A look at the potential of Hive Backed Dollars (HBD) and future impact on the price of HIVE.
There’s no hiding the fact that I’m a huge fan of Hive Backed Dollars (HBD) and wholeheartedly believe it to be the key to Hive achieving true success.
The need for stablecoins is obvious and when we have algorithmic stablecoins such as HBD, reading mainstream news articles on how regulators are knocking down the physical doors of collateralised options in order to class them as banks, is just laughable.
While they can theoretically get their greasy mitts on the supposed (lol) bank reserves behind collateralised coins like Tether, there is just no regulating algorithmic stablecoins.
The metaphorical train has already left the station long ago and the tech we can already see behind our very own blockchain’s solution makes this focus an utter waste of time.
But hey, it’s not worth my time worrying about how foreign government agencies spend their time and resources.
I’m just a humble blogger sharing my thoughts on the potential of Hive Backed Dollars (HBD).
The Road To 10 Billion Hive Backed Dollars (HBD)
Logging into LeoFinance today and seeing pro-HBD content, like Task’s road to 10 billion Hive Backed Dollars (HBD) blog trending, is great.
In this blog, Task brought up the size of other stablecoins and where HBD sits in relation to other stablecoins currently on the market.
The most popular stablecoin is the (maybe) collateralised Tether at 75 billion tokens issued.
Compare that to the 14 million HBD (23 million HBD in circulation minus the 9 million HBD that are locked in the HDF) and you can see truly how small-fry we currently are.
You may notice that I keep writing that Tether and its other collateralised stablecoins may have the backing that they say they do.
Well, they also may not have what they say they do backing them and that’s just the point.
We’ve all come to the conclusion that they use more than a simple 1:1 USDC:USD ratio as collateral and in fact use a mixture of cash and other assets.
All it would take would be a sudden market shock to those unnamed assets and a semi-substantiated rumour for Tether to be hit with a modern-day bank run where people are happy to liquidate their holding sub-$1 out of fear it will go to zero.
This is a real risk that stablecoin holders face and that means that there are potentially hundreds of billions of dollars in play for an algorithmic stablecoin like HBD.
When you look at it this way, a jump from 14 million to 10 billion HBD doesn’t seem entirely farfetched.
HBD’s impact on the price of HIVE
Before we start making some projections for the HIVE crypto price if HBD started to gain some serious traction, we need to talk about the haircut rule.
As we previously discussed in the HBD guide I’ve linked to above, the "haircut" rule directs the blockchain to stop producing HBD when it becomes more than 10% of the total value of HIVE.
If you’re invested in HIVE, I’d encourage you to properly dive into the mechanics behind HBD, but the haircut rule is basically designed as a safety mechanism to stop HIVE from death spiralling into oblivion.
This is a concept explained really well in one of edicted’s blogs which argues the HBD 10% debt haircut is too low and I tend to agree.
To the point where I now see an increase to this level as being an inevitability.
Now, going back to HBD’s effect on the price of HIVE.
If we were to see a sudden shift in the stablecoin landscape that meant even a small portion of that current 100s of billions of dollars were instead funnelled into HBD, the effect on the price of HIVE would be monumental.
In the midst of last week’s HIVE pump, we celebrated HIVE’s market cap going above $1 billion.
Lol, so get this.
If the above scenario played out and we saw an increase of HBD up to 10 billion under a 20% haircut rule, then the market cap of HIVE would be something like $50 billion.
HIVE with a $50 billion market cap would put the token price well over $100 and break us into the top 10.
This completely ignores all of the development going on around web 3, gaming and my personal favourite growth niche of Hive DeFi, moving the price needle on the back of an increase in HBD alone.
Once again, these scenarios aren’t totally in the realm of fantasy and there’s no doubt that the potential is there.
Bottom line on the potential of HBD
The bottom line and conclusion you draw from the potential of Hive Backed Dollars (HBD), should be somewhat obvious.
If anything like the scenarios we’ve talked about above plays out around HBD, then you are going to want to be in a position to take advantage.
So yes, right now you should buy Hive, power it up and get involved in the absolute myriad of opportunities this blockchain has to compound.
This is not financial advice.
Best of probabilities to you.
Direct from the desk of Dane Williams.
Why not leave a comment on what you think about the potential of Hive Backed Dollars (HBD). All comments that add something to the discussion will be upvoted.
This Hive Backed Dollars (HBD) blog is exclusive to leofinance.io.
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HBD needs enough liquidity and some form of decentralized marketing team that will help the listing of HBD on exchanges and wallets
The more the demand for HBD , the better for hive and $HIVE
If only our blockchain has some sort of decentralised fund for this sort of thing!
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I need to try this leo finance thing
Post any of your finance and crypto related content from leofinance.io.
Your content then not only earns HIVE, but also second-layer LEO tokens too.
Both on the same post!
Get involved :)
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I’m on it ASAP
I talk to some of my friends about HBD and it's algorithmically maintained value and they always laugh at me because it's not "stable enough".
I'm like, dude, USDT isn't as safe as it may seem and all the collateralized stories might just be crap, but again, they don't listen.
Anyways, in one tweet or was it a post, @theycallmedan mentioned that the beauty of HBD being our stable coin is that it's managed by the community. So, in theory, if the dollar goes to shit, we can just tweak the algorithm to mirror another asset.
USDT will go to shit if the dollar goes to shit.
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If we're honest, it's certainly a huge issue.
Price has always come back to a dollar, but the 10c fluctuations above and below that price is too much.
The stabiliser is a great start, but we need those external exchange listings to really encourage a shitload of money arbing.
I heard this and it resonated with me quite a bit too.
Obviously, I don't think that the dollar will actually not be used as the world's primary unit of account anytime soon.
But what if!! ;)
If you say something won't happen and you therefore don't have a scenario planned, you're going to get caught out.
We at least have a plan.
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Does HBD a stable token because for me, I'm not seeing it as a stable token. I like the token because when you convert it, you get enough of Hive in your wallet.
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There is the stabilizer project so it will go back to $1 soon enough. At least recently, it may lose its peg for a few hours or days before reverting back close to $1 from what I see. The stabilizer project tries to make the price closer to $1 using the internal markets and the exchanges.
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K
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Haha, yeah this comment comes up a lot...
Is Hive Backed Dollars (HBD) REALLY a stablecoin?
Yes, Hive Backed Dollars (HBD) really is a stablecoin.
It just has some trouble holding its peg and doesn't always act as stable as it should be.
Remember, as an algorithmic stablecoin, it doesn't work the same way as the collateralized stablecoins that you are comparing it to and these factors can lead to it drifting away from the $1 price.
As jfang has already replied, there are however a number of mechanisms in place to try and make the HBD price more stable, such as the stabiliser.
I've also spoken before about more external HBD exchange listings helping, as people will then be able to constantly arbitrage prices that move away from the peg.
Be patient.
HBD will eventually turn into the stablecoin we all want it to be.
It's just not quite there yet.
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Hey there @forexbrokr , really good research you have put in. I'm very new to Hive, only about a week or so.
It's not totally in the realm of fantasy that there will be an inflation in price soon. This trend of the the crypto markets falling in December and then peaking around mid January has repeated quite often in the past. I'm just waiting to cash out on a few 5x and 7x investments that should hit around 10x by January.
I discovered Hive a bit late but I'm happy to have found a great community.
Hey mate, welcome to Hive!
It's always cool to see people who already understand crypto discovering Hive and instantly seeing the potential.
I see you're already diving into comments, so I'd definitely encourage you to check out our finance and investments community at leofinance.io.
Plenty of cool content to engage with and comment on over there and the added advantage of earning LEO tokens on top of your HIVE.
Hopefully see you around :)
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It looks like we got a long way to go before we can even hit the 10 billion HBD because we would have to wait for HIVE to pump even harder and people to actually want to hold HBD. As of right now there is the 10% from savings and maybe a bit more in the HBD/BUSD diesel pool.
On a side note, do you know a way to get HBD into SWAP.HBD? The only way I see right now is to convert HBD into HIVE then move it into HIVE Engine and swap it back to SWAP.HBD. I want to see if I can put some of my HBD into that diesel pool for the BXT while the distribution is still high.
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You can deposit HBD directly into hive engine, just hit the dropdown and it's right under Hive.
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Thanks. I just used it earlier today and it worked out.
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Thanks to theb0red1 who has already helped you out :)
How to swap HBD to SWAP.HBD
If you want to swap Hive Backed Dollars (HBD) to SWAP.HBD, then you have two options.
Both these Hive-Engine interfaces are run by the same team and can do it for you.
Unfortunately, the Leo DEX and HivePay SWAP interfaces can't do it.
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I know we will see more conversations of hive to stable coin in nearest future, have been converting most of my profit into hbd for better apr .
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Just remember that you can technically earn more by powering up your HIVE to curate or by delegating HP to services like leo.voter.
Although converting some HIVE to HBD after the recent pump to lock in profits and then earning 10% on top of that, is pretty good :)
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