Hey eco, thanks for continuing to put the development of HBD front and centre within the community.
The more chat we have around the general lack of liquidity in HBD, the better :)
Whether you think it's the best way to address the issue or not, this proposal is at least trying to offer something of a solution.
We need to invite the devs currently working on HBD to add to the discussion around the lack of liquidity.
@smooth and @blocktrades, you two would be a great place to start?
What are the pros and cons of what you're currently doing to improve HBD liquidity?
And in your opinion, would adding this proposal (or something else) to the mix help?
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I don't think the DHF should fund market makers. I see it as subsidizing fees to whatever exchange the AMM is hosted on and subsidizing investment risk for the AMM funders. I feel that liquidity pools, like any other market maker, should be able to profit off of a market spread.
If there is pent up demand for HBD liquidity, then running an AMM for HBD should be one of the safer MMs to operate because a smart AMM can take advantage of HBD<->Hive conversions if HBD price goes out of whack on external exchanges.
As a side note: AMMs do involve risk for participants, as well as potential rewards, something that standard AMM literature tends to downplay, IMO, with talks of BS things like "impermanent loss". But overall market making tends to be profitable, as plenty of professional traders can tell you.
Out of curiosity, how you would compare subsidizing fees for exchanges to paying exchanges for listings, which seems to be something that many token developers feel adds value by enabling more liquidity, market access for more participants, as well as exposure?
I don't have a strong opinion either way, but I can recognize some value when you are small and trying to become more visible and established. It seems to be generally in the category of marketing expenses IMV.
Generally speaking, I don't think it is a good idea to subsidize fees for exchanges to pay for exchange listings, but like my stance on the proposal in question, I'm not really arguing that it is some form of moral imperative to avoid doing so.
In the case of exchanges, I just don't think it makes sense to pay for listings normally, because if the exchange doesn't profit from the market in the long run, it will just drop the listing anyways. So, in that case, paying for a listing mostly makes sense if your intent is to capitalize on the short term bump in price when the coin gets initially listed on a big exchange. And my perhaps cynical view is that is why some token projects buy their listings.
Now with all that said, I think there can be a legitimate case made for getting more exposure for a token by getting listed on exchanges. But so far, there hasn't been a case where it seemed to make sense for Hive to pay to get listed on an exchange.
Similarly here, I think if we're going to setup an AMM, I think it should be designed so that its economics make it self-sufficient.
AFAIK Hive-engine has set up some AMMs already but I haven't investigated them yet (I think they're called Diesel pools). And I suspect we'll see some operating on the SQL smart contract processing platform that we'll be developing next as well. And I don't think it would be that much trouble for someone to code one up on the 1st layer between Hive and HBD, if there seems to be sufficient interest in that.
AMMs are always self-sufficient. It only takes one person to contribute "some" liquidity and the pool will operate. But more liquidity makes it more useful and therefore likely to be used more, and more usage may attract more liquidity (i.e. virtuous circle), so I see a situation where what I am calling a marketing expense of bootstrapping it may make sense, similar to listing on exchanges.
As I noted elsewhere, I have no opinion on this particular AMM nor the platform on which it is operating.
I think an AMM in L1, probably integrated with the internal market, would be a nice feature, but not critical. I'd probably support paying to develop it but not necessarily prioritizing.
the problem now is, HBD is so illiquid, you can't go in with larger amounts and you can't go out.
If funds from BSC can easily enter Hive, I think that opens doors for more investments here.
Also vise versa. If I know I can go out, I trust HBD more and hold larger amounts of it.
My personal view is, I would NEVER hold larger amounts in HBD. Price is highly volatile + haircut rule + loq liquidity.
I know we have some huge fans of HBD here, but I see no proof it works or is useful.
For now, it works like a limited short contract on hive.
IMO trusting HBD is dead simple right now, since you can convert it to Hive in 3.5 days, then sell it off on any Hive market. I think I've held well over 1m HBD at times and never felt the slightest risk.
The only real risk IMO is the haircut risk and it is pretty easy to manage that risk when Hive starts to approach the haircut level (convert and sell). And after next HF, there will be even more headroom before the haircut gets hit.
Price has not been highly volatile since the new conversion was added: it has behaved extremely well, IMO.
Yes, I agree, but if I compare it to any other stablecoin, I can't trade it for anything on "medium" volume.
More pairs with HBD would be IMO a key feature for it. The 3,5 days are not bad, but also not good if you want to move the funds. I mean holding other stablecoins brings not have those problems with it.
Some low fee gateway between 2 stablecoins could be a good solution for a "real-world use case".
It's also not difficult to get large amounts (as mentioned in my sibling comment, I've obtained over a million at times just trading on exchanges).
Yes, like a Binance HBD listing! Is money all it takes?
A binance HBD listing is actually one that I could see real marketing value in getting, as well as increased accessibility. The main reason being that exchange listings for HBD right now are so limited, it's actually a drag on the success of HBD, I think. There is basically one working listing, which create a risky situation of liquidity disappearing at any time. It's a bit better because the internal market is a failsafe (HIVE has many more listings), but not ideal.
I don't know what it takes or if money would even help. That's not something I'm involved with.
I see ( no matter who hosts it) a pool with HBD and high liquidy necessary.
I know some people, that want to exchange middle amounts of HBD. its close to impossible ( without really high losses).
That makes HBD really useless as a stable coin.
I hold in the current HBD/BUSD pool 10%.
But even with 100k in it, you cant swap something close to a 1 to 1 rate with low volumes.
Sure it could be handled all by private investors, but I don't think HBD is that good to hold larger amounts without network support.
Risk is high and liquidy is low.
But I understand Blocktrades, it would be a competitive product with network subventions.
IMO benefits overweight, and if not I'm sure we can easily stop funding from one day to another :D
It's not impossible to exchange high amounts of HBD but it takes patience. You can't just do it in one go. The stabilizer exchanges $100K per day and sometimes multiples of that without moving the market much (if it did move the market, it would stop trading, and it often doesn't). It also does depend on market conditions to an extent, but this is not rare. This, of course, is HIVE-HBD. If you are coming from another stablecoin, fiat, another crypto, etc., you have to buy HIVE first, then get it on chain to use the internal market. HIVE has decent liquidity, but you have to do two trades, and you can't buy too much HIVE at one time unless you want to take additional HIVE price risk. So overall it is high friction.
I agree utility would improve with more convenient and consistent ways to access liquidity.
Agree it's not impossible :) But it involves the risk in time because of 2 steps.
Example. I want to sell X HBD for Hive. I sell 50%, now I have the risk in Hive price ( both ways).
For a stablecoin ( because it's the main reason to hold it) you want low risks.
So you need to be a programmer or stay nonstop on the computer to remove that risk.
Simple real-world example:
I want to buy something for 1000$, I move 1000HBD out and receive 975$, because it stays 1 day in hive ( i think 1k is no problem, but only to show the problem).
A pool between HBD and another stable coin can have a fee, but removes the "random factor".
Would make trades more predictable and efficient IMO, special if we want more people to really use HBD for whatever they want to use it.
And stability and predictable future ( in terms of you can trade it) is IMO the key element of a working stablecoin.
You can get rid of most of the risk by buying the HIVE in bite-size pieces (as much as you can trade at one time on internal), trading it, and then buying more. Say 100 HIVE at a time. This is only a small amount at a time but you can do many of these over the course of several hours, while price risk is just 100 HIVE at most.
I definitely agree this is annoying and not efficient.
Let's do that!
Can you make it?
HIVE:HBD Internal AMM (with order books still). The bots can arb between pool and orderbooks. This is the pair to start with in the internal market.
yes! @ecosaint
I don't have an opinion on this because I haven't paid much attention to the layer 2 solutions on Hive (except in that I encourage people to develop whatever they want on Hive). So I'm not sufficiently informed to have a view.
It is a layer two solution, a layer two exchange that is block-native to HIVE - its a solid sink for HBD and getting better - in fact it could get a lot better! Its also a great way to bridge Binance and BSC users into 'Real HIVE' and 'real HBD'.
The hive-engine team has added some tx fees to the pools and BXT has also activated a reward scheme, but we have a real opportunity here to activate this thing with a bang and create basically a marketing event.
Whether we keep funding it or not after we see the results, that is up to us all. But I really think this is a promising button to push.
I have nominated you for 20 HIVE SBI for getting both blocktrades and smooth to comment on my proposal. Let's tag more people!