Hive Backed Dollar (HBD) Moving Ahead
There is a lot going on with Hive. It seems we are getting activity in terms of announcement. Projects are expanding while innovation is taking place. This is exactly what many predicted would happen.
One area that is close to my heart is the Hive Backed Dollar (HBD). This is something that we discussed on a number of occasions, along with creating things such as the Hive Savings Bond. The idea is to use the time lock capabilities at the base layer to increase the amount of HBD created while also maintaining stability for the blockchain.
Of late, we are seeing more attention paid to HBD, especially in light of the success of UST. This is another algorithmic-driven stablecoin that is created through the conversion of the native token. It is a model that can have success. The challenge for that situation is the fact there is a company that is behind it along with Venture Capital money. This is a point of vulnerability.
For this reason, it is time for Hive to step forward and assert itself in the fixed income market. There is a lot of potential with trillions of dollars available. Keep in mind, most people do not speculate with their money. It is time to help the industry transition to the place where return (yield) is the focus.
We are going to cover two recent announcements that could have a significant impact.
Source
Increase The Savings To 20%
The most recent post by @themarkymark detailed how he increased the APR on the Hive savings to 20%. This is an idea the Witnesses discussed and he, along with a few others, increased the payout on their servers to 20%. Bear in mind, the actually payout is dependent upon the medium of the consensus Witnesses.
Nevertheless, this does show the intention to make Hive a bigger player in this market. Obviously the success of UST caught people's eye. There is no reason why Hive cannot operate on this level and attract a serious amount of capital from the outside.
One of the things Hive has going for it is the decentralization of the blockchain. There are the consensus Witnesses along with another 80 or 90 back up nodes. All block validation occurs on a rotation basis. Therefore, no one individual or entity has control of the blockchain.
We also have token voting. Here again, Hive is in good position with the distribution. The largest stakeholder (in Hive Power) has roughly 3%-4%. This is in contrast to many projects where the foundation, lab, or company behind it is holding 20%, 30%, or even more. We saw this the vulnerability of this in the Justin Sun fiasco.
For months we have covered the fact that these mean that HBD is actually outside the reach of regulators. There is no company backing it, hence nothing to submit an application to come under the banking laws. Nobody is making assertions (claims) what the token is backed by since it is evident simply by looking at the chain (and doing some simple math). HBD has nothing to do with the USD since it is nothing more than a unit of account, being backed by HIVE.
Investing in HBD at the blockchain level, putting it into savings, means it is a very low risk, high return opportunity. There is no third party counter risk since the blockchain is the paired party. One has full control of the HBD since it is only accessible through his or her wallet. We see no application involved.
It is also important to note that the return is paid out in more HBD. Many (most) DeFi projects pay out in another token, creating another layer of risk if for no other reason than introducing volatility to the equation.
HBD on-chain eliminates all of this.
Here we have a big step forward. As of this moment, there are a few Witnesses who increased their savings rate to 20%. We will have to see what the others do.
HBD Liquidity Pool On Polycub
We also had an announcement mentioning how there will be a HBD liquidity pool built on Polycub. The goal here is to have the deepest liquidity pool to give people access to HBD.
Here is where we see the base idea expanded upon. This is a second layer solution, outside the on-chain mechanisms. Under this idea, pHBD will be created. Just like people swap LEO over to Polygon in the form of pLEO, there is going to be something similar for HBD. It will be paired with USDC to create a pool for people to acquire HBD. This, of course, will also provide another on-ramp to Hive. One can take Polygon assets, convert them to pHBD, and toss that onto the Hive blockchain in the form of HBD.
Obviously, up to this point, HBD liquidity is a problem. Simply put, we are going to need a lot more HBD.
Without having the details, we cannot do a direct comparison. However, with the Polycub pool, there are some differences. To start, this does not generate more HBD. That is only done on-chain. Secondly, all returns are paid out in POLYCUB, the native token for that platform. Here is where the added layer of risk enters. We also see how this entails using Metamask or some other wallet application.
To get people to pool their HBD, this risk will have to be compensated for. This means offering a higher rate of return as compared to HBD savings. Return always has to be weighed with risk.
From an overall ecosystem standpoint, HBD heading over to Polygon is a good thing. Naturally, giving wider exposure to the token is always a positive. There is, however, another factor in this. A certain percentage of the HBD that is swapped to pHBD will be placed in the savings account. This helps to feed the return that people get for being in the pool. Yet, it also helps to create more HBD. In other words, it helps to keep expanding the amount of HBD that is being generated.
Steps are being taken to make HBD an attractive destination for fixed income dollars. This is an aspect to the industry that is just getting started. Here we have two ideas, one to increase the appeal of HBD while other is looking to help provide access. Both are needed to help take Hive to the next level.
Hopefully both of these roll out in a short period of time.
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The link in that phrase should be corrected to this: https://leofinance.io/@khaleelkazi/utgqxlrk
It is true that our HBD is presently underrated. In the next few weeks, it'll turn out a very reliable and solid stablecoin in the most powerful blockchain.
My Question:
If HBD demand increases as envisaged when savings % is raised to 20 and pHBD rolls out, is it possible to see HBD rise to the highs of $1.5 t $2 or more? What are the implications if that happens?
I would think it likely. If we get a big pool of pLEO, this means there are arbitrage opportunities with other exchanges along with the internal one. We also have the HBD Stabilizer operating, putting downward pressure on HBD if it exceeds the $1 peg.
We dont want a stablecoin to be at $2.
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https://peakd.com/hbd/@smooth/request-for-comments-hbd-stabilization-dhf-proposal
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The HBD stabilizer will use the excess hbd to buy hive which will In turn put upward pressure on the price of hive.
You can read more about it here
https://peakd.com/hbd/@smooth/request-for-comments-hbd-stabilization-dhf-proposal
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I just hope this happens. I expect to see Hive in the high side of $5 and $10 in the coming months.
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HBD may rise briefly but since you can convert $1.05 worth of HIVE into HBD, it is more likely that high demand for HBD translates into a lot of HIVE being destroyed to create more HBD. This likely drives HIVE much higher while HBD only experiences a short bump moderately above $1. The last time there was a surge in demand for HBD it peaked briefly at about $1.20 and quickly returned to $1 while millions of HIVE were destroyed and the price of HIVE went way up.
The stabilizer budget is much higher now than during that least surge as well, so it is possible HBD will remain even more stable (while still resulting in a lot of HIVE being bought and destroyed). That would be a good thing for the long term utility of HBD, since it aims to provide stability.
The HBD Stabilizer might have been the one innovation that completely changed the path of Hive. Congratulations on that.
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That'a a great milestone for HIVE blockchain.
As a user who always transfers HBD to savings, I believe that the number of users who hold HBD will increase with the new interest rate, thus this will meet the necessary demand of HBD.
That is true, interest could increase (no pun intended). We could see more money rolling in and people putting HBD to work. This is the idea behind having a higher interest rate, create more HBD.
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I always enjoy your posts on HBD. I also love the idea of it and think it can bring great things to Hive. But frankly I don't understand the math or the financial philosophy behind it, so I'm glad people like you do. I was excited when I saw Marky's post. If other witnesses follow suit, 20% would be huge! Think of all the new people it could attract to Hive? I see this as nothing but good.
!PIZZA
It could attract a lot of people which would mean a potential of more money rolling into Hive. The key will be the liquidity since there is not a lot of HBD out there. Some big players will have to convert a bunch of HIVE to HBD. The pHBD LP could be coming at just the right time.
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Okay, done reading...you guys are starting to convince me this might just be a good thing.
It can be a very good thing for Hive. As always it all depends upon what else is built around it.
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this means that the leo team will compound that HBD (in their savings account) which they collect?
At least a portion of it. There need to be some liquid since the savings is locked for 3 days. So maybe 50% is put in the savings to earn interest which will help the return.
As stated, we dont have the details so hard to know what they are going to do.
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I believe most of the interest will by paid to LPs to incentivize building the pool. There might be a fee charged by the project, I don't know.
Conviction is certain.
So over half of the top 20 witnesses have to set 20% for 20% to take hold? or does the system take some number between the two say if half set 10% and the other half 20% it would go 15%? Right now we have a pretty wild mix from 10%, 12%, 15% and now 20% yet 12% was the last option where over half agreed on so it's set?
I think it is a medium so it will depend upon where all the witness votes come in at but I am not exactly sure on that.
We will know if it changes in the next week. LOL
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facts lol going to be interesting times. Going to be holding on to my earned HBD for the time being to see what comes of it all.
It will be fun to see how it all unfolds.
Going to be a strong period of growth coming up for Hive I believe.
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While this sounds great, is it possible that Hive power curation APR% can be increased also, because people might consider buying more HBD to save than buy Hive to power up and curate since HBD savings give more APR.
It would be dangerous to directly change the inflation on Hive since there is a credibility issue.
There should be a concentrated effort to come up with ways of making the return on HP higher, but not from inflation. We should look to other mechanisms like Leofinance is doing with Leo Power.
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When there is lesser hive staked, inflation automatically increases as there is lesser competition in the reward pool. So I guess more inflation generated from less competition in the reward pool will lead to higher apr
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That is for curation and posting. But that isnt an increase in the inflation since there is still the same amount in the reward pool.
So yes your return could be greater if there is less Hive powered up.
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It is definitely a good improvement to we the HBD progress successful in the nearest future
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As a result, people will be more interested in buying HBDs and will be more inclined to save them.
This is an extremely important change. I’m glad to see that witnesses are paying attention to the broader crypto market.
What has happened with UST is a major wake up call. The idea of HBD having a fixed rate of 20% APR is truly exciting to me. I am more interested in holding HIVE and HBD now than ever before and obviously this means we’ll be ramping up the integrations of HBD into CUB and PolyCUB to create the ultimate cross-chain saver for it
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I presume it will be a bridging token also, allowing for the movement from Polygon or BSC directly into Hive (not Hive-Engine).
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Holy Mother of 💩 am I excited.
The future is so bright 🌞 and positivity is flowing.
Whoop whoop.
!BBH
!ALIVE
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If you are excited then so am I.
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Then you are super excited 😄
!BBH
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More than you know. Hell I am looking for Hive to take out the entire Eurodollar system.
Lets aim for it all.
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And you know what? From the education I got from .my reading from you and others, I see absolutely that this could, should happen.
We, as in Hive, is just at the very tip of a very large iceberg that it will become.
!BBH
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Hive can go in so many directions, which is awesome. We can push the tentacles out big time.
Doing this can magnify the potential of all that is being developed here.
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To repeat myself. I am so super fracking awesome sauce excited 😀
Because this is such an awesome post, here is a BBH Tip for you.
. Keep up the fantastic work
Because this is such an awesome post, here is a BBH Tip for you.
. Keep up the fantastic work
You are definitely not far from the truth . Hbd is really moving far ahead in a really turbo mode of a speed . The above mentioned boiling heated topics are really massive and huge steps in making sure Hive as a whole is recognized and really put on the world map . 20% apr just feels so surreal !
It will when it comes into being. Right now, there are a few who moved but it seems to still be around the 12% mark.
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HBD has huge potential to mainstream even before the native Hive token with the way this is going. I am a bit concerned about the risks the APR poses though, especially to the value of Hive
What risks are there?
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I am concerned about the value of Hive being affected, people disincentivized to stake Hive and the conversion of Hive to HBD will likely take a hit on the token. Also, I am concerned about how printing more HBD actually affects its stability.
I get that if we achieve our aim with it (more investors, more liquidity), then its a win-win, but don't you see any drawbacks at all?
Well in all honesty, you're the technical one on this matter...so your opinion does hold weight
There are other reasons to hold Hive as HP than just the ROI. Could some swap it out and go with HBD? Certainly. But that affects their governance, their ability to curate, and the upcoming RC delegation.
Plus when people come in to use the savings program, they require some RCs to do anything. This means more Hive will have to be powered up by someone. People overlook the fact that Hive is the "gas" for the chain. We cant get around that.
Also if there is a lot of conversion from HIVE to HBD, that will mean less HIVE, which then, with any demand at all, will push the price up even more. Doesnt everyone in crypto want lower amounts of tokens and think it a good thing? Here it is and now people suddenly do not think less tokens are good?
I wonder what the reaction of the Hive community would be if there was an announcement of a burn of 10 million HIVE. Do you think people would get upset thinking it a bad idea? I dont.
As for the stability, it is going to depend upon the use cases that are created. If the only thing tied to HBD is to put it in savings and create more HBD, we might have a problem. But if applications actually start building it in as a payment mechanism, then we will have use cases. That means we are far short of how much HBD is required.
We have 9 million out there right now. I think we can go a couple hundred million before we worry about stability. Just look at how many tokens other stablecoins have out there.
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This is something that is true and you are definitely not far from the truth about Hbd indeed moving far ahead in blazing fast speed mode. indirectly Hive as a whole is recognized and actually placed on the world map. 20 to 30% apr feels so real thanks for sharing
Well 30% APR is nice but not available now. We are content with 20%. Hopefully we will see some time locked options in the future which can offer that.
Also, it is going to be fun to see what layer 2 solutions people come up with.
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I am also a fan of the HBD savings offering more than 12% even though that is already decent. HBD has legs to perform as a tool to grow HIVE and should be used accordingly.
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HBD can have a huge impact upon the value of Hive.
We are going to see the HBD LP (pHBD) on Polycub. That is a strong 1-2 punch.
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Really looking forward to seeing the impact this has as this could be the biggest news Hive has ever seen.
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HBD has the potential to be a game changer for Hive. The next challenge is liquidity. We need to get a lot more of it produced.
This will take some time. Hopefully we see some layer 2 solutions start to roll out.
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So if we start seeing a lot of HBD being created, do you think we will start reaching the HBD haircut point? I remember that started getting liquid HIVE instead of HBD less than a year ago.
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If it gets to the haircut level, then yes it could happen. However, that is being increased in the next hardfork.
If the value of Hive explodes, the haircut is not a factor.
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vote for the validators that support 20%, unvote the rest :)
There was a jostling around at the end of the consensus I noticed.
So there was that mindset among a few evidently.
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Because this is such an awesome post, here is a BBH Tip for you.
. Keep up the fantastic work
Just me going on a deep dive reading all the posts about this. eheheh But I do think it can be a great idea. Just think that since the conversations are about making this just temporary, how could be the results when the % dropped again? Could that change in the future be negative?
The Witnesses have the ability to change the interest rate up or down.
Personally I feel that there needs to be a lot more HBD created so 20% is perfectly acceptable. However, I also proposed the idea of time locked options for a bit higher interest rate.
We will have to see how it all unfolds.
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I don't say a lot but you guys should follow a similar step as MakerDao, since MKR is used to generate DAI, and create collateralized vaults, similar approach would be a safer path to hold Hive or other tokens and generate HBDs.
It should be not the same way as MakerDao, because Hive Engine has a vast playground in terms creating new contracts on its own chain.
Taking HBD out of Hive Engine seems a bit complex mechanism, pHBD as you mentioned, but it will be a different contract with some liquidity available to web3 market in advance to make it run, this could create instability if you don't declare HBD a stablecoin in web3 market, and for this you need to follow regulatory matters again. So its not simple as it looks.
20% APR is way too much, Hive community is running an economy of its own, and already getting good returns on various contracts, like HP or LP has lowest returns and can be assumed the yields will not rise up further. But in HBD case most stablecoin yields are limited to 5%, which is reasonable, so I would not recommend a high returns for HBD, since it already has a good amount of returns on chain.
Bring more people to use Hive Engine and #tribes to generate more HBD for a longer and stable future.
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No smart contract capability on Hive. That is the drawback to mimicking a lot of what is out there.
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The pros and cons of Hive - it has almost everything the market needs and it is still not mainstream despite having all the solutions.
20% APR and pHBD are great signals. I would back both but as you keep on mentioning in your articles, we need value seekers and new investors looking into Hive to generate added value through true decentralization we present.
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The goal, I believe, the increase is to appeal to outside players. The Witnesses are looking to tap into some of the LUNA crowd. This makes sense and is a move I can support.
We just now have to get to the point where HBD is accessible. That one of the next challenges.
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Gaining new eyeballs is something we all should support. Not sure how big the influence pHBD would be but it is worth waiting.
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It is going to depend upon a couple of factors. The first is can it get about 1 million pHBD in it. That is going to be the first step.
After that, can they get the word out that it is a destination to get HBD so people looking to get involved in the 20% savings can do so with some big money.
Those two things are going to be crucial.
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I think the first step is within the community's grasp.I am more interested in the second one which requires external big investors to jump in.
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That is going to take some refinements to the system. Somewhere we are going to have to get accounts, plus RCs, plus be able to provide the HBD.
A lot of work still let to be done. However, we are on our way.
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Incredible times ahead for HBD and the whole Hive ecosystem. having cross-chain HBD is going to be nuts.
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Yes. I think the idea of a HBD bridge is going to be really appealing.
The Leo bridge seems to work well, at least with Polygon. So if we can make Hive more accessible to other chains, that will really help the entire ecosystem.
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Me thinks we might have a few things to talk about in these podcasts coming up....
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Things are getting so crazy, we are going to have a full card. Might need to add another couple shows a week.
You dont really like sleep, do you?
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I'll sleep when I'm dead!!!!
In the meantime, keep on Hiving.
We need a theme song now that I think about it.
Keep On Hivin' would likely be in the country genre.
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Could be classical?
Could be. Certainly not hip hop.
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Good post, @taskmaster4450
I am really liking the new 20% return on HBD.
Thanks for the explanation and information.
There is a lot to like about it. High return with relatively low risk. That is hard to beat.
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I think this move to have 20% APR to HBD it is an amazing move.
I was looking UST from the beginning what I though that maybe we can do the same thing on HBD take in advantage that we are completely descentralized unlike the UST.
However, I think we have a problem that is the HBD liquidity and the fact we dont have HBD listed at least on Binance. This makes more difficult to attract a lot of investors since they will need to buy hive send to hive wallet and then swap it to HBD.
I think we need to get HBD listed at least on Binance to really catch more investors.
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Liquidity is the next problem we have to address. Hopefully the Polycub liquidity pool will go live soon so we can start to fill that. At least then we will have access via Polygon.
We are taking these things one step at a time. For now, those who are involved with Hive can start to generate more by pumping more into the HBD savings. That is the first step.
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That is nice.
I really think that HBD can attract many people as UST did on Terra.
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There is no doubt people will chase the yield. Again we need to get the liquidity flowing.
To pull this off, we are going to require a great deal of Hive converted. It is that simple.
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Do you know how we can get all the hive that we need to take this off?
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I am not sure what you are asking? What do you mean by "we get all the hive we need to take off?"
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The necessary Hive to get enough liquidity for HBD.
Meanwhile I understand the liquidity will be creating a par USDC-HBD on Polygon.
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Ah okay. Yeah there is a ton of Hive out there. I think there is more than 120 million on the exchanges alone. So that isnt a problem if people are willing to convert it. That is a 3.5 day process and carries some risk. Has to be done really by someone who understands Hive and knows what they are doing.
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I don't think I'm a Hive expert but in the past I've used the Hive to HBD switch functionality using the 3.5 days functionality.
However I will try to help as best I can.
I don't know if the project where I am inserted called @hiveland.dapp can somehow contribute to help our ecosystem externally.
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Yes there is a 3.5 day to convert. You get 50% immediately and then the rest over the next 3.5 days.
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Thank you for sharing
Please what is the difference with Hive and Hive dollar
I'm a newbie and want to know??
HIVE is the native token that is used as the blockcahins "gas". It is what allows people to engage when it is powered up. At the same time, it also provides governance (voting on Witnesses and for proposals). Finally, it allows for curation, so the more one has powered up, the more one will earn in curation.
HBD is a stablecoin that is backed by $1 worth of HIVE. Hence it can be converted for $1 HIVE. This is the peg. Put HBD in savings and one will get 20% APR.
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Wow thanks for the explanation i now understand. I appreciate you
No problem. Glad I could help.
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I'm glad k came across your post
Glad this is already the case today :)
I won't be moving anything there for about 2 months but after that, I will start stacking like crazy moving all my HBD liquids over there..
There will be a lot of opportunities in my estimation within two months. With the pace of projects, that is a lifetime. LOL
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This is a nice news!
I am enjoying to see growing my savings in HBD little by little. But with this incentive, I would think about to convert some fiat>HIVE>HBD soon.
In the other side, I need to do my homework learning to use Polycub. It's kind of new language for me, in addition I am a slow learner :)