I would like to see better contoured and clarified the vision for HBD and its further development and roadmap (this could include marketing, market cap, and number of users-related milestones, for example) to reflect that.
20% APR in Savings
The 20% APR in savings has gotten many people on Hive excited about the potential of a passive and stable wealth-preserving option. Certainly beating inflation of all developed countries and even many less developed ones, as far as I know. So people started to think of it as a way of saving while protecting against the rampant inflation in the US (we refer to it since HBD is soft-pegged to USD).
HBD is almost a blessing when people also have hyperinflation in their own country with their national currency.
Ok, that makes sense. But is this the main purpose of HBD? As a protection mechanism against inflation that exists worldwide, and possibly beating it by a margin and compounding over time?
Commerce
What about commerce? Is this a purpose for us with HBD, to be integrated with various businesses?
At first hand, people would say yes. I would say that too.
But let's take a step back. What does the 20% APR on savings incentivize? Yep, saving. Which means not spending.
Given the option of spending 10 USD or 10 HBD, if a person has both currencies, which would he or she spend? I'd say the 10 USD, because that loses him or her money, while HBD earns money through savings.
So, if we want commerce to be the main purpose of HBD, let's cut the APR for HBD, right? Wrong! There are a little over 12m HBD in circulation if we disregard what the DHF holds and which will not come into the market directly. The 12m HBD includes both HBD in savings and liquid HBD (including on exchanges or on Hive-Engine). I haven't looked into the details, but we are most likely talking about a few million HBD which might be available if their holders would be interested in commerce. That's way too insufficient HBD! And APR on savings is, along with conversions and author rewards the most common way to add to the numbers of HBD (conversions can also reduce their numbers).
If commerce is a priority, we need more HBD! And, in my opinion, although I haven't found a way to do it that isn't exploitable, spending HBD should be incentivized, to become a better alternative than holding it in savings.
Something else about HBD and commerce. While this is not on the base layer, we still don't have the option to buy/sell tokens in SWAP.HBD on Hive Engine. The potential to set stable prices (compared to USD) could go a long way for small businesses on Hive.
Financial Activity
Financial activity that is not commerce is much larger as a volume than commerce. That includes 20% APR in savings but would go much deeper than that.
If our main purpose is to build financial activity around HBD, then, besides the 20% APR we need more options.
We need those long-term locking mechanisms with different APRs, the bonds to go with them on the second layer that Taskmaster was talking about (will need a smart contract platform, most likely), deeper pools and more derivatives, and more links to the outside that allows for an easy flow of capital.
Something else?
None of the above? Do you see a different option? I haven't included DHF in the list since it is a special case, and frankly, if the main purpose of HBD would be to fund DHF we might as well remove HBD.
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Are all these different purposes/functions mutually exclusive?
Perhaps HBD could fulfill a range of options? Certainly while we still have legacy systems.
There could be an apocalypse of one sort or another, I wouldn't rule it out, but until then, or as well as, I suspect that legacy systems are going to continue to linger on for a very long time. So to have a mechanism like HBD which is able to interact with different currencies is enormously helpful for all the different situations you set out.
I have started to save for a big expense I will have next year. For the first time since joining Hive (coming up to six years now) I have considered using HBD as a place to save for a real life expense, rather than somewhere I put surplus resources that are not needed for every day life. This is because I am reasonably confident that the value of HBD will be similar in 12 months to what it is now, and so I am able to take a considered risk in HBD.
At the end of that time, after I have withdrawn what I need, I will still have a nest egg (the accrued interest on my savings) which I can further use/invest as I wish - this is the way that credit unions work, at the end of paying off your debt, you're still better off than you were when you started. This would be why you would use HBD rather than fiat.
I've just used HBD to purchase some goods and their shipping from USA to UK through the Hive Thrifted community.
Another account set up an event in the UK (long ago) covering the costs with payments in Hive or HBD. By the time the event came around, neither token covered the fiat cost. Having some HBD stability would prevent one person taking all the risk and carrying all the liability and make it easier to organise.
In fact, no, HBD could have all 3 functions I listed, so they are not mutually exclusive.
But having one priority over others means we can search for solutions to better optimize HBD for that priority and certainly not take steps that would be detrimental to it or a waste of resources to pursue something that is not a priority.
Thanks for your example of building up HBD in savings for a larger purchase and then expecting to have the interest to work with after you make the purchase. That's an interesting idea. But would you use the same method for daily purchases?
If there was an easy way to use HBD (eg a card), then yes, why not?
I would probably allocate a proportion of my monthly expenses.
Easier for international transactions, too.
We are a long way from having a card for HBD. Although I'd like that.
Some people were using Wirex? I'm not sure if that still happens.
Well, I use the card from Crypto.com. Similar to Wirex from what I know. But neither support HBD. At least I think so, I never looked close enough at Wirex.
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It's funny that people think about crypto in USD value, and HBD is doing the opposite way... Backing up dollar by crypto... I suppose that says enough about which one is worth more nowadays... :)
Regarding the "commerce" on HIVE, we are failing over and over on that... Other blockchains did a lot more, and some of them in only a year or two... Don't want to FUD, but HIVE needs a lot more "finance and marketing" guys, with quality apps... We have some new games, which move some more activity... That counts, too...
We can't do it all...
I like the discussion in the comment section!
I have picked this post on behalf of the @OurPick project which will be highlighted in the next post!
I agree. We lack seriously on the commerce part. But to be honest, with only a few million HBD potentially usable for commerce, we really need that number to grow before we can really talk about any kind of serious commerce.
Other blockchains may have a higher impact on commerce because their tokenomics was thought with this in mind and focused on it. I don't really know what was the initial purpose of adding SBD. Fixing SBD and now building HBD off it will probably take time, and we are impatient because we are in the crypto world and everything moves at hyper speed.
personally, i think that commerce part opportunity's gone at least for several years. i also don't know who buys HBD, put in savings nowadays. Crypto is entering in a bull market, so everything else will be more profitable + the more important part: the dollar is in a downtrend, and i assume, it will go down for few years. (don't mention, it is losing the no1 fiat currency position very fast) So it can be an option max. in the US, where the $ is the currency, honestly, i don't see any good reason for that, even there.
compare to most of the other fiat currencies, $ lost 20%+ value in the last 3-6 months...
(including mine, actually, it is nearly -30% in this year) so what is the point in the 20% HBD interest???
i think, until $ stabilization and end of the crypto bullmarket (what is just starting) pointless to talk about it.
actually, i think about that, what will happen to stablecoins, HBD, when the dollar collapse. my personal opinion, within 1-2 years nobody will use any stablecoins, definitely not the dollar based ones.
I agree with your opinion on HBD versus volatile coins during the bull market that we slowly enter.
That is why, for my personal Hive goals, I add more HIVE (Power) than I do HBD. But the principle is the same for any other coin or token that is expected to appreciate during the bull market, unlike a stablecoin.
Your remark that USD is losing ground is correct. We should also remember that it starts from VERY high ground, so it has a lot of room to go down and still retain global dominance (for a good while), even if not as strong as in the recent period.
yes, that's true, but regarding commerce, it doesn't really matter where from it starts. the point: it won't be used by other nations so much how it used to be, every country is getting rid of USD reserves, and buying gold like hell.
https://data.imf.org/regular.aspx?key=41175
https://en.wikipedia.org/wiki/Reserve_currency
only eur is losing its value faster than usd, especially in reserve currency status.
i wouldnt be surprised, if global usd reserves would lose 50%+ in the next few years. so who would use a tide to usd 'stablecoin'??? (outside US) time scale is always a question, nobody can predict that.
and what it means to Hive blockchain, if hbd (generally stablecoins) would become worthless??? thats my question
The design of HBD makes it loosely pegged to something. Despite the name having "dollars" in it, we can change the peg from USD to something else and potentially rebrand HBD.
If the argument is that stablecoins themselves, regardless of the peg don't belong in the crypto space, this holds some truth to it. But as long as we spend money in fiat prices instead of crypto, stablecoins are needed as a sort of bridge between the two worlds.
20% is not enough - we need 30% for the next couple of years!
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Maybe with a long-term locking mechanism, the APR could be increased from 20% for long-term contracts. Even as it is, it's 22% APR if compounded monthly.
I bought HBD for 10 thousand - if the interest increased I would buy another 30 thousand!
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I'm sure many would do the same, with their eyes on the debt level at the same time. I see already bigger fish starting to move some money into HBD. Not too much because it's hard to take it out of the ecosystem if they need it. If it were easy, I'm sure some would put in significantly higher amounts.
That 20% sounds very attractive. But, it did raise a question in my mind as to how the coin is created and perhaps burned to maintain the price. Do you know where i can see more on the matter?
Thank you very much for the post
There are different sources where you can find this kind of information.
The easiest for me (and maybe for you, because it's not a lot to read) is to pull the link I shared from Twitter in my weekly news update. It covers the subject quite well, despite being on Twitter, thus in a tweet storm.
~~~ embed:1647347253508718592?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1647347253508718592%7Ctwgr%5E11885b2234a2abfc200abbfd5c07022f1b952ba4%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fleofinance.io%2F%40gadrian%2Fweek-through-adrian-s-lenses-17-23-april-2023 twitter metadata:RG9jdW1lbnRpbmdIaXZlfHxodHRwczovL3R3aXR0ZXIuY29tL0RvY3VtZW50aW5nSGl2ZS9zdGF0dXMvMTY0NzM0NzI1MzUwODcxODU5Mnw= ~~~
P.S.: There are references you can check at the end of the tweet storm if you want to go deeper.
Why do we need to peg to fiat? Why cant we just use Hive as a currency?
Because it matters what you spend, not what you earn. If you spend USD or Euro, that's what it's best to be pegged to.
Plus, for businesses, it creates a more predictable income flow, not depending on exchange rates.
At some point we need to let our attachment to fiat go.
I think there's going to be a transition time when we will need to interact with fiat, probably quite a long time, until all our needs can be met with Hive providers.
I haven't seen any other options out of this and I think the interest/commerce are the main reasons. I think there could a different option for bonds but I am not sure if that will ever come out.
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It might be revisited the idea once we have a smart contracts platform, which is quite a while from now.
I am glad to read that you are following in TM's footsteps in seeing HBD's potential. I consider saving 100 HBD by the end of the year as planting a seed for future growth.
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If you like round numbers, you could make a goal to save 120 HBD by the end of the year. I keep reading that every 60 HBD in savings gives 1 HBD in interest per month at 20% APR. :)
Thanks for that! Yes, 2 HBD per month if I have 120 HBD savings in my wallet.
Nice and comprehensive explanation. Thanks alot!
It was more of a big question with non-exclusive options (potentially), than an explanation. But I'm glad you found some useful information here.
Gadrian - You always place great content - mindful and well thought out. As a recent hive starter I have managed to save 1 HBD - so not so relevant to me. However, I always glean a ton of useful information from your posts so, thanks for helping me tie all this hive business together.
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Thank you, John! It's humbling to see people appreciate your content and adds a certain pressure to keep the quality up and improve.
If you have questions, don't hesitate to ask.
You understand us in an easy way. Now I came to know about this.
I'm glad it helps.
Hi @gadrian. Thank you for the discussion on HBD. It was a good one that brought up some good points. Have a great week!
Barb 😊 !BBH !CTP
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Thanks, Barb. You too!
You're welcome @gadrian !BBH !CTP
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Good stuff, Adrian.
I am certainly in the "won't spend it" category.
CTPX has the option to pay in HBD, and I still pay in USD.
I am not sure what the future will hold, but I do think it needs to be "pegged" to a fiat coin so people will easily understand its worth.
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