The first batch of HBD bonds as per the announcement post from November 15, 2023 was sold out.
The sale was for a 10k HBD, offering a 30% APR, or 10% premium on HBD interest, for a 90-day lockup, in tranches of 10x100 and 9x1000. There was a 10 day sale period, but they sold out after seven days. If the funds are withdrawn prior to the maturity date, the bond buyers receive only the principal with no interest.
The accounts that bought the bonds are as follows:
| Account | Bonds Bought [HBD] | Bonds Buying Date | Maturity Date | Expected payout |
|---|---|---|---|---|
| @newilluminati | 5,100 | 11/23/2023 | 2/21/2024 | 5,481.5 |
| @dannyshine | 2,000 | 11/21/2023 | 2/19/2024 | 2,149.6 |
| @deanliu | 1,000 | 11/19/2023 | 2/17/2024 | 1,074.8 |
| @freecompliments | 1,000 | 11/17/2023 | 2/15/2024 | 1,074.8 |
| @randumb | 200 | 11/19/2023 | 2/17/2024 | 215.0 |
| @trostparadox | 200 | 11/21/2023 | 2/19/2024 | 215.0 |
| @bhattg | 100 | 11/19/2023 | 2/17/2024 | 107.5 |
| @talesfrmthecrypt | 100 | 11/15/2023 | 2/13/2024 | 107.5 |
| @kenny-crane | 100 | 11/16/2023 | 2/14/2024 | 107.5 |
| @lilkingdom | 100 | 11/20/2023 | 2/18/2024 | 107.5 |
| @manniman | 100 | 11/15/2023 | 2/13/2024 | 107.5 |
The details for the maturity date and the amount of expected payouts are in the table above. A total of 11 accounts took participation.
Initial Impressions
Overall, there seems to be a moderate interest in the project. The sale went somewhat moderate, and while there was no initial rush, like everything sold out instantly in the first day, as time progressed more users took participation and the 10k cap was reached three days before the end date. There was a few more accounts that showed interest in buying more bonds afterwards. This is somewhat understandable as all this is new and a type of experiment.
As we can see one account bought half the bonds. This confirms my initial suspicion that these types of projects make sense for a bigger amount of capital. On the other hand, we can see that there are 7 accounts buying bonds in the 100 tranches, so there is some interest there as well. Still, this is a first time, and some might just be cautious and testing things out.
What remains to be seen, will all the 11 accounts hold to maturity date and collect the full amount of interest.
Further Steps and Considerations
The next thing to see is how will the lockup period be executed in terms of withdrawals. Will all the bond buyers hold to maturity or not. My thoughts are that they will, and it will be a surprise if someone needs the funds earlier, but still it remains to be confirmed.
Possible tweaks of the existing parameter's:
- Lockup period
- Interest premium
If more of these bond’s auctions are hold, there can be tweak in the lockup period, for example instead of three months, to four, five or six months. I personally would not go longer from six months, having in mind that I’m the executor of the project and it is not automated or thrustless. Still all options are on the table and things will develop based on real feedback.
Then there can be tweak of the interest rate. The current bonds offer a 10% premium on top of the regular HBD interest rate. What the premium should be? This is the same question as for the APR on HBD in savings and can be looked at multiple angles. What is the goal? How much capital do we want? What is the cost… etc. This need to be looked at in alignment with the possible sustainability solutions and be developed in next iterations.
I like the idea of auctions. Having a sale period and depending on the bidders, increase or lower the interest rate. This is a bit more complicated process and might require developing an app or similar. At this point this first iteration of 10% seems to be working well for the lockup, plus I like to keep things simple at first.
Exploring Sustainability
The current yield premium is subsidized by me. A total of 250 HBD. This amount provides the extra 10% premium for three months.
Now the question is how to provide more funds in form of yield reserves that will not be subsidized and build a more sustainable model.
If we look at some options, they will be:
- Inflation
- Fees
- Lending
- Trading
- Staking
- Ventures
Inflation. This is the standard way how things are done in the current economy. It is also the standard way how most of crypto works and how projects are being incentivized for running nodes etc. In the case of HBD the issuer is the Hive blockchain. HBD is issued in multiple ways, author rewards, interest, DHF payouts. There is no specific amount of HBD issued for bonds. But I’m managing the project and at the same time an active member of the community that receives a part of that inflation. In this case I’m giving up some of my share and relocating to bonds.
Going forward I plan to set the @yiled.reserves account as a 100% beneficiary for all the posts that are related to the HBD Bonds. I have already done it for a short post coming from @dalz.shorts, with a bene for the @hbd.bonds account, but realized it would be better for a separate account to manage the yield reserves. I have already topped it up for the first bonds. Obviously, these amounts are small and therefore the cap of the bonds is small as well and can’t scale the project. Its only a small part of the solution.
Although it is worth noting that accounts like the @hbd.funder that is a beneficiary of the stabilizer, have comments voted from the Hive stakeholders and receives a big share of the HIVE inflation, somewhere in the range of $90k at current prices. As an example, this amount can provide a 10% premium for more than 10M HBD in bonds. But this requires more general consensus, discussions, key management etc. Also, the basic question to ask is what value this project brings to HIVE. The stabilizer is providing liquidity for HBD and helps it hold its peg making the whole HBD project viable. So comparing these two is not on the same level. I’m just giving an example here that this is basically possible for the chain under the current conditions, in a similar way as for existing project.
Another way to provide yield from inflation would be to create a new token. This is a whole different topic, with a lot of details how can be done etc, that I wouldn’t dig into it now. I’m just giving it as an option while exploring the possibilities.
Fees. After the inflation option comes the fees. In the long run Bitcoin is relying on fees. Ethereum is using fees to burn some of its supply and simultaneously reward block producers. Fees are obviously one of the most used options from projects to sustain them self. I have tried to implement fees at the very start of this project in terms of lost interest for early withdrawals. But what other options can there be? Fees are usually paid when using some service, and in this case the overall service is to provide an APR premium for participants, so it is hard to think of another way other than the early withdrawal penalty. There can be some type of membership, or eligibility payments, like monthly fee to be able to participate in a bond sale etc. but the fee generated from these will probably be small.
Lending. This is also one of the other options that is used traditionally to generate interest on funds under management. But in this case the HBD is locked in savings and can’t be lend out. It will require another token that is pegged with HBD in savings to be able to lend it to other parities. Something like liquid staking, stETH and ETH. This additionally requires liquidity for that token, and development under smart contracts. It is a project on itself, that might be far away in the pipeline, but can’t see it implemented anytime soon.
Trading. The good old trading. Take a small share of the funds, 10% to 20%, buy another assets, and if they appreciated in meanwhile, they can help providing some part of the APR. For starters funds can be allocated to HIVE, BTC and maybe ETH. The thing with trading is that for sure there will be periods with gains but also periods with losses. The share of the funds used for trading should remain small, to be able to cover up from other sources when losses occur. The risk from trading will be taken by the project and not passed on to the bond buyers. They will get what is offered in the sale.
Staking. This refers to other assets that are under management, bought with trading. HBD itself already has staking. For example there can be some HIVE and ETH, and they can be staked to get APR on those.
Ventures. This is far fetched option, but just to mention it. If things grow and develop, there are some excess funds in the yield reserves, some of them can be used to invest in new and upcoming projects as venture capital.
Current possibilities
Of all the options above, only a few are currently possible. Setting @yield.reserves as beneficiary, fees (partially implemented), trading, and maybe a small amount of staking. Still not a bad start and options to choose from. It remains to be seen how will things work out as time progresses. Also in the next bond sale if more of the options above are implemented and how much they will contribute to the premium.
Note that all the options mentioned above if applied will be possible for the next bonds sales. The current one is already funded by me, with the funds currently in the @yield.reserves account. The good thing about these bonds sales is that it’s an iterative process that can be improved and upgraded. Also, if the practice shows that it’s not feasible, after some time it can just be stopped, paying the latest bonds sold, and not auctioning more.
For all the accounts that bought in the first sale please follow the @hbd.bonds account as I will be making periodically short reports from there.
Feedback is very much welcomed, so please engage in the comments.
I definitely love the experiment and kudos that you're providing 250 hbd to give out the extra 10%.
As you asked for feedback, I'll explain why I didn't participate as there are a couple of reasons.
Want to conclude that I really enjoy the experiment and I am looking forward to the results at the end!
Thanks for the feedback.
Everyones situation is different and some might want to have a share of their portfolio in stables, and park it in some type of yield bearing instrument.
As for the 3rd point, thats totaly the case, I'm poining it out myself as well. Much better it is trustless, but for now we do it like this.
Definitely true!
1 is my situation, 2 is my preference and 3, it's just the situation as it is, as you idd acknoledged yourself as well. :)
Although I didn't join in (this time around....), I love the sound of this project.
What prevented me was a combination of two things; first, that all my HBD was tied up in savings and I didn't want to reduce that total, and second (and more importantly) my usual on-ramp to HIVE had changed and was now full of KYC obstacles, which prevented me buying some "fresh" HBD to use. I hate KYC at the best of times, but accept it as a necessary evil, but this was the kind of KYC that just didn't want to play nice and recognise me as a human.
I do have one thought for a tweak, but I'm very aware that it might make the maths infinitely more complex. Would it be possible to allow HBD to be added to the investment on (say) a monthly basis ? I guess it might be easier to treat each tranche as a new and separate contract, but I guess what I'm looking at is the idea that it would be a bit like DCA'ing funds in from fiat as I have them available.
Yes it would be a new bond sale. Theoreticly if this is developed enough there can be sales each month...
I think that overall is a success. I'm sure many bigger players are looking at the sidelines to see how this first batch goes, etc. At the end, markets need to grow in depth and liquidity to be attractive for bond players. I'm pretty confident that if the second tranche is of 25K HBD to be offered in a 10 day window it will be oversuscribed.
At the end, a healthy and deep bond market only will bring more legitimacy to Hive, and any external observer will see it as what it is: People trusting Hive ecosystem and how it goes forward.
Congrats on the project, one more time!
Yuhh seems this theme may become popular. Do you have plans to make second round to sale bonds. Maybe in December or January?
Most likely there will be a second round with some tweaks. It will happen after the maturity of this one ends, so in February 2024. If I get some more support migjt do it earlier.
thanks again for doing this, THIS is what HIVE needs.
people don't want to come here & read long azz post & hear rants on streams, they want to make some money.
do something thats
& more people will come into the space.
& it should def be advised that if you can't make what you invested back within 2 weeks, you prob shouldn't put it in.
don't risk what you'll miss!
#inleo
Congratulations on the momentous success of your HBD bond experiment and to those who were able to invest!
I look forward to reading about and partaking in your future investment endeavors on HIVE! @dalz 📈💰📊
Thanks!
I think the bonus theme will be implemented in one way or another at some point in Hive. Although I don't know if we are at that point, it is still interesting to see how this experiment works.
Really cool project! Would definitely join if it would be trustless as @stekene also pointed out. 90 days look-up for 30% I would dump all my HBD in it I think. Maybe I missed it, but what would be the procedure when the interest would change during lockup? Ill keep en eye out for any developments on this whole project for sure 👌
Thank you for paying for this demonstration project out of your pocket.
I think you bring value to the community with projects like these by showing people what can be done, and incentivizing them to think of other projects which could be created to bring value to Hive as a community.
I have built financial projects on Hive and I certainly learned from those projects and hope to build better ones in the future.
I expect you will also come up with different ways to run this project, but your logic and the simplicity of this project are strengths also.
%30 APR on a stable coin. Dude, that should not be sustainable. :)
Dude small steps here :)
👍
Thanks for sharing
I have never participated in this but I have only staked HBD before
I wish to do that again but with a lot of money or a reasonable amount of money
Nice Nice ;)
Very nice :D
Thanks for an informative post. Please can someone explain what value HBD has in the real world?
This is actually a really cool idea and it could get really popular
Tnx!
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The way we see that people are now very wise and use everything very wisely, whoever will put money into this project knows that within the next few years they will It must be inside a good hypocrite.
Wow, HBD bonds that sounds like a great thing. I didn't know this even existed in crypto. 💪
Happy to have a small part in this initial trial.
I’ve suggested before that something like a ‘Premium Bond’ as we have in the UK might be an interesting project to run on Hive, utilising the interest of HBD to provide a monthly prize fund.
It would mean less certain returns for investors (although having lots of small prizes alongside a main prize would ensure most users get a ROI) but the possibility of a big win. It’s different from a traditional lottery because at anytime an investor can cash in their bonds.