"Currently HP holders directly receive 47.5% of the inflation..."
This is only true if they are actively curating or delegating their HP to projects that curate. It's going to make a big difference whether an investor wants to be that active on a social platform or not, or want to tie up their funds for an additional period of time as they do with delegation. So staking alone is only 15% of the inflation and about a 3% APY. Changing that to a much more passive ROI would undoubtedly make staking more attractive...in addition to reducing unstaking to less than a week.
"The best performing asset over the long term is BTC. What are the tokenomics of BTC?"
You're talking about two entirely different models though. Bitcoin is proof-of-work, so mining is what attracts the investment in order to distribute the tokens. Proof-of-stake is built around staking incentives. You could give 100% of inflation or transaction fees to those who stake and achieve the same goal. The new tokens flow out to one group and they sell to those who want in. This is pretty much how all cryptocurrencies work. Getting distribution "right" has been argued and experimented with for years, but it mostly comes down to two methods: "mining" and "inflating." (Though the truth is - it's all just inflation.)
We should probably compare Hive to Ethereum 2.0 (which is only theoretical at this point), not Bitcoin.
"As a self contained system BTC is setup so that only miners profit from its use...not investors. And yet, Bitcoin continues to outperform everything else."
...for now.
But again, you can make the same argument for PoS chains. As a self-contained system, Ethereum 2.0 will be set up so that stakeholders and staking pools profit from its use. A buyer of ETH gets nothing for simply holding the tokens in a wallet, just like on Hive. They would need to stake in the system in order to receive any ROI, absent selling the token. And ETH has performed very well as an "alt" of Bitcoin. Some believe that it will flip Bitcoin in the near future and take over crypto dominance. It certainly has the potential as a PoS token.
"What narrative can we push that will drive demand for Hive? That is the real question."
The same narrative that has seen DeFi explode in the past year. Decentralized finance is the next evolutionary step for digital currencies, and when better products materialize, the overall cryptocurrency market cap will likely jump to $10 trillion or more. And what is it that people are looking for in DeFi?
Well, the most important tool is a decentralized stablecoin, which is pretty much non-existent. Most depend on a lender of last resort or some form of fiat-based debt. Hive has HBDs which are about to get an upgraded stabilization mechanism. It'll also be paying out interest.
Collateral markets are also at the top of the list for DeFi, which will be much easier to build on Hive once we have a stable HBD.
Add to this an improved ROI for staking and no transaction fees and Hive would have four huge features/functions that are in high demand, and all of it is native to the mainnet. What other chain has...
- Decentralized, interest-bearing, native stablecoin
- Staking and governance token with ~10%+ APY
- No transaction fees
- Three-second block times
and can also legitimately boast both decentralized governance and a decentralized development fund?
Hive can be a super-competitive platform to rival Ethereum, BSC, or any of the other top PoS chains. But most people can't look past the social platform and its pitfalls/failures, and you really can't blame them. With 65% of inflation being directed to that, it's not very attractive for investors and developers. Move most of that to layer two and make staking more attractive, in addition to the rest of what I mentioned, and Hive and its tokens can absolutely be in higher demand.
We just need to be willing to take that step. It sure as hell beats sticking with the same social media plan that only sees stagnation in its best years. So, we can adapt or die. Some are OK with dying. I choose to adapt. Based on the feedback so far, it seems that most people choose adaptation as well.
The comparison to the token economics of BTC cannot be dismissed. The point is that what drives value is not the distribution of inflation. It is demand that plays that role. As long as it outpaces supply the price will increase.
It doesn't matter if we change the distribution the APR will go down inevitably because the inflation rate will be reduced to less than 1% (unless if we change that). We need other narratives that create demand for Hive. The store of value meme is already taken by BTC, the "world computer" story doesn't have a clean winner yet but it looks like it's ETH with a clear lead.
Doesn't Hive already do this? Let's assume that we get rid of the social rewards, what will happen to the new tokens created? The answer is that they will be sold on the market...just like today and we will still need a narrative that creates demand for them or we create other inflows that do not depend on narratives.
I disagree that DEFI is the next evolution of the crypto world...it is *one of the branches that will grow from the tree known as blockchain...there will be others. And some will die off just like in nature.
Of course. I don't think I've ever said otherwise. We are not meeting any real demand with our social rewards scheme on layer one. Five years of data corroborates this.
Yeah, that was my point. All blockchains operate like that in one way or another.