Is HBD Pegging Really Coming?

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Until not so long ago, after watching the pegging mechanism of HBD fail over and over again, I started to support the idea of removing it from the Hive economy.

But then I began to look at this issue from a different perspective.

Stablecoins are becoming something gigantic in the crypto-sphere, and it's barely the beginning.

While HBD doesn't play in the same league as the major stablecoins from multiple reasons (market cap, broken peg, not backed by existing assets - it's part of a mechanism of debt management), we call it the stablecoin of Hive, and it might have the right name for certain times like the bear markets.

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Blocktrades and his team, as well as smooth through his @hbdstabilizer proposal seem determined to take another attempt at taming the pumping and dumping beast for HBD and make it if not pegged at least loosely pegged to $1.

In the hard fork that is almost upon us, blocktrades intends to introduce the possibility to convert Hive into HBD at the blockchain level. Currently, only the opposite conversion is possible, from HBD to Hive. He writes about this in more technical details here.

The Hive to HBD conversion will likely push the price of HBD down, because the supply of HBD increases. The question is what happens when HBD goes below $1. Well, this operation will fail if it would result in breaking the haircut rule, thus keeping HBD from crashing below $1. That's how blocktrades intends to deal with this eventuality.

I don't know if these ideas (reverse conversion + stabilizer bot) will keep HBD price loosely pegged or not. But they are worth trying. Don't give up without a fight, right?

Blocktrades wants this to work so much to the point he unvoted all other proposals and only votes for the stabilizer proposal now. He explains here why.

Let's wish them good luck! Hive deserves a working almost stable coin, but not a joke that can be pumped or dumped whenever someone with a little bit of capital wants to make a quick profit.

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We really need a solid plan and mechanism to keep it around 1$ mark. That will bring more confidence in hive as that I’ll prove that this is community driven asset not something being controlled by someone in the background. This will also help us keep the market away from influencers who can make the market red or green whenever they want it it to be for their own gain.

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It is going to require a lot of trial and error. Like most things of major nature, it is best to do things in incremental phases to try to move things to the end sought.

The stabilizer is a good start. When the hard fork goes through, hopefully we will have another mechanism that helps hold the peg.

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The biggest issue is the market cap of HBD. With such a thin market cap, we invite anyone with a little bit of capital to attempt to game the token and break the peg.

On the other hand, the Hive->HBD conversion practically can add the liquid Hive in the game at any time, making it more difficult to pump it, or more costly.

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Having a stablecoin native to Hive would be incredible. The fact that it is getting attention shows how far we have come as a community. With some of the base layer coding upgraded, now other things are starting to get attention.

Will it work? I think with the focus being paid, we stand a chance to get things in alignment.

We will see what unfolds over the next few months with it.

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Having a stablecoin native to Hive would be incredible.

Yup, in the context of the huge importance stablecoins start to have in the crypto world, that's definitely an advantage.

Will it work? I think with the focus being paid, we stand a chance to get things in alignment.

I'm getting positive feelings on this. Before, at least during my time on the blockchain, there wasn't any real commitment to fixing HBD pegging at the level which counted for core development. Now it seems this issue is on the radar of blocktrades and he seems committed to deal with it.

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I don't even get why we need to have a HBD... Same story with SBD which HBD is trying to replicate. I just see it as a means of making things more complicated same as with the curation curve and others. The simpler the better.

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Well, without thinking at all at the implications of such a change, I would add another rewards payment options:

  1. 100% HP
  2. 50% : 50% HP / liquid (where liquid means Hive + HBD)
  3. NEW: 100% Hive

Then, someone would never have to use HBD at all. They can either go full HP or full Hive. I'd even make the 2nd option advanced only.

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The conversion mechanism failure wont be enough to keep the Hive dollar from crashing below the US dollar. As long as we can convert hive dollars for a US dollar worth of Hive, then the Hive dollar should remain near 1.00. That fails if there are too many Hive dollars. I fear the new mechanism may leave us with the opposite problem of having a 50¢ Hive dollar.

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As long as we can convert hive dollars for a US dollar worth of Hive, then the Hive dollar should remain near 1.00. That fails if there are too many Hive dollars.

I forgot how this works. If the haircut rule is in effect, you can't convert HBD -> Hive anymore?

We still had a sort of a similar situation with Steem during the bear market, so it's possible.

Not sure how much the stabilizer bot can help in either situations when we are talking about high volumes.

I also felt when I was reading blocktrades' post there's something missing on this side of the equation to keep the balance. He seems more concerned about a pump, rather than a crash below $1.

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Of course, he was. The blockchain will honor the debt of hive dollars, here after referred to as "dollars", so long as the market cap of the dollars does not exceed 10% of the combined marketcap of dollars and hive.

Looking at the market the price of Hive is 0.45 dollar / Hive. Yet the blockchain feeds has it at 0.776 dollars / Hive. So here we go according to the price feeds we have.

There are 6,090,616 dollars and a total virtual supply of 391,404,129 Hive.

6,090,616 HBD ÷ (391,404,129 Hive × 0.776 HBD/Hive) = 2.01% (source: https://www.hiveblockexplorer.com/)

That looks good, but with a 30¢ Hive, this is 5%. At 15¢ Hive this is 10%. We would lose the peg below 15¢/Hive.

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Yeah, makes sense your explanation. He did say this is the beginning because it was an easy function to adapt with little chances of introducing any bugs. Maybe they will think of additional improvements to the pegging mechanism in the future. He seemed pretty determined to solve this issue and from what I've seen so far has a step-by-step approach, safety first.

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