Hive is being established in a way that offers the possibility of being one of the top blockchains. Much of what hindered the progress with Steem is being eliminated.
In this article, I decided to cover something that is little talked about. In fact, most people are not even aware that it exists yet it has the ability to propel Hive to great heights.
Were you aware that Hive has, potentially, hundreds of millions of dollars available to pay for development? This is something that does not have to come out of the pockets of any group of individuals. It is written into the code enabling the ecosystem to keep funding itself.
How is this possible?
The answer is that it was available on Steem. However, due to the albatross that was present there, things were hindered. On Hive, this is not the case.
The Steem Proposal System was to be a way to fund development on Steem. The challenge was the funding. Hive took care of this by setting up this account.
Notice the HBD balance: there is 445K which is worth 71 cents apiece. This adds up to roughly $315,000.
For those who remember the Steem Proposal System, all payouts were in the form of SBD. The same holds true on Hive. All this money is to fund the Decentralized Hive Fund. This is where the individuals are able to submit proposals to get funding.
https://peakd.com/me/proposals
Two things we can see here. The 445K HBD is the same on both images. Also, at present, there are 4457 HBD allocated daily to fund development.
Of course, there is a huge difference between $315K and millions of dollars. How is that gap closed?
Let us go back to the wallet of the DAO account.
In this, we can see there is 83 million HIVE tokens. At present, this is worth $20 million. A nice run up in the price of HIVE to, say $3, would mean there is close to $250 million available for development on Hive.
In my opinion, this is the secret weapon that Hive has. There are going to be hundreds of millions of dollar available, over time, to fund development and other necessary activities on Hive. This will help Hive to be a self-funding mechanism.
To start, many are probably wondering where all this came from. Remember the Ninja-mined stake of Steemit Inc that caused so much controversy? This is the mirror image of it on Hive along with some other tokens that were not dropped.
There is, of course, a major difference fwith Steem and where understanding how it works if vital.
Unlike the Steemit Inc stake, nobody (or everybody) owns the Steem.dao stake. In fact, there are no keys to it. There is no individual or committee making decisions.
So how does it work?
The HIVE is converted to HBD slowly over time, like water dripping. This is to prevent the inflation rate from going through the roof and the market being flooded with tokens. All proposals on the DAO are paid out in HBD, thus providing a consistent stream of funding. This is coded in meaning it requires a fork to change it.
As a side note, this also explains why there might be a fork to give HIVE to some Steemians who were overlooked.
Obviously, the goal over time is to make Hive more valuable, in turn, pushing the value of the token up. As this is accomplished, we see value of the account, in USD increase. This will obviously enable more funding to take place.
In effect, it becomes a cycle that builds upon itself. The greater the value of HIVE, the more development we can fund. As development increased, it should help to further increase the value of the token.
Rinse and repeat.
Ultimately, this was the intention of the original stake on Steem. Unfortunately, due to the events that took place on there, it never came to pass.
Here we see one of the biggest advantages of getting a fresh start. Hive does have the ability to fund itself on the development (and marketing) front. It is a system that is designed to keep feeding itself as the entire ecosystem grows.
It is very important to understand how all this works. In my view, this is one of those things that adds a great deal of value to the ecosystem, yet generally goes unnoticed.
The ability to fund ourselves is crucial and the money we are talking about could be enormous.
If you found this article informative, please give an upvote and rehive.
How does distribution of the @steem.dao funds work? Is there a set amount that is spent per year? Could a single proposal request all the funds... etcetera?
My understanding, and someone please correct me if wrong...
The DAO can spend 1% of its balance daily. So much like content voting, it’s impossible for it to ever spend itself empty, especially since it’s replenished with inflation, donations, and now this slow release of the Steemit stake earmarked for funding.
It’s also of note that the better the price of HIVE, the more funding the DAO gets, since it earns a % of the inflation pool, but always in Hive dollars. For instance, if the pool earns 1000 Hive a day via inflation, if Hive is .20 and Hive dollars are at the 1.00 peg, then the pool would get 200 Hive dollars. If Hive climbs to 2.00, then that same 1,000 Hive are now depositing 2,000 Hive dollars daily in the pool instead of 200. Better Hive price equals more DAO funding.
Proposals are voted on similar to witnesses, stake weighted, but vote on as many as you want. So the highest weight voted proposal gets funded first, then the second, third, and so on. If all of the daily funding is allocated, the last proposal may only get partial payment of the remaining balance.
The reason the entire 1% of the pool isn’t spent daily is because of the “return” proposal. This proposal is structured as a proposal that gets 240 million Hive dollars a day... with the beneficiary being the DAO account, essentially returning it to the fund and not spending it. Voting on the return proposal sets the threshold that every other project must cross in order to see any funding, since if the return proposal is #1, there’s no remainder in the daily budget to be spent. As is, the return proposal currently gobbles up that “remainder” since we’re not maxing our spending with our approved projects at the moment. So yes, one project can take all the funding... but it’d either be the will of the community, or a Steemit Inc. style takeover.
Incredible explanation! You should consider making this its own post so I can rehive it!
The return proposal is an innovative use of the proposal system to set a floor on which proposals are funded.
When voting for proposals in the future, I need to consider not only whether I support the project but also whether the requested funding is reasonable. I didn't understand that nuance before.
Seems that the proposal system is susceptible to vote selling, similar to content and witness voting? For example, imagine a proposal that distributed its payout to everyone who votes for it. Perhaps even with some mechanism to reward early votes that allow it to surpass the return proposal more than later votes. Ignoring reputational damage for supporting this proposal, the incentives seem to lead to this outcome?
Other commenters here seem to think the @steem.dao holdings are too large. I tend to disagree. Development is a crucial ingredient for growing and sustaining the blockchain. @steem.dao is a way in which the blockchain can effect change outside its own protocol, but in support of its protocol. It's a major step in blockchains become self-sustaining and adaptive entities, almost like a digital life form.
But this really depends on whether the system is used to fund valuable work or whether it is susceptible to embezzlement.
you are right @dhimmel.
Downvoted because the comment has no valuable content and is likely spam designed to collect upvotes. The author has a history of indiscriminate and thoughtless comments pretending to support other's comments.
Impressive I was not aware of this... so if that is the case there are no obstacles for development to grow gradually and with it the price of the token. It is worth noting that the more capital there is, the more development as you mention in the post, and therefore the greater the attraction of the public and monetary investment by new users.
I hope they don't commit make the same mistakes as before, it's the advantage of starting from scratch that helps you to improve things
This is the best explanation of the stake that I’ve seen yet! Thanks so much for taking the time to write it out. I’ll definitely share this with people when they have questions about it!
If nobody controls it then how HBD get utilized from it?
Through the voting of the DAO.
The proposals that get approved by the community members get the DAO.
I just analysed it, 22% of the virtual supply (all HIVE + HP + HBD) is now in the dao.
I think it is too much and some of it needs to be burnt to avoid controversy and potential threats (it's a lot of money to take).
Another issue I have is the fact that the #NinjaDaoStake trickles into the dao. This was decided by ??? because development. We should have probably just quarantined it until the community could decide exactly what to do with it #decentralization.
Is history repeating itself? Steemit Inc stake must be destroyed. I had a proposal 33.3% burn 33.3% freeze for 3 years and send 33.3% in parts to the DAO and another question: https://hive.vote/ configured but the vote does not happen - what could I do wrong?
They (meaning the anonymous users that decided) did this for our own good because we wanted this and would have decided it anyway (i guess no clue really).
Same actions as 22.2 would have been fine, freeze it till we decide. Who knows what they will decide next? Urgency breeds tyranny.
Your proposal seems good. Cheers to hoping the freezed part is burned, too. My favorite part, it is your idea is transparent and up to the community to decide.
I'm not sure why the vote isn't working.
is completely transparent and leaves it up to the community to decide.I see putting it all in the DAO as the absolute best solution. That account is trustless and has functional voting rules in place already. It essentially is frozen until we decide, by voting on DAO proposals. If you want to set a proposal that sends 30% of daily DAO funding to @null and burns it, you can do that, and if enough people agree it’ll be done. This is already the ultimate implementation of voting, instead of setting up polls on Twitter & arguing in Discord over what to do with the funds. Parking the funds in the DAO
1000HBD a day is a lot of melt.
Who made that decision? (No transparency, centralized anonymous authority) Why did they make it? (Um ??? They want it?)
Everyone says make a proposal... but there was never a proposal to drip it into the dao. 100% Frozen should have been the default.
The drip was given an unfair advantage and must be stopped and reversed immediately to restore legitimacy, decentralization and transparemcy.
Initially it was supposed to be frozen under sf 22.2.
But it’s not a given that funds dripping into the DAO must be spent. They can stay locked in there forever if the stakeholders choose.
If the funds were fully frozen from the start, pending discussion of what to do with them; then it would require a hardfork to implement the desired changes. That means it would be in the hands of the same “anonymous”, “centralized” 17 people who you clearly don’t trust, to alter the disposition of the funds as they saw fit. The current solution already drops it into the hands of the community at a much more granular level, independent of witness voting.
So the choice is between having lots of non binding discussions and polls which you can then submit the ambiguous results of to the witnesses and hope they do what you want, or... have the community directly vote on each and every dollar, choosing whether to hold (freeze) it, spend it, or burn it.
The mechanism set up is really the best “no decision,” punt to the community that I can imagine.
edit
Is 1,000 HBD deposit a day the confirmed “drip rate?” Was looking for this number. If so I find this very conservative as we basically have a secondary “drip” in place since the daily spend of the DAO is capped at 1% of the pool. That means potential spending power (and remember, it can still be held or burned) will grow 10 HBD a day due to “the drip” as it’s currently structured. That’s not a lot. Funding from inflation combined with any token price appreciation will greatly outpace that I believe.
Who chose to put them in there and why? We will never have a true a d verified record.
Technically it still is, but at least doing that would have been a good first step.
No clue, it was an anonymous centralized decision, but you can check the dao on both hive and steem to see how much larger it has already grown (over 100k in less than 6 days !!!!!)
100% agree with this. If it was burned up front then there could be no debate. Now a debate can be had.
Yes - I did not see Satoshi Nakomoto separately print 5 million bitcoins and say, “this is for the development of the network and if you need it, you take coins from there” - this is ridiculous - the network should develop organically - now there will be a bunch of shit projects that will be funded - and this is already sad.
Only if the stakeholders approve them.
I think those types of decisions are still going to be made. The way I understood it was the goal was to move as quickly to Hive as possible and then have an open discussion about these types of issues without having to worry about Justin Sun passing through a hardfork with a 1 day power down and is losing the ability to track the steemit ninjamined stake.
I originally wanted to see it all burned as we were originally lead to believe, but on reflection I'm warming to this perspective.
I would like to see a lot of it burned, but I can appreciate why getting clear of Justin was top priority.
Im sure they could have moved it to any account without being trickled to the dao just as fast. Correct me if I'm wrong but 22.2 soft fork didn't even have to move it to freeze it.
True, but the only account I would trust would be the dao. I wouldn’t even trust if they put it in my account.
The dao seems like the safest option to me and then the community can vote to figure out how to use it or destroy it.
How convenient, only account out of millions used and billions unused is the one that trickles it into a fund.
It was put there for a reason...trickling to proposal system won't require blockchain vote or hard fork, not because it is actually safer.
They took removed all sorts of permissions without a hardfork, with a hardfork they can manipulate the chain anyway they see fit.
I domt think anyone stole anything.
I think it was moved there without our being asked. It could have been moved somewhere else, but it was moved there.
I suspect some who want it there wish to remain anonymous actors. This is concerning.
We don't know who was involved in the decision. We know it is reserved for development. We don't know what development means.
The entire third world has received billions in funding for development and most are in shambles. It would be safe to say they would be better off without that debt.
The money in the dao represents likely inflation amd debt. This has been decided as the default.
Who decided it? Why?
How does that process of transforming HIVE into HBD work for the DAO how much is transforming daily 😕? I thought the DAO only receives (& distributes) HBD.
I’m not sure of the exact rate, although someone mentioned 1,000 HBD a day which could be right. But I believe you’re correct that the DAO is set up to only distribute HBD. So that’s the whole reason for the slow “drip” conversion of the 83 million Hive into HBD.
For one, the blockchain is set up to see HBD as debt. If there is too much debt on the system wonky things happen. So with Hive starting life around .20, it doesn’t make sense to instantly convert it all to 16 million + HBD and crush the blockchain in “debt.” That also would deprive the DAO of any benefit of future price increase. If Hive is .25 and the “drip” pulls in 1000 HBD a day, then it’ll be pulling 4,000 Hive from the reserved tokens daily. If Hive climbs to .50, then it’ll only pull 2,000 tokens to fill the same rate. It could take a loooooong time to deplete that 83 million reserve depending on conditions! I’m not 100% sure of the drip rate or it’s mechanism, but I’m sure the debt load and price fluctuation are crucial to slowly introducing the Hive tokens into the HBD structured DAO.
as far as I understand, the HIVE in the balance is then slowly converted into HBD (which complements the 10% funding rate that the DAO receives from the total yearly inflation).
Thanks for taking your time to answer :)
That's an atrocious amount of capital sitting there, waiting.
I do hope it is not squandered.
You and everyone else can vote for it. For the projects that you deem worthy.
Who decided it belongs in there to begin with?
🤑🤑🤑🔥🔥🔥🤗🤗🤗
I suppose you are saying there is something wrong with a decentralized repository for development projects.
I think this is an excellent idea. Everyone who has an idea for something to work on, can ask the community to vote on it, and perhaps get a good funding for that project.
So what's wrong with it?
I like the dao 🥰🥰🥰🥰
I just dont think it should have received 83 million hive by default.
Please reread my argument.
Who should have decided it?
It should have been 100% frozen, the proposal can decide what to do.
Some unknown centralized group decided that it wouldn't be frozen, it would trickle. They also decided the trickle rate.
2 entirely unnecessary and avoidable centralized decisions on the 'decentralized' chain before it started.
I'll agree certain things like who else to punish and what to name the chain needed to be decided quickly, but the trickle could have waited (or well justifyed including the reason for thebspecific trickle rate, account names and stakes of all the decision makers). We got like 200k in the dao and at least 100 days to use it.
There is a return proposal.
If the community votes for the return proposal above all other proposals then nothing is paid out and the fund is frozen.
If the community decides a project is worthwhile then some of the DAO funds are paid out.
If that project is too expensive then people won't vote for it and fewer funds are paid out.
So the drip rate and the extent to which the funds are frozen is determined by the community.
There is a return proposal. It is still much more easy to impliment dao spending now that it is in the dao. Who said it belongs in the dao? Surely you don't believe this was a transparent a d decentralized decision....much like the dao is.
"It should have been 100% frozen, the proposal can decide what to do."
Are you kidding me? This would have had the excat same result. High stakeholders want it in the DAO, so it would have been transferred into the DAO.
It wasn't determined in a transparent and decentralized manner.
Maybe they would have voted it any. But now we will never know if that is the case or exactly who / which accounts.
The witnesses we’ve voted for. Hive is essentially a republic, consensus witnesses are our Congresscritters or MP’s. If we don’t like their votes in Congress/Parliament, we can vote them out.
You mean the top 20 from before SF 22.2? Or do you mean the list of several people mentioned and more unmentioned, with several of the mentioned people having not been top 20 witnesses recently?
I know it is the latter. Maybe they 'proxy' to the top 20 maybe they don't. Maybe they would have enough SP to do it, maybe they wouldn't. I know a perfect solution....oh wait they didn't put their decision on the blockchain (could have been in encrypted memo till fork) because they didn't want to....for reasons pertaining to our own good.
I don't think any of my solutions are the best or any of my opinions are the most correct. I'm trying to gauge other people's thoughts on my own beliefs and ideas.
I'm going to be quarantined for quite some time. Please keep this up! It is quite entertaining. I doubt you will convince them but you fought the good fight.
Looking at the projects that are being funded it seems like you need a lot of votes to get funding - perhaps if it was easier to get funded you would get more proposals and new ideas?
Sound thinking and to be fair I think $3 maybe a while off but I can see $1 Will be probably not far off.
Let's keep up the good work and let's on board more people to the land of hive and honey.
$3 might be a while off...it might be years in fact. But over that time, the amount available, in USD, is going up.
This can be used for development and funding.
Hello, please help, my posts are no more showing on Steemleo.com. What should I do?
Post using the Steemleo front end. Then they appear in Steemleo.
Also use the tag #leofinance.
So more posting on steempeak?
No posting on Steempeak does not post on Steemleo.
You can either use the Steemleo site or use peakd with the #leofinance tag.
Submit articles to the LeoFinance community (hive-167922)
Not sure what to say about it.
Some want it burned. Some want a large share of it burned.
Such a huge chunk maybe quite lucrative and possible lead to abuse.
How can it be abused since there are no keys?
The only way to access it is via a fork.
Yes there are no keys.
By abuse I mean putting large amounts out via the DAO to developers, and in some cases maybe more than it should be. Basically the large stakeholders are controlling these funds now.
I would like to see at least a part of it burned.
It can be used to pay those doing the work that we all benefit. Hive developers are not well paid. Token holders vote to spend it. It's not abuse.
To a bright amazing future in here all together
I'm sorry about the app or my internet doubled the comment
I’ve seen several posts using the option to donate all rewards to the DAO. This is pretty cool and can help the fund grow.
Oh awesome! I did not realize the ninja-mined stake was moved to the dao. I thought it was essentially burned in the hardfork.
That was part of the motivation for this article @sepracore.
I think many (if not most) thought it was done away with.
It is healthy for all to know it is still around.
We have to be proud of this achievement and support high paid job for our developers and educators using HIVE DAO. Our builders need to be well paid.
It an also be used for marketing purposes when we are ready to approach that.
I would prefer to eliminate HBD and switch everything to HIVE only with a Hardfork, HBD like SBD was a huge risk, added unnecessary complexity and failed as a stablecoin. Now we have the opportunity to do this.
Do you know what the rate at which the Hive is converted to HBD or where I can find it?