The Case For HBD Eating Up Hive
We are watching closely our stablish-coin to see how it reacts. So far, we are looking at a peg that is not holding. The recent bull run saw a massive run up in the price of HBD, over 25% above the peg price. While this is much better than the multi-dollar price we saw in the past, it still is not acceptable.
Therefore, more is going to have to be done to aid in this effort.
One of those the solutions is an adjustment in supply. This is something we already see changing.
The Case For A Stablecoin
Hive having a truly decentralized stablecoin is something that is needed.
HBD is not backed by any organization or entity. It runs on the Hive blockchain the same as the native token. This is important since we are seeing a lot of crackdowns by regulators. At some point, it is a good bet they will go after stablecoins in some fashion.
There is also question about what is backing those stablecoins. Tether is one that have come under heavy scrutiny about whether there is really the asset backing there. Many feel it is not. This could be another point of vulnerability if they are pushed to an open audit.
A stablecoin is vital for commerce. Cryptocurrency, in general, is treated like stock. People want to buy low and sell high. They are looking at the pricing each day, wanting it to moon. Obviously, this can be terrific for wealth creation yet it useless for commerce.
Merchants want stability. They do not want something that will go up 200% in a day. While that might seem like a windfall, if it can do that, the price can also drop 50% over the same duration. As we can guess, this makes the pricing of products and services a nightmare. Add in the fact that things can change quickly and merchants would be assuming a risk that they do not want.
Of course, having a "stablecoin" that moves 28% above its peg is not healthy either. Therefore, more needs to be done to get us there.
Hundreds of Millions of HBD
If HBD is going to be a commerce token, the supply is going to need to increase greatly. This is something that is required to have a thriving economy. Ultimately, the more liquidity in an economy, the better it is able to function. Those that lack liquidity tend to get locked up as the velocity of money stalls out.
By now we are all familiar with this chart by @penguinpablo that comes from his Hive On Exchanges Report.
Many are pointing to the success of @splinterlands and the fact they are signing up so many accounts. This is causing a two-fold demand on Hive. The first is the fact it costs 3 Hive to create an account. In the volumes they are signing up, it is likely they are doing this for each account, compensated by the sale of Spellbooks.
The second is, of course, the need for each account to have a minimal amount of Resource Credits. Whatever the determined amount, the game required at least 10-15 HP per account that goes live and plays. When having 7K+ new players a day, this can add up.
There is however, another factor that could end up coming into play. Over the last few weeks, we see the amount of HBD in existence increasing. We are now near 25 million.
Here is what the situation looked like two weeks ago according to @dalz taken from Hiveblocks.
This is what it looks like right now, taken from the same site.
As we can see, in a two week period, almost 10 million HBD were created by converting Hive.
According to the post on [Printing HBD](Printing HBD | Data On HIVE to HBD Conversions And The Opposite By Date And Accounts) we see this chart and conclusion.
A total of 11.5M HIVE was converted to HBD in the months July and August.
You can only imagine how much Hive will be required to get this to a few hundred million, a minimum level required to operate as a commerce token.
Ways To Create HBD
The blockchain is programmed to generate HBD in a few different ways. There are a few options to tinker with it but overall we see how it is going to unfold.
- 50/50 payouts
This is obviously one of the easiest ways to get HBD into circulation. Content creators opt for the 50/50 payout which will give them half their rewards in HBD with the other half in HP.
There is one issue with this. If the HBD to Hive ratio hits 10%, then the blockchain stops printing until the level is below it. This is something that is going to be cause for debate.
For a better idea about this, check out Hive Dominance: HBD Buffer which presents the case for raising this limit), something that in light of what is happening makes sense.
- Interest On HBD In Savings
The last hard fork actually increased the printing of HBD since any token put into savings will earn 10%. This means that the yearly amount of what ends up in savings is increasing 10% a year. Here is another area that can be altered to get more HBD into circulation. If the Witnesses decide to increase the rate, the total HBD will see more going into each savings account that is holding it.
This leaves us with the conversion. To get the big numbers, this will obviously be the primary method.
We do see an interesting loop. The value of Hive actually can assist in the expanding of HBD. When the price of Hive increases, as long as it is faster than the increase of HBD, it can produce more.
For example, if the price of HBD is $1.30 and Hive $.65, it takes two Hive to create one HBD. However, if the price of Hive jumps to $1.30, it only requires one Hive to generate a single HBD.
Thus, with the existing supply, the higher the price in USD, the larger the amount of HBD that can be put into circulation. Of course, the decreasing of the Hive supply through conversions should help to push the price of Hive even higher.
We can see how this can factor if in a couple applications are doing like Splinterlands and if millions of Hive are locked up in the SIP when that is released.
Suddenly, the liquidity of Hive is not as plentiful, forcing a run similar to a short squeeze in stocks.
For the moment, it looks like there will need to be a lot more conversion of Hive to get the price of HBD moving back towards the peg. The HBD Stabilizer is operating in high gear to do its part to get things aligned. However, it is evident that application is being overwhelmed by what the market is doing.
Nevertheless, if we start to see commerce emerging on Hive utilizing the HBD as the currency, a lot of Hive will be eaten up. Even 25 million HBD is nothing for commercial purposes.
This is just another way that the value of Hive will be pushed higher.
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The importance of a stable coins cannot be overemphasized. Having decent supply which I think should be somewhere around a couple billion will drive DeFi and commerce to the next level.
Hive already has the framework to be a world-beater in terms of network speed and capacity, although when more people and higher transaction volumes comes through, we'll start discussing scalability.
There is a lot forming on Hive that is in its favor. A decentralized stablecoin is exactly what is needed with the recent thrust by regulators.
We will see if we can move from stablecoinish to stablecoin.
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Thank you for the information.
Recently I switched the payout to 50 50 so that I can start investing more into the local communities here.
Absolutely awesome job thank you very much for all of the help and support for our blockchain. Really excited to watch this entire thing grow even more.
Thank you for me and puppy dog.
Interesting. The default for all my posts is 50/50. I didn't even realize there was another option.
I'm still relatively new to creating content on Hive so posts like these and discussion in the comments is such a great way to learn.
Mostly mine is always set to 100% powerup.
But I wanted to get some more shitcoins from friends. Hehe
I've been saving up my HBD as I noticed we now get 10% by keeping it in savings. I was hoping that some of the dapps on here would start using it such as NFTShowroom but maybe they are waiting for the price to stabilize more? It would be awesome to be able to set a price on NFTs since hive's price has had wild swings in the past. Most likely just one of the many use cases of HBD in the future.
Given that the supply is rapidly expanding to push the price back to $1, you would be better off selling at $1.28 (price as of writing) and buying back later when it's $1 again than holding in savings now. It will take nearly 3 years to gain 28% sitting in savings.
sell HBD for what? another stable coin maybe? I look more at the exchange rate between HBD and Hive and when that is above a certain level I buy Hive, irrespective of their prices, because I believe in Hive long term and I want to get as much as I can
If you believe in Hive, it's Hive you should buy. That's the equity token that can make gains from increasing demand for HBD.
People buying HBD as a 'stable' token should sell now for fiat or something else stable and rebuy when it gets pulled back to peg price.
I am buying Hive with HBD but I only do that when I can get 3 or more Hive per HBD. The people that are buying HBD I think are doing it because it's profitable under the collateral conversion system that has been recent implemented
That is not the case. It's profitable to convert Hive to HBD right now, not the other way around.
The people buying HBD are speculators holding it on UpBit. That is seen empirically: almost all of the supply is being held on UpBit:
Use of a stablecoin here, especially for legit art products like what can be seen on NFT Showroom, would/could give that platform a competitive advantage over many of the other NFT platforms. I too have been hoping this catches on. Using a token that fluctuates in value means those selling NFTs are not in control of their profit margin, which makes doing business inconvenient and way harder than it needs to be. One could ship merchandise to consumers/fans/followers/whatevers that comes with the purchase of an NFT for instance, but not without a stablecoin, because you can't ask $100 for a hoody one week, then expect to sell any the next week if the token value goes up making the hoody worth $200. You're either ripping the consumer off or putting them in a position to wait and not make a purchase until the value drops, which is just silly if you're expecting to sell merch. Or one could sit and adjust prices all day, and the next day, and the next day, and forever; micromanaging one's life to death leaving no time for, life. So yeah, the stablecoin HBD would solve some problems and offer more business opportunities for artists and content creators to explore.
To use for commerce more stability is required. There is a move to push the price down which expanding the supply will do. The challenge is that there is not a lot of HBD out there which means that it will fluctuate; not something you want.
I too hope that some applications start to take payment in it. That would give it more of a use case.
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This is can change, HBD eating up hive tells is that in this life nothing reign forever, now a time will come that Hive will fight back, as we always knows they must be a reason for the tremendous rising of HBD.
Nice piece, i am happy that I red this post❤️
People are getting paid a 28% premium on it. Thus it makes it worthwhile to arbitrage it.
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Thanks for sharing this piece of advice
Thank you for the information.😎
I have been reading a lot of this topic of late and I find it interesting. I have also tweak my strategy a bit to accommodate some of the knowledge I have gained.
From what I can gather here, we need more HBD to attract more commercial activities. One of the ways this is been achieved is through the conversion of hive to HBD. This also has an impact on the price of hive. So hive is the coin to hold right now. I was tilting towards HBD at some point.
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Just follow the supply and demand in your head.
If you convert Hive-to-HBD, you are reducing the amount of Hive and increasing the amount of HBD. If you are turning around on the open market and then selling the HBD, you added more sell pressure which should help to push the price of HBD down.
With it being higher than $1.00 right now, more sell pressure is needed. That is what HBD stabilizer is doing at the moment.
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Don't blame the messenger, I need to be "this guy".
For the sake of network security max HBD supply nedds to tight to powered-up $HIVE. Especially with very few exchange listings of HBD. Isn't it potential attack vector? Somebody could amass relatively cheaply vast amounts of HBD to be converted during bear market to power up and gain control over the network
I am trying to think how that would work. If the limit was increased to 20%, would that be an attack vector? It could be in theory. However, the mass expansion happens when the price is above $1 like that. That means one is paying a premium for the HBD, not getting it cheap.
It is something to consider and one would have to run some numbers to see where a point of vulnerability could arise.
I do agree, we need to get HBD listed on more exchanges though.
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I've been saving up my HBD as I noticed we now get 10% by keeping it in savings.
That came as a result of the last hard fork. It might end up being increased in the next few months if the witnesses decide to do that.
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Hbd price go high little
It’s beautiful and scary at the same time. The massive success on Hive we have been seeing is making it hard for HBD to keep up to being stable. It’s only fun when you are on the benefiting side but the volatility makes it kinda scary. Happy to see that it’s been checked to get corrected.
The tight float does make it volatile. There simply is not a ton out there on exchanges (and most of it is on one exchange anyway).
More use cases would help a great deal. Hive is still growing and the situation with HBD is following the same path.
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price of the hive bean exploding I hope it rises above 1$ soon
It could. Or it might go back to 50 cents.
Markets do what markets do.
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yeah could be
Think with the potential extended altcoin season it could hit $2?
Your wish has been granted.
yeah it did
As a witness I am voting on a 15% yearly yield on Hive savings to increase printing. As a writer I am opting for 50/50 rewards, but as an investor I don't want to risk converting Hive to HBD anymore because everyone is doing it, so I am afraid the peg may suddenly return to 1:1 and I take a loss.
Very good. I am sure there might be some other witnesses who join you in the 15% category. I have no looked of late to see where all stand.
A shift higher though would not surprise me. Getting more HBD on the market would be a good thing especially if the price of Hive keeps heading higher.
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Also, there are people buying HBD to put into savings to get the 10% a year yield... Guys, this is not profitable, you are paying a 20% premium price, when the peg goes back to $1 it will take 2 years the get a return on the investment. It is not worth buying HBD to put on savings.
That is true. Now is not the time to buy HBD to put into savings.
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As far as I understand, a lot of people are buying HBD with hive because it's profitable if you use the collateral conversion thingy
The idea is to get the HBD and sell it, especially on an external exchange.
You are being paid $1.27 for something that is going to be pushed down to $1.00 at some point. So why not sell it.
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Tremendous analysis between the HIVE and HBD mechanics on this blockchain. I think that both of them are under the spotlight at the moment and I wonder with this bull run where the prices will take us. Still need to wrap my mind around what is "good" for this ecosystem and how this could create opportunities for the users, but one thing is clear that we are on the right track.
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What is good for users tends to be good for the ecosystem since they are tied together. Security is always a concern but one of the best security measure is more people, distributing the assets across a wider cross-section.
That is what makes an ecosystem more stable and robust.
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Forgive me because my brain always short circuits around this kinda thing, but holding HBD in savings helps this issue, is what you're saying, yes?
!BEER
I feel ya on the short circuiting brain on this stuff Phe!!! Ugg lol anyways, 1st things 1st i should probably get myself back in a blogging mode in these parts!! I hope you get the clarity you're looking for!! Great to see your comment. :)
Good to see you here Jill! <3
Actually right now, it hurts it but if we are dealing with a few HBD, not the end of the world.
The price is too high so it requires more HBD hitting the open market to push the price down. Simple supply and demand.
Packing HBD will help with the overall stability in time. The more that is controlled by strong hands, the better.
Ultimately, we need the supply to keep expanding which will reduce the volatility.
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Is HBD is becomes a stable coin?
That is the goal. Right now, it is not very stable.
Too volatile to be considered a stablecoin.
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It's not really about having massive supply, it's about having supply rise and fall dynamically with demand, with minimal friction in the price.
It needs to be profitable for someone to bring capital into the system with increased demand by issuing tokens, and similarly profitable to remove tokens from supply, but on small enough margins that it is not disruptive to price and liquidity.
The reason HBD is not yet stable is that the people who are doing the work to make it stable (ie. the HBD stabilizer, large whale accounts like @mika and a larger number of smaller accounts like myself) do not together have the capital to bring in millions when the demand spikes as it has recently. However, in the act of enforcing the peg, eg. using the collateralized convert contract, these accounts are rapidly increasing their capital - as a consequence over time the ecosystem will have more capital available to it to stabilize the token more rapidly.
Edit: With more real commerce, it will also be more profitable to simply act as a market maker, without needing to issue new tokens or to remove tokens from supply as often.
This sums up Hive in many ways. The big money is not here yet. So a lot of the issues we have is because we are still building capital. Unlike Ethereum where billions are rolling in, Hive is stuck dealing in thousands.
It will take some time but more capital is being generated on Hive which will help things in the long run.
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Stablecoins are vital for day to day e-commerce. HBD could be one of the best stablecoins out there if it holds the peg. You can send millions of dollars in just 3s and that too feeless. You own the keys of your account and get 10% on savings. No bank in the world can provide such unique prospects that HBD has.
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Indeed. :) However, banks provide things that many people and institutions need, such as collective/institutional ownership, ability to regain access even after losing credentials, and similar. We do have more work to do to make it usable for the masses.
That's true! Owning your keys has its own risks. Also, we cannot buy crypto without banks. Directly or indirectly we have to go through them.
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That is all true. We can see tremendous use cases for HBD if we can stabilize it. However, so far, it is a slippery road.
We were doing well until the bull run and the peg went out the window. It will come back but is showing more work needs to be done.
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Yeah. I am sure @Blocktrades and other witnesses are already on it. Peg is crucial for the whole system to work properly. I don't want to keep on selling at high and buying at low. It's inconvenient.
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I have been keeping my HBD as well. It does seem like we might need to be concerned about the amount of HBD being produced. So we will just get HIVE in return if its reached right?
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If the threshold is reached, yes the 50/50 payouts are 50% HP and 50% liquid Hive if I remember correctly.
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Correct
We could greatly stabilize HBD if we turn the internal market into an AMM yield farm.
This would give HBD x100 liquidity and give users another option for passive income.
Not only that, but the pair to HBD greatly reduces volatility and risk for liquidity providers.
Drop that in the suggestion box of the developers.
Worthy of a discussion.
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THAT is very intriguing!
I think at this point it would only help a little. In the future it would probably be more worthwhile.. The bigger issue right now is supply and how fast it can adjust.
Supply, versatility, and liquidity all increase exponentially with AMM.
Millions upon millions of both hive and hbd are a prereq for these pools.
Automatic moon with high enough yield.
maybe if more HBD and Hive gets removed form the exchanges it will get more stable?
The problem with HBD is that it is to scarce on exchanges. This will cause big swings in price.
Volatility in Hive isnt much of a concern since people want the price of that token to move.
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Thank you for sharing this. I always wondered about the mechanics of HBD and never just sat down to do the research.
See this is the point i was making about why this won't happen. When i mentioned ubi coins. People thought it was a dumb idea. Nobody would accept it or invest in it. That they wouldn't value it. However if you replace ubi coin with freemium service coin and velocity of money coin. You end up at some point with a stable coin.
I've repeated this several times you all probably never going to connect the dots until you do. So if you look at facebook. what is it? It's a freemium service i get as much use of facebook with zero dollars than if i got if i paid for everything facebook sold. My use of facebook would be the same. Now for facebook this ends up equating to large valuable free network. You all with me so far?
The hive blockchain is one i have to pay for? This adds up to meaning low user base with low economy, with limited economy. I can't really have a stable dollar because i have no growing economy to sustain one. if the hive chain was free like a freemium service chain or we can use it interchangable with a ubi coin or guaranteed income coin. See the ubi and free coins none of that really matters. All that matters is that you have a big network and a big network under metcalfe's law will be more valuable than a paid network pretty much anyday of the week. If you all don't understand that you will keep an unstable coin that could never be a stable coin. Now back to facebook it could create a stable coin that would actually be stable. Why? because of the network value and growth. So i think what you all are chasing right now is probably going to end up being theoretically impossible that's my view. A second layer token may be able to do it with an entirely different model and system. Like bbd coins but its probably no way this could happen with hbd's like ever. I think you guys wasting your time and energy but you all haven't listened to me thus far so why stop and listen now lol.. I think you all will end up right back here but experimentation is good go for it. Once you fail there consider what i'm suggesting here.
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How HBD works is still over my understanding and frankly I don't even want to get in such details, but I wonder if HBD will ever be a stable coin.
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More than 14 million Hive were converted to HBD
I can see how the balance can serve a purpose to propel
Hive price in the long run.
HBD is like a gauge for the real price of Hive.
Now what happen if HBD stays at a dollar mark
while Hive moves up to $2.
SO you will need more HBD for Hive.
!BEER
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Don't know about the economic and all about hbd. Thought the last hardfork would have completely fixed this. Will really love it to be a true stable coin.
Thanks for breaking this down in a way that makes sense.
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Yes and no. The hard fork changed things so only savings earns interest. Previously all HBD even if not in savings earned interest. After the hard fork witnesses raised the rate from 7% to 10% but the amount of interest being paid out probably declined because the large amount of HBD held by exchanges and DHF became excluded from interest.
Also there is one more way to create HBD, which is through DHF. Some of the HIVE (ninja fund) in DHF is autoconverted by the blockchain to HBD daily, and any amount of HIVE sent to DHF is instantly converted to HBD. The primary source of HIVE sent to the DHF is from the HBD stabilizer proposal (about 50K HBD per day).
Finally, HBD in the DHF doesn't count toward the 10% limit. That's approaching 6 million out of the current total of 25 million.
Hbd is very good for me because it helps me power up my hive power by converting it to hive and getting more of hive
Once again thanks for the education.
!BBH
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Wow this is amazing
If we can find a way to incentivice the support of members of the hive community in stabilizing the HBD, I believe we can preserve its decentralization and also improve its stability
Maybe one thing that helps is that there are pairs in HBD. That I think would increase the demand.
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