Thanks for the update! I've also held my HBD into savings. To be honest, 20% APR is still unsustainable in the long-term. But I trust this platform, so I'm putting my around 400 HBD into savings.
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Thanks for the update! I've also held my HBD into savings. To be honest, 20% APR is still unsustainable in the long-term. But I trust this platform, so I'm putting my around 400 HBD into savings.
Witnesses can change it anytime and we will in case of emergency ;)
That's great to know. Now this adds to my worry. If the APR will be decreased, this will create a massive selling for HBD thus will push the price below $1. What's your opinion on that?
I doubt there will be massive selling of HBD. There isn't massive amounts of it. But selling HBD means buying Hive, so it would be positive for Hive price. Many won't sell HBD significantly below $1, because they can convert HBD to $1 worth of Hive without engaging in selling/buying.
This question has been discussed in depth many times already, including among the witnesses. That's why I not too worried when I see 15 out of 20 top witnesses approving 20% APR. Stakeholder who ultimately end up paying for this, don't seem to be worried either. Otherwise they would have expressed their opposition either in words or by removing votes.
I believe Hive has safeguards in place to keep this sustainable and avoid risks. In theory for 20% APR to reach unsustainable levels, total amount of payments would be in millions, which would require hundreds of millions of HBD in circulation. It is not possible to have super high amounts of HBD without buying Hive in large quantities to convert to HBD. This would raise the Hive price. As the price of Hive continues to go up, it will continue to be able to afford such interest payments.
However, if things don't go in the right direction for Hive and its prices continues to drop to levels that it can't pay HBD, haircut rule gets implemented. And also in the event HBD APR starts becoming risky or unsustainable witnesses would detected that in no time, and as Engrave suggested they can remove the APR payment or lower them quickly. It is a witness parameter, witnesses can configure as they choose and can change it anytime.
It's good to know that top witnesses are approving this and thank you for the explanation. Just from a business standpoint, considering Hive is also a business for everyone. 20% is a lucrative offer that other Defi projects have collapsed following the same offer.
I don't wanna mention this but this was "one" of the reasons of Luna collapse. The high APR rate.
When Luna/Terra collapse happened, it was extensively discussed on Hive. It didn't collapse because of 20% APR but rather due to lack of safeguards in place to protect the network and coins. Some say Luna's death spiral was inevitable and programmed to happen.
Hive has measures in place to prevent this. Blockchain have corrective measures when the HBD market cap goes higher than certain threshold compared to Hive market cap.
It is actually very interesting if you look deeper into how Luna's protocol worked and how Hive works. It is a longer topic though. Dalz had some interesting posts on the topic.
I agree that there's more deeper reasons behind Terra's collapse. Just like FTX. I fully trust HBD's APR offer, it's just that it's way too high from a business stand point. This could attract investors and bring new players in Hive ecosystem, but in the long run as I always say it's very difficult for a business to offer a fixed 20% return annually.