Exploring HBD and its derivatives bHBD and pHBD

When it comes to the Hive ecosystem, there are several terms that one needs to be familiar with to fully understand how the platform works. Three of the most important terms are HBD, bHBD, and pHBD, which are often referred to in discussions about Hive economic model on the Leofinance space.

HBD or Hive Backed Dollar is a stable Coin built and coupled to the Hive blockchain. HBD funds are created by users in the Hive ecosystem through a process called collateralization. A Hive token holder can use collateral smart contract to immediately receive HBD. Once the contract is initiated, the collateralized Hive amount is deducted from the holders account immediately and the HBD amount is likewise credited.

Another way HBD are created in the Hive ecosystem is through the haircut rules that implement 50/50 reward option for content reward payouts. This ensure that 50% of rewards are payout in HBD, while the other 50% are payout in Hive power HP.

bHBD (Binance wrapped HBD), and pHBD (Polygon wrapped HBD) are two types of HBD stablecoin derivatives on the Binance chain and Polygon chain respectively. They work by allowing users to speculate on the future value of HBD which is useful for risk management, and arbitrage trading. Additionally, these derivatives can provide liquidity for HBD as investors take advantage of the juicy staking APY available on those chains, thus ensuring the stability of HBD.

HBD are a crucial aspect of the Hive network as they allow users to store their assets without the volatility that is inherent in cryptocurrency. As a stablecoin, the value of HBD is equal to the U.S dollar but not backed by the the U.S dollar like other stablecoin such as USDT, USDC, and other stablecoins in the crypto space. HBD is backed by its equivalent in Hive token. This factor is crucial to individuals and businesses that prefer to operate without wild fluctuations in currency values.

The bHBD and pHBD derivatives are built to manage market risk by giving users the ability to profit from arbitrage trades or earning staking outside the Hive ecosystem. The HBD derivatives market is an attractive option for investors and traders that want to gain from price movement of HBD without actually owing it. The two system allow traders to bet on, or hedge against the fall or rise in HBD price overtime. Investors and traders can take positions in these HBD derivatives to profit from the constant changes in HBD price.

Benefits of bHBD and pHBD in the Hive ecosystem

1. The use of bHBD and pHBD derivatives in the Hive ecosystem has several benefits.

2. They provide liquidity to the HBD system, ensuring that users can transact any time without having to wait for extended periods to convert their tokens in a stablecoin.

3. The bHBD and pHBD derivatives help stabilize the price of HBD. Whenever the price of HBD falls below its peg, investors and traders buy bHBD or pHBD with native HBD, reducing the supply of HBD, and increasing its price; when the price of HBD rises, traders and investors again sell bHBD or pHBD back to HBD, increasing the supply, and reducing the price. This mechanism helps maintain the stability of HBD value.

How important bHBD and pHBD are for the stability of HBD?

The importance of bHBD and pHBD for the stability of HBD cannot be overstated. Without these mechanisms, HBD would be subject to market forces, making it more volatile and less reliable as a stablecoin.

Moreover, if the number of circulating HBD tokens exceeds the amount backed by Hive, it could lead to a situation where HBD loses its peg to U.S dollar, causing significant disruptions to the ecosystem.

What is the best way to narrate HBD to crypto enthusiasts?

To explain HBD and its significance to crypto enthusiasts, it is essential to break down its features and highlight its benefits. For example, HBD provides a stable alternative to other volatile cryptocurrencies, making it an excellent option for risk-averse traders.

Additionally, HBD's backing mechanism ensures that the token remain stable even during market turbulence, giving users peace of mind when using the token.

Moreover, HBD is integrated into the Hive blockchain, which offers numerous benefits such as faster transaction times, lower fees, and greater scalability.

HBD savings reward system is another great features to tell crypto enthusiasts about. With a 20% yearly interest on savings, there is nowhere or any other coin that can give such a return by just holding HBD in your savings account on the Hive platform.

Why I used HBD in my earnings on the Hive platform

HBD is a popular choice among Hive users as a means of earning and securing their earnings on the blockchain. I use HBD as a way to not only maintain the value of my earnings but to also have a stablecoin to utilize within the Hive ecosystem.

Another reason for using HBD in my earnings is the level of security it provides. HBD is pegged to the U.S dollar and can be redeemed for 1:1 for other cryptocurrencies on certain exchanges. This means my earnings are not subject to the volatility that often plagues cryptocurrencies. It also act as a hedge against market instability for me.

What are the risks associated with HBD?

There are risks associated with HBD. One of such risks is the possibility of the peg breaking, which would result in a loss of value for HBD. While this is a very low likelihood, it's still something to consider.

Additionally, since HBD is held in a user's Hive wallet on the platform, there is always a risk of theft through hacking or phishing attacks. To combat this, it is important to use strong measures such as two-factor authentication and maintaining a strong password.

Comparing HBD with similar stablecoins

Comparing HBD to similar stablecoins such as USDT or USDC, HBD has a unique advantage in that it is native to the Hive blockchain. This allows for seamless transactions and utilization within the Hive ecosystem. Additionally, HBD has the added benefit of being decentralized and transparent due to its use on the Hive blockchain.

Moreover, HBD is not backed by the U.S dollar like other stablecoins such as USDT or USDC which are subject to government regulations. This means HBD cannot be regulated by any regulatory entities because there is nothing to regulate since it's not backed by anything.

While there are other stablecoins available, the integration with the Hive network sets HBD apart in its utility and ease of use. It also provides an opportunity for users to become more involved in the Hive community as earnings can be reinvested into the platform through various dapps and initiatives within the Hive ecosystem.

The article is an entry for the LEO&HODL contest for the week ending 23rd of April.

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