry for the end user and for Splinterlands when the free credits dried up.

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20% would be amazing! This could consist of a nice way to attract more investors, and also better options to buy HBD on exchanges (which is the main blocking point for me at the moment; I only have Bittrex and the internal market as working options).

I was thus very pleased to see some witnesses having set a 20% APR. It is probably a good moment to invest a bit more in HBD (this is my opinion and blablabla... not a financial advice and blablabla...).

Have a nice week-end geekgirl!

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20% sounds amazing at first glance for sure, but tbh I don't know how the economics of it all works, so I can't say for sure what's best for the long term of the blockchain. After reading some of the discussion below I'd say that moving the % up slowly is probably the smartest move.

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I just need to know how this is being justified. Because that money has to come from somewhere? So what are we doing to make that 20% sustainable? Thanks to anyone that can clarify!

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Witnesses know what they are doing. Decentralization will work itself out.

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Now that I have read a bit more about it I'm thinking it might be a good experiment after all.

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(Edited)

Increasing APR to 20% would definitely make some noise in crypto space and may also serve as a marketing strategy.

I agree with you that it is a market strategy and a good one at that. This will make the hive system highly sort after. People love to be where there is value. And if they can get as much interest by saving, I am not sure the block chain will be ready for the outburst that will happen.

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I mean, I guess it's a good strength test if we can in fact get more interest from this initiative.

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I think it's a good thing,am already thinking of how to convert my hive to hbd

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It's such a difficult balancing act - I guess a higher rate encourages more holding and buying of HBD and helps the Hive price.

But more potential to crash it further down the line also!

!1UP

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B20. This is a nice picture, I agree that nowhere is it possible to passively receive such a profit in relative calm.

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I m sure Hive will get there.
Terra UST does give 20% for staking their coin, but goes through a lot to maintain it.

If hive gets there, there ll be better things to be said I m sure and it gets into public eye.

The banks are nothing to write home about currently, they even reduce your money here's in Nigeria.

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20% would be great. I think I would power down, sell all my Hive and buy HBD. All my posts get downvoted to zero these days. Not sure why.

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20% and go, stack bonds and DEFI products on top of it and we're talking 2022.

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UST was 20% APR and a lot of people started to use it due to the APR.

I am always looking for good APRs to stablecoins since I like to have a passive income in stable to be able to do my buys without need to use FIAT money.

If HDB APR be 20% like UST I will move my funds to Hive and I will forget other chains to stablecoins stake.

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Is the Interest paid out in Hive ?

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Interest is paid in HBD back to the savings account

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Oh. That is excellent …. I’m switching everything over to HBD

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Remidner you have to 'claim' interest once per month by performing some savings transaction. Depositing or withdrawing 0.001 HBD is sufficient. If you don't claim you will continue to accrue interest but will lose out on compounding (interest earned on the new interest).

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If I am buying HBD every day and sending to my Savings will that work ?I plan on buying several thousands of HBD every month.

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(Edited)

Yes sending to savings will trigger any interest that is ready to be claimed (once per month).

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(Edited)

Excellent. Is there a specific day of the month we should do this activity to maximize the compounding interest ?

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30 days after your last interest payment

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(Edited)

This is interesting 🤔

I feel the 20% APR is cool because it puts us 1pt higher than the highest available (among rhe reliable ones) APR in the market which is 19.55% APR on UST (from Terra Network) in Anchor Protocol.

Imo AP has now more than 18b TVL, now imagine even 1% of that migrating to Hive!

I'd had to research more, but Idk if the 72hrs cooldown to convert to/from HBD to HIVE, plus the lack of quality graphs, gives us the right image and the required branding-reliability-professional looks for us to sit beside Terra Blockchain, and to provide HBD with the level of trust the UST inspires.

HBD has kept the peg very nicely tho. The UST-LUNA arbitrage option is very interesting to investors. We must develop some bigger opportunity (not just APR) to get some of the outside Volume into Hive.

Also, a lot of USD-pegged stables are developing an arsenal of diversified collaterals. We might consider backing up HBD not only with HIVE but with BTC, ETH, GALA, BAT, AVAX, and/or anything the community might find interesting.

Just a thought tho.

- EvM

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Subir al 20% requiere estar preparados para una avalancha de inversión que luego tendrá #hive que reponer en intereses. Los resultados a corto plazo son prometedores, pero luego para colocar los intereses en manos de los inversionistas es el problema. La solución está en buscar que hacer con estos ahorros en cuanto se tengan. Producir más dinero 💲para la reposición.

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20% would be great, but is it sustainable in the long run? I smell troubles or HBD getting under 1$, don't you agree?

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A 20% APR could be unsustainable, but it could be interesting to do it for a limited period, like for 4 weeks. I am not an expert, mine is a personal opinion and given according to a feeling.

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I think high APR rates are good to draw more users. It should be encouraged, the situation is similar to staking $AWC from
https://atomicwallet.io/, which comes with an APR of up to 23% when staked on the decentralized atomic wallet.

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I really hope witnesses on hive could deliberate on this and make it a reality. It will further enforce Hive’s stance as a decentralized blockchain platform which people around the world should endeavor to avail themselves as well as benefit from the numerous social and financial opportunities hive exudes .

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I really agree with u on the getting noticed part. and of course, who wouldn't want more interest?! :P

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I am just reading all the posts about this news and I find that it is interesting and it could be a great move.

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Bears might find this 20% HBD very attractive for the next bear market. 👀🐻

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20% would be good, especially if it encourages people to hodl instead of sell HBD / Hive. I think there would be enough incentive that many would only sell large amounts if forced to...

What do you think about the potential power downs though? Might that affect the curation rewards (and the blogging aspect) in a negative way?

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The very cool part of this story is that saving HBD with 20% profit is gonna help bring more new users to Hive, and that's a win for Hive and HP holders on the long run.

Posted Using LeoFinance Beta

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Great work for being one of the first to get a quality post out on the topic.

The Hive and LeoFinance communities have now started to run with the news, but we're still waiting for a crypto media outlet outside of our bubble to pick it up.

News of an algorithmic stablecoin running on a truly decentralised blockchain that can offer 20% APR is surely newsworthy.

Who's going to step up!

Posted Using LeoFinance Beta

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To me it doesn't really make sense, where does the premium come from, income to subsidise the interest payments? I added my critiques here

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It comes from the growth of the network. Just like any other rewards/payments Hive distributes.

It is really a bet on the growth of the network. It can only success with growth. Interesting thing is interest payments on hbd may boost the growth of the network in circular positive feedback loop.

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