Hive Fixed Income Market: BlockFi Settlement Shows The Dire Need

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The Securities and Exchange Commission won another one. For those who were not paying attention, BlockFi settled with the SEC and 32 states for $100 million. This stemmed from the company offering Interest Accounts that paid based upon people staking their cryptocurrency.

It is a concept similar to the Hive Backed Dollar (HBD) saving program. This offers 12% return on any tokens that are placed into savings.

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Centralized Point of Vulnerability

By now, most who are involved with cryptocurrency realize that centralization means there is a point of vulnerability. With the BlockFi case, the fact that it is a corporation that offered its services via an application made it susceptible to action.

The SEC claimed that BlockFi, by offering these interest bearing accounts, was providing a security. At issue is the fact that BlockFi was not authorized to offer securities, thus running afoul of the Securities Law. The particular piece of legislation they were hit with dates back to 1940.

Naturally this is not about protecting investors by government control.

“Crypto lending platforms offering securities like [BlockFi’s Interest Accounts] should take immediate notice of today’s resolution and come into compliance with the federal securities laws,” said the SEC’s director of compliance, Gurbir Grewal.

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Here we see a dire warning to crypto lending platforms. It is likely all of them are vulnerable meaning the SEC along with individual states could some knocking on their door.

So what does this mean for this section of the industry? Ultimately, if not worked around, it is probable that Wall Street and the banking industry take over. They are the ones suited to deal with regulation as well as having the money to stay in compliance.

This is the crux of any battles that are taking place. The SEC is involved in the hijacking of the cryptocurrency industry.

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Base Layer Fixed Income Market

Hive is in a unique position. There is the potential to develop an entire fixed income market at the base layer that will be out of the reach of the regulators. This is something that will become more important as time goes by.

We already see the process with the Hive Backed Dollar (HBD) saving program. Unlike the BlockFi situation where one is actually trusting a third party with his or her cryptocurrency, this allows one to operate at the base layer. There is no application required.

All activity is on-chain. This means the point of vulnerability is moved to the blockchain level. Is Hive vulnerable to an action such as BlockFi faced?

The answer is probably not. We saw the upset by Hive Blockchain Technologies Ltd over the name "Hive". The end result was nothing could be done since there is no foundation or centralized company that is in control of or behind Hive. At the same time, no single entity has the majority of the token distribution.

Here is where we see a tremendous opportunity to build out a fixed income market that is secured by the code and outside the reach of the regulators. This will prevent moves such as what took place with BlockFi.

In the past, we saw the idea of Hive Bonds put forth. As a step in the process, we can start to offer Hive Certificates of Deposit. We won't delve into the specifics at this time since the two linked articles cover it.

However, the main premise is to utilize the time lock capabilities of Hive to offer fixed income accounts. The Hive Certificate of Deposit is taking the existing savings program idea and extending it out. This would mean different levels of time commitments in exchange for higher rates of return. For example, the present saving program is 12% for a 3.5% return. The first Hive Certificate of Deposit could offer 20% for a 12 month lock up.

The Hive Bonds goes one step further in providing a token that can be traded for each HBD placed into one of these accounts. The idea is to create a typical bond tree. These can go up to 30 years. Obviously, people will not want to lock up their HBD for that long. That is why another token is created to represent what is placed into the account. This can be traded just like Treasury bonds are.

A further advantage of this, due to the transparency, if the market is liquid, we suddenly have pristine collateral that was generated. Since Hive Bonds are backed by HBD that is locked up based upon blockchain coding, everyone is well aware of what the asset is worth when it is collateralized. This addresses one of the major deficiencies in our financial system at the moment.

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Hundreds of Trillions Of Dollars

The global bond market alone is estimated to be worth about $120 trillion. It is also estimated that near 1/3 of that is operating under negative interest rates.

What is appealing about establishing a fixed income market on Hive is we can offer much greater returns. The reason for this is simply due to the fact that we need a lot of Hive Backed Dollars to be created. We are dealing with a level that is inadequate to keep a peg, let alone serve as a strong stablecoin.

Of course, this brings up the other piece of the puzzle. Stablecoins are also under attack by the regulators. Here we also see where the governments have a way in. Behind most of the stablecoins is a company that can be targeted.

Once again, since the Hive Backed Dollar operates at the base layer, there is nothing to target. It is an algorithmic token that operates solely based upon the code. Expansion or contraction of the money supply is driven by the free market, with the community deciding through their actions.

Cryptocurrency is going to need a fixed income market since speculation does not suit the majority of investors. Even those who engage in trading are apt to move their profits into less risky, revenue generating funds. Bonds and other fixed income assets are crucial to the process. It is also why the markets are so large.

The challenge is going to be getting rid of the middlemen. Wall Street is drooling over this potential. Since the SEC is making it very clear that the old rules apply, we can also deduce that many of the old players are going to be involved. This is the exact opposite of what cryptocurrency needs.

Hive has the ability to stand out in this regard. Everyone is drawn to the "mooning" aspect of cryptocurrency. This is where a lot of money can be made. However, true wealth generation entails having a strong fixed income market for people to reduce risk while still garnering a strong return. A major problem with the present system is people are pushed into riskier assets to find yield. The fixed income market globally was most destroyed yet global bonds along top $100 trillion.

BlockFi is one of the companies trying to solve this problem. Herein is the issue: a company trying to do it. This is where the vulnerability comes in. With Hive, we can have a blockchain that can address the problem. That is the key difference.

And if the SEC wants to coming knocking, let them try to find the door.


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51 comments
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Bruh, how do you put out so much good content so consistently 😐

It takes me days to write something this good.

Anyway it's a shame that they keep going after so many people, but I guess there's really no one to go after when it's happening at the blockchain level.

I actually thought there was a company behind Hive... I guess that's why that company was upset about the name. I heard in a video that Hive bought a bunch of mining equipment, and just kinda figured the 2 were related without doing much research into it.

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Yes there is some confusion. What we are doing here has nothing to do with Hive Blockchain Technologies. The latter is a Bitcoin mining company, publicly traded I believe.

For us, there is no company, no foundation, no single majority stake holder. There are different people involved in different things. The core development team comes from all over the world. Same for the consensus witnesses.

All of this adds up to the capability for us to keep pushing things forward in a manner that is unaffected by what the regulators do. It is key to keep this idea in front of people.

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This is great to know. Feelsbad that I waited all these years to finally take the plunge here and get involved with Hive, but with vaporware projects having $100B market caps left and right... seems like I'm still early enough with Hive at a few hundred million.

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It is still very early. There are probably less then 10,000 people on Hive. This shows how small it is in the social media world. Yes the primary use case is still blogging but that is changing. There are more gamers of course but they do not interact a ton on chain.

We are seeing a lot of things expanding. So yes you are very early.

Also, keep in mind the wealth extends beyond just Hive. There are the layer 2 solutions like LEO that can also have a major impact going forward.

The next 24 months will be exciting.

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Also, keep in mind the wealth extends beyond just Hive. There are the layer 2 solutions like LEO that can also have a major impact going forward.

I have a bigger stake in LEO than I do in Hive. I was actually just thinking about doubling up on my LEO position because I'm terrible at doing things in moderation.

I see the price has gone up like 4% since I bought my initial stack, but I still think it has plenty of room for growth so I might get more anyway.

Do you know if there's some place to learn more about the tokenomics of LEO, and maybe the price history? I saw on LeoDex/TribalDex that the chart only goes back a month or 2, and all I can really see about tokenomics is the circ/max supply.

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The Hive-Engine tokens do not have great charts with history. When Cubfinance was released the price of LEO jumped to over $1. Since then, it obviously pulled back.

Overall we are looking at a low float and a strong growth rate. At some point we are going to see LEO take off. Keep in mind that LEO is going to equate to the airdrop when ProjectBlank is released. So having more LEO is of benefit there alone.

A lot of upside in my opinion. We are also seeing pLEO developed on Polygon. That means more LEO spread around. The staking will likely go down as some move to the LP to get the return.

So a lot in favor of LEO in my opinion. That is why I keep staking all I get and curating with it.

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Keep in mind that LEO is going to equate to the airdrop when ProjectBlank is released.

I know nothing about this. I need to take a look into it I guess, but that sounds pretty enticing.

The staking will likely go down as some move to the LP to get the return.

I would assume this means a larger slice of the daily reward pie for LEO stakers, but again I need to dive into the tokenomics some more. I know that's how things work with some other hive engine tokens.

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ProjectBlank is a microblogging app that is being developed. Consider it "Twitter on the blockchain". It is something that we are waiting on, over a year at this point. But it will be a huge success when it is finally released.

Yes as LEO is moving into the LP, the ones who are staking will get a larger percentage of the daily reward pool since there is less total LEO staked. Simple math really. The less in there, the more for those who are.

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Thanks man, I'm actually watching your video on 3speak about stacking LEO now.

So as I understand, LEO token won't be used for ProjectBlank - the project will have its own token.

But LEO holders will be airdropped that token. Interesting...

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That is exactly what is going to take place. The Blank token (not going to be its name) will be a proof-of-brain which carries similar properties of curation. This airdrop is going to be based upon LEO holdings. From what was mentioned, this is both LEO staked and in the LPs.

The ultimate goal is to have LEO as the "parent" token with these different projects under it, all feeding users into the Leo ecosystem. That is the reason for an application like Hivestats.

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You convinced me to buy and stake another 7200 LEO

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LOL Well not sure that was my intention but I think you will be happen long term.

There is a lot going on with Leo. Plus you can always curate with it to increase the amount of LEO you earn.

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It is as brilliant as could be, and I love reading about it.
/miko

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Bruh, how do you put out so much good content so consistently 😐 It takes me days to write something this good.

I've the same concern that he publish quality contents consistently which take me to make a month 😛 I'm a regular reader now.

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Just to be sure to be a regular commenter along with being a reader.

That is how you can quickly establish relationships and improve your wallet along with standing in the community.

It all builds upon itself.

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Thank you so much sir for your kind direction. I'll try my best to be regular and follow your foot steps 😊 have a nice day!

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great write up, and HBD and Hive really do seem to offer a solution to this "problem" of regulation. with the next HF raising the haircut to 30% we should see a lot more HBD soon. I also plan to convert much of my Hive into HBD in the near future as will probably others. Of course more HBD in existence is better as it should allow for more adoption and stability

@tipu curate

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Of course more HBD in existence is better as it should allow for more adoption and stability

I agree with this. That is one of the major problems at the moment. There is not a lot of HBD out there. While we see about 25 million total, half of that is locked up in the DHF. Thus the free float is rather limited especially when we realize a significant portion is on Upbit.

The raising the haircut is helpful. Perhaps then we can start the process of implementing some of this. We are operating in stages. I would like to see the first layer, a 1 year lock up in exchange for 20% to be implemented. I dont think that is hard from a coding standpoint and could be done rather quickly. Plus Peakd could easily do that.

Of course, I could be wrong on the technical since I am not aware of the coding requirements yet it seems to me the core features are in place on chain.

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Hive is just so extraordinary with the features surrounding it

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We just need to keep expanding things and pushing them forward.

This is where we will see a massive difference over the next year or two.

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Hive has the ability to stand out in this regard. Everyone is drawn to the "mooning" aspect of cryptocurrency. This is where a lot of money can be made.

With this same believe I'm with hive and your every point is right and I do agree on your opinion and research as always!

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Here is where we see a tremendous opportunity to build out a fixed income market that is secured by the code and outside the reach of the regulators. This will prevent moves such as what took place with BlockFi.

I agree Hive can absolutely do this! Excellent write up that has some awesome ideas in it.

There is definitely a lot of potential with what you outline here and yeah Hive has 'immunity' to a lot of stuff since it lacks a corporation and is (as you say it) secured by code.

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It seems as time passes the need for this only grows. We know the governments of the world are only going to keep increasing the pressure. They now see the threat that exists and are intent on reigning it in. If there is any degree of centralization, they will exploit it. That is where Hive has an advantage. The exploitation came from Justin Sun and allowed up to tighten things up.

Bitcoin is obviously the poster child for out of reach. I am not sure a lot of other things in crypto are though.

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That was a really interesting point about that company with the name Hive. I remember a bit about that lawsuit and first, but then It just kind of got dropped. Now I know why and it just kind of makes sense. Cool stuff. That is pretty lame that they are holding onto laws from 1940 when things are clearly changed.

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How do you sue someone if there is no place to send the lawsuit?

That is the issue. Who do you sue on Hive? Who can be held responsible? Who is in charge?

The ultimate answer is nobody.

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well sec is killing centralized crypto companies that why I like hive cause its decentralized let's hope for the best but sec is a problem

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Hive has the ability to stand out in this regard. Everyone is drawn to the "mooning" aspect of cryptocurrency.

So sad it’s taking the world so much time to find and appreciate Hive. Hive is literally the solution to all their problems.

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I dont think the world even knows about Hive yet, even most of the crypto world. We are still flying under the radar. However, it will allow us to develop and grow. This is vital.

This makes me believe we will have a much brighter future. There are a lot of options with Hive in terms of the directions things are heading. So if we keep pushing things further out, it will only help us.

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I have to agree but what happens when the regulators start paying attention? I guess there are still the bridges out like wLEO and bLEO as an alternative out of the system.

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Out of which system?

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Well out of the Hive ecosystem if the centralized exchanges started delisting tokens that the mainstream establishment consider threats.

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Well I dont think that is a problem other than to and from fiat. Right now that is a major hassle.

However, once things can be purchased in crypto, it reduces the need for fiat. Hence, the on/off ramp is less of a vulnerability. It will still be there but reduced in its importance.

This tug o war is going to continue for a while and it is up to us to keep developing alternatives.

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Incidents like this should serve as learning curve for us and the blockchain we get involved with. If it's not decentralized it's not decentralized.

Hive is far from perfect but keeps getting stronger and better by over time.
While we still flying under the radar, let's keep getting stronger.

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We are moving forward. There is a lot of stuff coming up that is making Hive even more interesting. This is something that we all should be excited about.

The development is pushing us in other directions.

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The more you write and the more I read, the more I hope the community is listening to you.

What an exciting time to be a Hive owner. The future is so bright.

Hive is the place to be. Just wait till many more find out.

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The more you write and the more I read, the more I hope the community is listening to you.

We will see. I am doing my part to keep adding to the HBD pool. I put all my HBD into savings to keep earning more and providing more to the market.

This is something that all need to start piling into.

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I got some in savings, but I been funding my Splinterlands card buying with my earned HBD. Wonder if I should rethink that?

!BBH

!ALIVE

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Impossible for me to answer since I am not a Splinterlands player and have few cards. That said, it is hard to argue with the upward trajectory of all that is taking place on there. Hence, if you are into spec as well as trying to amass a bigger Splinterlands stake, it might be best to go in that direction.

The HBD in savings is a fall back position after taking profits or a way to establish a baseline in your portfolio.

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Because this is such an awesome post, here is a BBH Tip for you. . Keep up the fantastic work

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Interesting post and so right with what you have highlighted. Hive is in a unique position which one would hope we could take advantage of.

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It is something that we do need to take advantage of because we have the potential to do something that most chains cannot. The point of vulnerability is great with many of these projects. Hive has some protections.

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I am really amaze how you put out this kind of content consistently, what a great mind you have!

!1UP

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