Hive has a unique system in dealing with fees. It is fee-less whereas other blockchains have direct transaction fees.
How can this be?
Notice it says "fee-less' and not free. There are no free transactions on Hive. The blockchain, like all others, costs money to run. However, people can get involved without having to pay a direct fee for each transaction.
This is the novelty of Resource Credits. As long as one has enough RC to conduct the transaction, it will go through. If, however, one lacks that, nothing can be done.
One major advantage is the power is rechargeable. This means that while one can use it all up, it will regenerate each day. The model is that 20% of one's total returns every 24 hours. When an account is completely used up of RC, it will be full in 5 days.
Here we see a built in sink that is very powerful.
The Need For Hive Power
There is one way to get Resource Credits and that is to stake Hive. This turns it into Hive Power. Therefore, the greater the need for RCs, the more HP that is required.
We see a lot of discussion about how this topic starting to arise. For example, we see how RC Pools Are Priority #1. While these are valid discussions, we need to highlight one thing:
More traffic means that more Resource Credits are needed.
Hence we see the push to get more Hive Power taking place.
Of course, this can happen one of two ways.
The individual users can acquire some Hive and power it up (stake). For the cost of roughly a common transaction on Ethereum, enough Hive is acquired to operate mostly without issue.
An application can delegate it to the new users for a certain period of time.
Both accomplish the same end. The second one, however, is what commonly appeals to newer users. After all, when people are new, they really have no idea what this is. Hence, them investing money to transact is not going to sit well with most. In this instance, the application (game) can delegate some HP for a month or so to get the individual started.
Buying Pressure For Hive
We are already starting to see the impact upon this for Hive. While the price has not strayed much from overall market movements, there are some signs that things are beginning to happen. Much of this is presently due to @splinterlands. However, we could see a couple of things driving this idea in the future.
Let us start by looking at the sign up activity. We will be using the charts from @penguinpablo for this.
The latest report shows us this in terms of new accounts:
As we can see, the last month or so really saw a major increase in the number of new sign ups. Depending upon how many of those users get active, this pushes the need for Resource Credits. Hence, someone is going to require the Hive Power.
We see something interesting from the How Much Hive Is Leaving Exchanges Report:
The timing on all this is interesting. Not long after the signups exploded, more Hive was being transferred from the exchanges. As we notice, this broke a long established trend of the exact opposite. People were moving Hive from the on-chain to the exchanges consistently.
What changed this?
Splinterlands Moves A Lot Of Hive On-Chain
We only need to look at the reason for the increase in new accounts to get to the bottom of this.
@gadrian highlighted some information in an article regarding the powering up.
We see a couple of tables pulled from @penguinpablo that help us to uncover what took place.
Simple calculation shows that more than 450K Hive was moved on-chain to their accounts. We can only presume this was to facilitate these new accounts with some Resource Credits to operate.
Resource Credits Will Push The Price Of Hive
The situation with @splinterlands is showing exactly what our future looks like. It is important to remember this is one application at a single point in time.
We can expect two things:
More growth from this game, as presented in their road map.
A large number of applications following suit.
Imagine for a second if we have 3 or 4 other games/applications doing what this one is. The need for Resource Credits would be even greater. Again, it doesn't matter who provides them, someone needs to have that Hive powered up.
Another thing we need to keep in mind is the fact that games tend to have the least "expensive" transactions. Since they are sending Custom JSONs over, this requires the least amount of RCs. Posting and commenting use up a lot more on a per transaction basis.
Why is this important?
Here we can see the potential of #ProjectBlank that the @leofinance team is working upon. They seek to create "Twitter™ on the Blockchain" by developing a new data structure as it applies to Hive. This will allow for people to operate the same way they do on Twitter but using an interface that also posts to Hive.
The difference here is that the Resource Credits required for those transactions is greater than what a game uses. Hence, we are going to see even more need for Hive.
What happens if #ProjectBlank gets 50K or 75K users? This is just another application that is going to have a thirst for Hive Power to delegate.
The old "rinse and repeat" enters the picture.
It is easy to see how the need for Resource Credits, which is basic to operation on Hive, can drive the price. At some point, there will be buying pressure simply to allow users to engaged with team's applications.
Of course, as outlined in Three Reasons I am Super Bullish on Hive, we also have the @threespeak SIP arriving somewhere around the same time #ProjectBlank is projected to be released. This will start the process of removing Hive from the market, affecting the supply side.
Limiting of the supply side while driving up the demand side can only lead to one thing: higher prices for Hive.
The need for Resource Credits will have a lot to do with this.
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I can confirm this. Prior to Splinterlands' recent meteoric growth, the primary @podping active pinging account (which is @podping.aaa) was operating with around 1800 HP delegated and it's RC's were usually maxed out at 100% occasionally dipping into the high 90's.
In the last few weeks I've been steadily growing the delegation and now it's on 2,101 HP and 87.23%. I still feel this is a minimal investment: $1,015 invested to run a global notification system for Podcasting. And the money isn't spent, it's merely reserved for this use. Unlike payments to Linode, I can take back this cost whenever I like.
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And the value of the Hive could keep increasing over time. So the $1,015 put in could end up being worth a few thousand dollars.
So not spending it but utilizing it makes a big difference.
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The main reason Hive is leaving exchanges is HBD. 2% of the hive supply has been burned in under 10 days.
Considering a lot of hive is powered up, the reduction of liquid hive is huge.
The next report on how much hive is leaving exchanges will show a massive drop.
That is interesting.
What is causing the burn?
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First there is the HBD proposal converting hive to HBD which is then in the DAO, so out of circulation. It's around 5,000 hive an hour being burned.
Also, there's is a 5% burn fee on every hive to HBD conversion. 4 million hive were converted today only so that's a big burn.
That's a mistake on my part, most of it was simply converted to HBD. So the biggest part is not burned, it was just converted into HBD debt.
When HBD dumps in the future, it will be converted to hive again (hopefully not more hive), but meanwhile, it can cause a hive shortage.
Ah okay. I follow what you are saying.
To me, the key is just get the growth on Hive. That will solve a great many issues. Token burns are nice but they are often done in lieu of solving the underlying problem: no growth.
We see a lot happening that will bring a great many people to Hive I believe. So we just need to keep pushing things further along until the numbers show up requiring Resource Credits.
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Yes, I agree. Activity and resource credits are the main feature. Although they're not that different.
In order to be valuable, there are basically two models.
1- Burns: similar to stock buybacks.
2- Resource credits: Similar to stock dividends.
Both return value to shareholders and without this all is speculation. This is true for every crypto.
The Spk network SIP is basically locked liquidity, which is a form of burning. Similarly, the Hive DAO is locked liquidity, which can only be released by governance voting. So when I say "burned", it's not technically correct, it's just locked in the DAO in the form of HBD.
Bitcoin as the best store of value and Eth as the best collateral are both speculations imo. People speculate that those assets will be bought and held for their better security. I have nothing against speculation, and hold both BTC and ETH as I agree, but in order to have intrinsic value, we need buybacks or dividends.
Eth has buybacks, Hive has dividends. Bitcoin has dividends in the form of fees as well, but only the miners can earn them, not every bitcoin holder. Time will tell if this is a flawed model or not.
There is, of course, the "network effect value". Some people believe that the more users there are, the more valuable a token, even if it doesn't capture value in the form of burns or dividends. I don't think that this can hold true in the long run.
Also important to add, Proof of Brain is a form of dividend and burn at the same time.
Hive power is locked liquidity (temporary burn), and it allows you to allocate inflation (upvotes are like a dividend).
Someone might argue that governance gives value without being a burn or a dividend. But I disagree, because if I own 51% of the governance token, I can decide to allocate myself a revenue stream in the form of inflation.
A more practical example would be uniswap governance choosing to earn from the exchange fees. It's always about burn or dividend.
The token "burns" (moreso getting locked into HBD) are a consequence of growth in demand for HBD.
That demand may be purely speculative, but it is real money coming into the system and token burns are a way to ensure that money is locked in for long term Hive investors, not just dumped by the next HBD speculator.
Not strictly being burned, most is just converted to HBD and still in virtual supply. A small percentage is burned, and a small percentage of the HBD is itself locked in the DHF.
There will be a need for resource credits but if the RC pools come out, will it alleviate the buying pressure for HIVE? Some of us don't use up all of our RCs so putting some towards the pool doesn't seem that bad.
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Depends upon the growth rate. What you say is correct that there will be a flood of Resource Credits since most users have a ton of excess.
However, couple this concept with the SIP by @threespeak. Each Hive that goes in there will not be eligible for Resource Credits since it cannot be powered up.
Hence we need as many as we can if things start to take off.
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Every time I think about the Hive model it feels ahead of its time. Just look at what Reddit is doing with community points. Since everyone can spam as much as they want the quality of the content went down drastically while the complete opposite is happening on Hive.
Great post and one more reason to do even more research on Hive. You will not find a better reward system and a better-governed blockchain out there. Stack and sit tight. It is still very early.
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Hive has a lot to offer and more in the pipeline. We are going to see a ton of things start to roll out.
Is it ahead of its time? Yes it is. We have a lot here that others are still trying to catch up too.
And then we roll out the Hive Application Framework? Damn put us light years ahead of other chains in terms of ease of development.
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It makes a lot of sense. Especially now when Splinterlands is gaining traction.
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That is the first one, it is breaking down barriers and showing all what is possible.
@splinterlands is requiring a lot more HP than it did a few months ago.
And if they keep adding 6,000 accounts a day, that will really add up in another 6 months.
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The trend is that but more games or large applications are needed to achieve it. The good news is that it seems that the growth is continuous.
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I think we are going to see that. We could see things really take off with @splinterlands and the release of #ProjectBlank.
The fact that we are seeing the later getting closer means that we could see tens of thousands of people starting to use it.
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Will this mean new accounts will need more hp delegated to them when starting off in order to interact on the Blockchain or the same hp but at a greater cost per user?
good question, although on Hive we call it hp ;) I believe it is the latter
Oh yeah, didn't even notice the mistake :p
It depends. RC per transaction could go up but the witnesses have the ability to adjust it as the market determines.
Right now it is a bit unclear as to what they will do.
Fortunately, each day more Hive is produced.
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Nice information.Hive wallet is free,is freeless that's while it will liberate many people from poverty.
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I really need to buy more Hive, looks like we are running out Hives.
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Well I wouldnt say we are running out at this moment. However, in the future, they could become rather scarce especially if the SIP gets going from @threespeak.
The SpkNetowkr could eat up a lot of Hive.
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Looks great. I think it will take a few weeks or few months until we notice the changes in the market.
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The market can lag. You are right it might take a few weeks or even months for the market to realize what is happening.
However, word will spread if this keeps up. It will be fun to see where we are by the end of the year.
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Lovely Analysis!!
I did not know all this, users are powering up for Splinderlands, and then there is going to be less HIVE around to purchase with demand creaded for it with all this Blockchain twitter by Leo Finance, and SIP by 3speaks.
This sounds good for HIVE users. Having more HP would be advantage in future and when we accumulate it, we can be well off tommorow. Nice.
Genrally, there is talk of ETH and BTC supply schock, now that might apply to HIVE?
But does HIVE have a fixed supply, what's its supply and inflation etc, they generally discuss all this in tokenomics, what you highlighted here is HIVE's fundamental reasons to rise, if it's complemented with its tokenomics it would be better I feel.
Hive is inflationary which is needed. As we can see, if growth takes place, we will see higher demand. Hence we need more Hive to provide more RCs.
The rate is like 7.5% or 8% at this point but goes down every 250K blocks (I think it is .25% each time).
So it is disinflationary, reducing the amount produced over time.
The fact that it is needed to interact with the Blockchain is going to push up the demand. It is a built in sink.
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Undoubtfully, if Project Blank becomes popular and every short message will be on chain, with the improvements to the UI and backend the Leofinance team are doing which speed things up, with the release of the mobile app, those will drive the need for RCs through the roof.
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I can envision #ProjectBlank** mirroring what @splinterlands did but with microblogging and not custom JSONs. This means there will be a huge draw need for Resource Credits.
To me, 50,000 users for #ProjectBlank is really not a lot. We should be able to achieve that in the first month or two.
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I know the @edicted talks quite a bit about RCs and their future but I never really "got it". Helpful stuff. Now that I am actually splinterlands I see how these things come together. Future looks bright.
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It is hard to grasp some of this stuff when it is in the theoretical. However, when you see something like @splinterlands in action, then we see how the Resource Credits really come into play.
Now that people are starting to see the potential, I believe the level of excitement will go up.
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I finally feel a little excitement after 4 years on this blockchain!
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Nice one
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STOPThis is a good point and I never thought about it in this way. More action on the blockchain, more HIVE Power which should make it less liquid resulting in price improvement. So the key is to get as many as successful dapps on the blockchain like Splinterlands or Leo Finance related tools and DeFi.
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Dude! I already knew all this but seeing it written out really solidifies it in new ways.
I don’t know why I haven’t been considering RC as a primary driver. I guess I just thought people engaging would mean more people transacting so naturally hive would be more in demand, but yes, this all tracks.
At some point, every serious Splinterlands player gets the red not enough RC banner and surrender, which drives you straight to the nearest wallet, coin purse, or sofa cushions to scrape together anything to stake.
You gotta get that two hours of progress back, ffs!
Anyway, great post, man! Always inspiring!
Thanks for your sharing!
It's very helpful information.
It also explains why Hive's price keeps increasing these days
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