What is the appropriate APR for HBD savings according to you ?

elderdark 10 months ago

The APR was set at 20% to attract money flow to Hive, but this measure was not very effective. When we search on google for "Best stablecoin yiled opportunities 2024" we see a maximum APR of 16% and HBD is not on this list, only those who know the Hive ecosystem well are aware of HBD's existence.

So the main reason HBD is 20% is not achieving its real objective. Attracting new investors to Hive.

My proposal for the APR rate for HBD should be gamified, the more HP the user has the higher the APR, where the maximum would be 20% (which is the current value). Below is a table to illustrate:

Between 1000 HP - 5000 HP --> 10% Between 5001 HP - 10000 HP ---> 12% Between 10001 HP - 20000 HP --> 15% Between 20001 HP - 50000 HP --> 18% Greater than 50000 HP ---> 20%

This would encourage users to increase their Hive Power in order to increase their performance in HBD Salving.

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5 votes

achim03 10 months ago

My proposal for the APR rate for HBD should be gamified, the more HP the user has the higher the APR, where the maximum would be 20% (which is the current value).

I quite like this idea. The more HP you have, the higher your APR gets :-)

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elderdark 10 months ago

I quite like this idea. The more HP you have, the higher your APR gets :-)

Glad you liked it! But in terms of implementation, I think it would be complicated. But I think it's worth the effort!
Thank you very much for your comments!

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godfish 10 months ago

That's an original idea. It would most likely require a Hard Fork, though.

HBD is not a true stablecoin. It is rather a voucher that can be anytime exchanged for Hive worth one dollar. That could be the reason why it's not on the list above.

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elderdark 10 months ago

I don't have much knowledge about the implementation of this idea. But thank you for clarifying these questions and that you like the idea!

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toofasteddie 10 months ago

looks reasonable to me

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elderdark 10 months ago

Thank you!

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liotes 10 months ago

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godfish 10 months ago

Thanks for bringing more attention to this topic, I believe it is one of the most important ones for the Hiveans.

From the top of my head, I'd say 3-8%. You've already mentioned some of the keen reasons, I elaborated them in my recent post. The discussion below is maybe even more interesting than the post itself - there are over 100 comments.

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achim03 10 months ago

Thanks for bringing more attention to this topic, I believe it is one of the most important ones for the Hiveans.

It is probably together with the inefficiency of the DHF ;-).

I've read your post and it triggered this question here. It's good and necessary for the community to discuss such topics.

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godfish 10 months ago

Yes, and yet again, it is us who can influence which Proposals will recieve funding. We shall discuss that. Hive offers all possible tools to make us able to handle that :)

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liotes 10 months ago

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godfish 10 months ago

Thanks :) What are those credits good for?

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liotes 10 months ago

These credits get you ranked in our Liotes Ranking. Every month with distribute a pot to the top 15 of this ranking. You can get points from taking part in these missions or by owning and staking LENM or by delegating Hive Power to the @liotes.voter account.

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godfish 10 months ago

Oh, thanks for clarifying that :)

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seckorama 10 months ago

I have already commented on something in your post that I think I will comment on here, albeit a little late.
I would go back further, namely why HBD was created in the first place? Then why do curators and authors get rewarded half in HP and half in HBD? This can be changed but by default, it is set like this in all wallets.
HBD had no real use until Savings. And that is one added value of this stablecoin. It is also used, at the moment, in seven liquidity pools. What the APR is there, I do not know.
We also have a buffer mechanism in case something goes wrong, namely the witness consensus and @hbdstabilizer. The APR will already be reduced when necessary. Or increased, as some assume if it is used for bonds (I can't find the link at the moment). I haven't changed my habit of posting at least once a day and commenting on posts personally until my VP drops to somewhere around 70% either.
In short, it suits me at the moment, and for me, it means one passive income that you can't find anywhere else. By the way, just over three thousand users have HBD in savings, the rest don't.

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achim03 10 months ago

If the dept of HBD reaches a certain level, post payouts will be done in liquid hive instead of HBD.

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seckorama 10 months ago (edited)

I guess that's what it was meant to be.
When the Hive will be worth $5? 🤔

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godfish 10 months ago

Nope, it was meant to be paid in Hive and HBD from the very beginning. However, I believe you experienced the time when ~~Steem~~ was worth like $0.1 and there was no SBD emitted. Since then, we increased the allowed dept ratio, so on Hive, the cap is 30% (I believe).

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seckorama 10 months ago

I don't know what the cap is I think 3% of inflation but not sure.

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godfish 10 months ago

Nope, the cap is 30% and the current ratio is 7%, see here for further details: https://hbdstats.com

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godfish 10 months ago

I would go back further, namely why HBD was created in the first place?

Now, that is an interesting point. HBD (or SBD) has been around since the very beginning and the ~~Steem~~ whitepaper reasons it quite understandable, at least to me.

Put simpy, it is there (or it is meant to be there) to provide stability to the system. And it was also intended as a commonly used currency with predictable value (in fiat), even though it is not technically a stablecoin. Imagine I book a hotel for this summer and would opt for crypto payment. The hotel will likely have prices in fiat, as it pays its stuff and basically everything in fiat. So my stay would cost say $300. If I prepaid it today, it will cost 1.000 Hive. If I preferred paying upon my arrival, it could cost anything from let's say 200 to 2.000. I wouldn't like this uncertainty. Some people might, I am just not that kind of person :) On the other hand, I'd feel bad about paying 1.000 Hive today and then realizing I could have paid way less if I'd opted for payment in the summer.

HBD should solve that, and when we have reversed conversions (so that you can convert both HBD=>Hive and Hive=>HBD - something that does not exist on ~~Steem~~, where SBD actually hoover way above dollar), I guees we could manage keep the price stable even without HBD Stabilizer. If the price drops, you can buy cheap HBD for less than a dollar and then convert it for Hive worth one dollar. When the price rises, you can sell it for Hive and then convert the earned Hive back, taking profit again.

We've already discussed that a lot, I just appreciated your thought and couldn't help replying :))

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seckorama 10 months ago

This paying with HBD run pretty well in Venezuela and Cuba. There is, somewhere, also a map where you can see places where you can pay with HBD. Check Spanish language communities.

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godfish 10 months ago

I know about that, I am in touch with some people from there (and I even speak a bit of Spanish 😉). However, it is just a drop in the sea. Currently, there's nearly $8 million in Savings. And here's a graph of Monthly HBD transactions taken from this post:

It means, that the interest paid out on Savings deposits this year will be higher than the average monthly HBD transfers. Besides, not all of those transfers are actually payments. In fact, I am afraid that most of them are not payments.

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mypathtofire 10 months ago

HBD has been a failure and being promoted as an active form of exchange is dishonest at best if not deceptive.

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godfish 10 months ago

I would rather say we don't use it the way we should. It could be a great tool, though. I am just thinking about writting down an article about that soon.

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mypathtofire 10 months ago (edited)

I think, like you said, it is only really useful for those paying things in fiat in a future date if you want certainty. For paying straight away, people can do an instant conversion easily like any currency. Then the 20% hubris has come in and taken over.

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liotes 10 months ago

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zallin 10 months ago

I really don't understand very well where the money comes from to pay this 20% rate, I confess that I was attracted by the 20%, but I know that it is a very high rate for a "safe" investment, I think that even if it drops to some 15% would still be a very interesting offer.

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achim03 10 months ago

I really don't understand very well where the money comes from to pay this 20% rate

This is a very good question to ask because most have no clue about that. These 20% are actually minted in top of the coded inflation of hive. It means that these interests have no real value they only dillute the value of all the existing HBD and Hive.

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godfish 10 months ago

I confess that I was attracted by the 20%

Now, that's interesting! Are you one of those who found out about Hive thanks to the HBD APR?

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liotes 10 months ago

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coquicoin 10 months ago

From my point of view, the % should not be higher than what HP can offer with inflation plus curation rewards, to be honest. So 12% or lower.

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ph1102 10 months ago

It looks like more people think in the same way as you... To not make a "competition" between HBD and HP, but rather balance them out...

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liotes 10 months ago

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dagger212 10 months ago

20% is fine right now. There needs to be a LOT more HBD in existence if we ever want it to become a useable and recognizable stablecoin. There needs to be tens of millions available for it to ever go mainstream. If and when Inleo starts breaking into the mainstream the attention on Hive will grow exponentially and there will need to be liquidity for new users wanting HBD. Especially if they want any size. What good is it if one $100k order breaks the peg to the upside or knocks it to $.90 on the down? If we're serious about Hive becoming a household name, we can't be focused on "protecting" against the small risk of a downward spiral. Rather we need to be focused on building the framework for the future. 20% has obviously not created a buying frenzy, but it HAS added to the liquidity slowly but surely. I don't see a reason to go higher, but I certainly don't see any reason to drop it.

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achim03 10 months ago

Thanks a lot for sharing your interesting point of view!

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godfish 10 months ago

HBD is not a true stablecoin, it is basically a token that grants you getting Hive that is worth one dollar. If there was no Hive Stabilizer that keeps it more or less pegged to USD (and reversed conversion) it would range quite a lot.

Speaking about reversed conversion, it also grants an unlimited amout of HBD in existence. You can anytime convert your Hive and get HBD. However, when Hive price is low, you obviously get less then if Hive was worth say 3$.

How exactly has the 20% APR added to liquidity? HBD in Savings is not liquid, it is staked.

I wrote down four reasons that should lead us to reconsider the current rate earlier this week. The post has over 100 comments, perhaps, you may find it worth reading (both the post and the discussion).

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liotes 10 months ago

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moonthumb 10 months ago

While I can see how 20% is a bit high (I'm not complaining), I think offering a higher rate based on higher HP hurts the "little guy" who will generally earn less from HP. The people with higher HP are not as likely to need that high of an interest rate and are in a better position to earn with HP. Therefore, I would propose that any sliding scale on the interest rate go DOWN as the HP goes up. I would also base the scale on HP + HBD so people would not move HP to HDB (reducing their HP) to lower their base scale. That way, people with more HP would be encouraged to put that HP to use rather than let is sit in an interest bearing HBD savings account.

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achim03 10 months ago

You are right the high HBD return is actually hurting all the people who create content and curate content because every printed HBD is dilluting the value of all the existing tokens. The 20% come with a cost...

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godfish 10 months ago

If there would be an APR penalty for those who have bags of HP, they'd simply create new accounts just for Savings. It takes just a minute.

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liotes 10 months ago

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relf87 10 months ago

Hmm, I feel that I don't know well enough to decide what is a good balance. Even at 20% APR, we all know this is very small when crypto goes into a bull market where prices can move 20% in a day. So I am not convinced about the argument that it is better than curating with Hive. Hive has the potential to give capital gain, but HBD doesn't. For me, I have always done 50% HP and 50% HBD for my posts regardless of the APR, and I feel comfortable having roughly half of my Hive assets each in HP and HBD.

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achim03 10 months ago

For a very long time the return on HBD interests was 0% and it was increased over time to 20%. The important thing here is to understand where these 20% come from and what it costs us...

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relf87 10 months ago

I think when I joined it was something like 12%. But it didn't change any of my plans when it went to 20% hehe.

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liotes 10 months ago

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relf87 10 months ago

Thanks!

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yeckingo1 10 months ago

It is a complicated answer that depends a lot on each person.
Money has two important characteristics: it is fearful and it is intelligent. Or in other words, run away from risk and run towards profitability.
Now it is up to each individual whether a coin collateralized by Hive has a risk/reward ratio of the current 20% or any other figure, whether larger or smaller.
As I have said, this depends on each investor and their appreciation of the risks.

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achim03 10 months ago

You are right that it's a very personal question and that's the interesting part about it. I see a lot of emotions when it comes to this topic.

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godfish 10 months ago

Or in other words, run away from risk and run towards profitability.

There's hardly any investment option with better risk/reward ratio than a (de facto) stablecoin with 20% APR. Moreover, you don't lent it to anybody for trading or providing liquidity. Instead, you can withdraw it anytime grabbing the interest for the vesting period. However, there are not crowds coming to Hive and Saving billions of HBD. Why is so? No bank can give you better APR on your USD savings.

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mypathtofire 10 months ago

People are not coming to Hive for this 20% because they know it is not sustainable and very risky.

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godfish 10 months ago

If you just want to take some profit, you don't necessarily need something sustainable in the long term. Still, we can afford keeping it one or two more years, perhaps longer if some of the new projects or games will turn out to be a huge success. But I believe we shall cut it.

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mypathtofire 10 months ago (edited)

I disagree, why put your capital at risk for a short term gain? There are far better investments out there with a higher return with much lower risk. A low market cap coin like Hive can only be attractive and compete with the focus on adding value to the Hive token and building a vibrant community/ecosystem that has value. Then the returns have the potential to exceed 20%. The Hive token must go up or it goes into a death spiral like Blurt.

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godfish 10 months ago

Yes, you're right. On the other hand, we currently have a 30% debt ratio limit set, which makes HBD "safe" for a while - we're currently at 7%. As long as the HBD Stabilizer works and Hive keeps over say $ 0.15, I'd personaly consider HBD in Savings as a great option. Having a different opinion is fine with me, obviously, that is a subjective matter :)

I just don't have and have never had anything in Savings because I dispute the whole concept of HBD insterest and taking advantage would be hypocritical. Also, I care about Hive :) That's also why I am against the interest :)

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mypathtofire 10 months ago

I personally do not care if HBD is safe or not. Im thinking about Hive too. We are already in the danger zone for Hive and as Ecoinstant already mentioned on your post comments, currently it looks like Hive wont break out of the $0,40 range which will be a huge disaster this bull run in my opinion and Hive wont recover from this. If Hive drops to $0,15 or lower, it is pretty much a finished project.
Hive needs to shore up its tokenomics now to make Hive more attractive and drive in new users and stop those like me powering down and leaving this cycle. Either way, it is not in my hands.

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savvytester 10 months ago

For HIVE maxis, $0.15 is a "massively discounted" price. 😎😏

Have some !PIZZA with !LOLZ for today! 😁

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Show 2 more replies

godfish 10 months ago

It sort of is in our hands too, even though we're not whales or so. That's why it is important to discuss it and spread the information - the community should be aware of possible consequences of our decisions ;) Be it the HBD interest or anything else network-wise.

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liotes 10 months ago

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gadrian 10 months ago

I believe the APR should be flexible and changed as needed. Right now, I would lower it because there's too much pressure on HIVE from people selling HIVE to HBD. How much I would lower it? At most down to 15%.

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achim03 10 months ago

I agree that the APR should have a certain flexibility and maybe it should be linked to certain indicators like amount of HBD in savings or price of Hive.

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godfish 10 months ago

The APR is flexible and can be adjusted anytime. In fact, it lately jumps from 19% to 20% depending who becomes the 21st witness on the cycle. Also, there is a debt ratio above which no more HBD is emitted as rewards (I believe it is 30% currently, and we are at like 7%). If we reached that debt ratio, I believe the wittnesses would cut the interest rate down.

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achim03 10 months ago

I believe there are two levels of the haircut. There is one level where instead of earning HBD, we would earn Hive from post rewards and there is a second level where HBD depegs from the dollar value. The problem I see is not the growing supply of HBD but the growing supply in respect to the price of Hive. The more HBD is in circulation, the higher the leverage on the dept ratio is. If Hive prices drop by a significant amount, the haircut can be activitated without it being predictable. In my opinion if this happens, it would be too late to lower the interests because there might be panic on bord with unpredicatable consequences.

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godfish 10 months ago

Yep, that seems about right. We've already expirenced no HBD (well, SBD) rewards being emitted. I think it was around the time Steem was worth like $ 0.1.

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gadrian 10 months ago

I believe there are two levels of the haircut.

And a pre-haircut time, when author rewards slide from HBD to HIVE until only HIVE is paid.

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gadrian 10 months ago

Would you link this by code or leave it a human decision? Both have good and bad sides. Code is inflexible but gets executed no matter what. Humans are flexible, but sometimes avoid making decisions or make the wrong ones (but can correct them). That's not to say that actions by code cannot be wrong. They can be harder to fix sometimes.

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achim03 10 months ago

I think that when things are not decided by code, it's often a battle of ideas which can bring out the worst in us. I would prefer a code solution honestly.

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godfish 10 months ago

The APR is flexible and can be adjusted anytime. In fact, it lately jumps from 19% to 20% depending who becomes the 21st witness on the cycle.

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gadrian 10 months ago

Yes, I know. I wrote an article about it a few days ago. I meant in practice, not in theory. And yes, I like that it currently bounces influenced by the APR signaled by the backup witness in rotation. It gives a higher say to backup witnesses for the time being, and I like that.

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liotes 10 months ago

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imfarhad 10 months ago

I think 20% is fine, which though on a higher side does attract savings within the existing hivers. The question for the outside world looking as a scam will still persist even if the rate is lower down.
But said that, the rate should be sustainable for a long time. And if the stats say 20% can be sustained then it should be continued.
Again, that's my thought on this subject.

!ALIVE
!PGM

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godfish 10 months ago

Any interest on a de facto stablecoin that stays in your wallet with no use looks like a scam :) How can you be rewarded for nothing? Banks pay out interest on deposits, because they spin the money. Liquidity pools pay out for providing liquidity. Crypto staked on exchanges is usually used for leverage trading. HBD in Savings is in Savings, and nothing else.

The interest rate can be kept for months, years perhaps. But from my point of view, it does not bring any benefit to the network. Quite contrary, I'd say. I tried to express my thoughts in this post putting down keen reasons for decreasing the rate. The discussion is maybe even more interesting than the post.

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3 votes

achim03 10 months ago

But from my point of view, it does not bring any benefit to the network. Quite contrary, I'd say.

I quite agree with you. Also people seem not to realize that these 20% apr are actually an added inflation to the hive blockchain. There is no value generated here, it's only redistributed through inflation.

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godfish 10 months ago

Yep, and that is why an open discussion should arise on this topic. The community should self-govern itself and keep its members informed. We are the community, so we all are responsible for that.

I am glad this post already has over 100 comments :) Good job and great outreach!

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achim03 10 months ago

The question is how do we define sustainability? When price of hive is declining in respect of other crypto tokens, this can be a side effect of the additional inflation. It's not easy to see if things are sustainable or not and maybe when they will be clearly visible it will be too late to change something.

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imfarhad 10 months ago

Yes, once we cross that bridge it will be difficult. Reducing the rate slowly and gradually over few years may help. What i mean is reduced by 2% and see the effect for a year or two and then reduce further by 3% and see it's effect for a year and so on. Investors may not mind small cuts to the rates, than a very huge reduction.

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liotes 10 months ago

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toofasteddie 10 months ago

20% has demonstrated to be very safe in therms of Debt ratio, I wouldn't touch it for the moment, in particular now that the Bull market will also impact on HIVE
https://peakd.com/hive-167922/@toofasteddie/not-the-best-moment-to-lower-the-apr-of-the-hbd-in-savings

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achim03 10 months ago

We are still far from the dept ratio I agree. The problem I see whith the APR on HBD is that it is adding one more level of inflation to the Hive token and this might be the reason why hive price is not evolving the way we all wish.

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liotes 10 months ago

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ladymisa 10 months ago

I would leave it as it is. However, I am not a math whiz, so that's just my opinion.

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achim03 10 months ago

It's always good to share ones opinion because even the ones who believe they know it all, seldom know much more ;-)

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liotes 10 months ago

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blitzzzz 10 months ago

Personally, I would keep it at this "promotional" rate to attempt to attract new users in. As far as I know, we are nowhere near a dangerous level yet. It would be best to keep it artificially high to take advantage of the rising crypto market.

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achim03 10 months ago

I think the APR would be definitely more sustainable in a growing crypto market. If prices continue to fall, it's another story :-)

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godfish 10 months ago

The "promotional" rate fails attracting new users. And even if it succeeded, people who just buy some HBD and stake it in Savings would hardly become users, they would just take profit once in a while.

I wrote down reasons for lowering the APR; and the post has an interesting discussion with 100+ comments. I don't want to brag, but I believe it is worth reading (and so is the discussion, obviously), as the interest rate should be one of the keen topics for the Hiveans ;)

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liotes 10 months ago

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jesuslnrs 10 months ago

I had never thought about this topic, in fact I think it is a marvel with the current 20% and I didn't understand why it has been in discussion for so long until I read the comments on this post, now I don't know what to think hahaha. I see it from the point of view of the humblest people who come to Hive to obtain profits to help them in their day to day, especially Cubans, Nigerians and Venezuelans who are a great amount and more than thinking about investing they think about income to survive, in that aspect the 20% is fine, but regarding whales and accounts with much HBD... Now I have begun to notice the imbalance that exists, I believe that the ideal is that the biggest profit is in HP, but I am only a humble servant reading comments and learning 😬

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achim03 10 months ago

I think it is a marvel with the current 20%

I think you are not wrong here but very often people don't really realize where this money is actually come from... Because every percentage that is paid is actually dilluting the value of all the remaining HBD and indirectly Hive tokens.

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3 votes

godfish 10 months ago

Yes, this point is definitely worth mentioning - HBD interest means rewarding inactivity. A part of the Reward Pool is distributed among those, who simply deposit their money in Savings. I believe distributing the RP among creators, curators, witnesses and people helping Hive grow through projects supported by community Proposals would be more beneficient to the network. I don't say it is definitely true, I may be missing some important bit, yet this is what the common sense suggests :)

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achim03 10 months ago

I think that the reward pool is the best marketing tool that we have on hive. People can actually earn some money. With the RP we attract active actors, with HBD interests we want to attract idle people. What does it bring to hive to have that?

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godfish 10 months ago

Yes, that is my point. Besides, the interest rate has been like that for two or three years and I don't think it brought benefit worth spending the interest. Currently, there's nearly $ 8 million vested in Savings. It means about $ 1.5 million will be paid out this year if we decide to keep the rate. What will the community get for that money? Except for the people who have their mony in Savings getting some extra cash, obviously :)

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jesuslnrs 10 months ago

That's right brother, most of them don't realize where it comes from and even worse, maybe they don't care as long as they are satisfied. I sin by ignorance but I have really opened my eyes a little on this subject, now I understand why it is so controversial 😅

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liotes 10 months ago

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kaibagt 10 months ago

I believe that 20% is fair, the risk of cryptos is still very high compared to fixed income/equities and as the whitepaper was structured like this, we already had an idea of the inflation of the token, probably in the future it could be revised to 18%, however quickly changing the percentage would not be good for the token in my opinion

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achim03 10 months ago

If there is some change it should be gradual in my opinion. However we jumped from 0% to 12% and then from 12% to 20%. I think it will be more difficult to get a general agreement to do it the other way around ;-)

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godfish 10 months ago

The Whitepaper does not suggest that the interest rate shall be 20% :)

Quite on the contrary, the very original one says that it is content creation, curation and commenting what should be rewarded from the inflation. Instead, you take a share of those rewards for activity and appreciate inactivity - passive staking tokens to Savings.

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liotes 10 months ago

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lordshah 10 months ago

Nexo offers around 12% APR on stablecoin staking, here it is 20 for now, but some other projects go up to 14.5%.

So, I think anything between 10 to 15% would be nice and it will slow down the emissions every month, and also the collateral to Hive will be less.

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godfish 10 months ago

Nexo (and others) use the stablecoins (and other crypto) for liquidity pool and/or for leverage trading. Hence the coins generate profit which is shared with the owners. Plus, when you deposit crypto to Nexo, you don't control it - not your keys, not your crypto.

HBD in Savings does nothing. You have the keys. Have you thought about where does the HBD interest come from?

I wrote down a post which generated interesting discussion. It tries to explain why this interest rate is not beneficient to Hive. It may be worth reading ;) And I would not skip the comments ;)

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lordshah 10 months ago

Nexo has a for profit model for sure and it generates profits for the company and users alike and once coins submitted their wallets there is no control like as you said having keys. True.

I'll read the post and see how interesting it is to churn Hive for HBD interests.

Thanks for the heads up..

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achim03 10 months ago

the collateral to Hive

People often forget that the APR has a direct cost for Hive...

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liotes 10 months ago

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dkid14 10 months ago

Wow the loites posts get some real engagement. Congrats for having a following that want to engage with the discussions. I think this is important for the community.

I don't know enough or have I read enough to say what is the right % for HBD.

I do think there are a lot of opinions from people who are guessing one way or the other. I think we will end somewhere around 12% in the end becuase it seems like the top witness move together a lot and it will start to lower. I think what i have learned the most from all these discussions is I need to learn more about what direction the witness want to go and make sure I vote for those that align with what I want to happen.

!PIZZA

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achim03 10 months ago

Voting for witnesses that represent your ideas is the basis of this blochain and I think that's how it should be done. Thanks for your comment!

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liotes 10 months ago

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jfang003 10 months ago

I think 20% is fine. We need people to hold onto HBD and give HBD enough value to actually become a stablecoin that people will use. Currently, there isn't really enough HBD to make an impact that much on the inflation and if that were the case, I would expect people to be making more noise about it. However, I think it's better to keep the APR so that HBD can succeed as a stablecoin for now.

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achim03 10 months ago

Thanks a lot for your opinion!

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godfish 10 months ago

How does the APR help HBD to "succeed as a stablecoin"? With such APR, it does not make sense to use it for daily payments to me - it's smarter to keep it in Savings? Or do I miss something?

The interest rate is not the only way how to mint HBD. You can convert Hive to HBD anytime. So in a way, there amount of HBD equals Hive market cap (currently around $150 million). The easiest way how to increase the HBD volume is to increase the HBD market cap by increasing its price.

However, the value of Hive is added through content creation, curation, and projects such are games. Paying out HBD Savings interest takes resources intended for the contributing ones and distributes them among the passive ones (the Savers). This post tries to explain why the interest rate should be reconsidered, and there is a great discussion too.

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jfang003 10 months ago

First off, I think we need way more HBD to be out there and for the liquidity to be large enough if we even want to consider HBD as a stablecoin. I think the HBD interest there will provide more incentive for people to get more HBD and that is better in the bear market. Afterall, what incentive is there for people to even want to keep HBD around if Hive is the only thing that people care about? The economy revolves around people using the currency and that is done through places like Sucre. We will want more people to do so and I think even Ragnarok wants to use the HBD interest to generate value in their game. I still think that anyone trying to get more HBD through places like the internal market will suffer quite a bit and that is because there isn't enough HBD out there. While it may be locked, when the HBD debt ratio becomes higher (enough HBD is created), then I think reducing the APR might be a good idea.

Marketcap is one thing but I think you need to consider the HBD debt ratio. It's fairly low and way below 10% right now. If that ratio were to go up and we need to cap the HBD production, then I would say that the APR might need to drop. However, that is not the case and I think 20% is perfectly fine as it is not affect Hive that much. I think HBD and Hive have their own advantages and if Hive were to pump a lot, then it will prove to be a better investment compared to HBD.

Also, I think a lot of the people saving HBD also care about Hive. I personally am stacking both HP and HBD. HBD is just one of my options and in a way a hedge. If Hive's price were to drop quite a bit, I would take out my HBD and use it buy Hive. If Hive were to pump quite a bit, I might consider getting some HP out and turning that into HBD.

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godfish 10 months ago

The discussion around suggests that it would be better to get back to the original purpose - a bond. It make sense to me. Even if we wanted this not a stablecoin to become one, the interest rate is an incentive to vest it, not to use it. If you keep it luquid and ready to transfer, you're losing money.

Regarding the debt ratio - we produce debt we have to pay out. And what do we get in return? As the comminity/network, not as somebody who vests HBD? Which is something perfectly racional and I don't blame anybody for doing so. Is that a "smart" debt that will bring profit or is it just a burden that will make us pay $ 1.5 million of interest this year for more or less nothing?

Fine. There are people staking both HBD and HP. But have a look at the top HBD stakers. That's the second one. This accound would earn $ 25k on the interest rate. Does it bring anything? True, this account votes with like 25 HP and gets more or less more or less the same interest.

I mean we obviously see people who participate in the community, when somebody just stakes tens of thousands of HBD and does nothing besides that, you'd hardly notice them. But such people are out there, getting their share from the RP.

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liotes 10 months ago

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dewabrata 10 months ago

18%.. or 1.5% monthly... Still high but not using 20% as many other project do

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ph1102 10 months ago

Thanks for your input... Now I'm curious, what other projects are offering 20%? 🙂

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dewabrata 10 months ago

everyone uses that number, I mean for outside HIVE blockchain. because if they try to use 30% or above, it will look as a scam trap. For example the most infamous one, UST.

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ph1102 10 months ago

tbh, I don't know about any that gives 20% atm... That's why I asked you about it...

Luna, Celsius, and others that tried it are dead... Only maybe in some LPs, you can get 20% (or over), but there you have an imp. loss risk...

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liotes 10 months ago

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shiftrox 10 months ago

It really is a good discussion about the APR value of HBD in savings, for those who are still on the evolution curve like me, putting HBD to yield like this is a great form of income, in addition to that there is still a lot of the hard work of posting and take votes and everything else.

Now, looking at some giant/whale profiles, it's strange to see, for example, 100 thousand in HBD or even numbers larger than this in savings, so you really wonder: what if half of that or all of that was used to acquire HP and and so the profile has higher votes?

Anyway, it's a conversation to spend hours thinking and conceiving ideas, but I believe it would be interesting to put it at 15%, because that way people could do the middle ground, a little on savings and the other focusing on increasing HP.

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ph1102 10 months ago

Thanks for your comment! I like a balanced approach and splitting things is a good option IMO...

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liotes 10 months ago

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mypathtofire 10 months ago

A great question. I would say 10% or lower would be a suitable level, but the return should be less than the return from Hive Power. HBD understates the current Hive inflation that is officially 70k Hive per day, but we have an increasing inflated HBD which is a hidden inflation of 37,859,926 Hive! This may be only 10% of the supply but seems to have created enough sell pressure on Hive to stall the price very well.

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ph1102 10 months ago

10% isn't a bad idea... a bit lower than HP which could incentivize more people to power up their HIVE too...

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liotes 10 months ago

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edgerik 10 months ago

In my opinion, an appropriate interest level for HBD would be around 10-12%.
This would allow the generation of some attractiveness for saving in HBD, but at the same time would not disincentivize activity and hard work in Hive.
It is important to find a balance that encourages active participation in the platform while rewarding savers.
A more moderate level of interest could help maintain the stability and growth of the community.
It's exciting to see how this discussion evolves!

!PIMP

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liotes 10 months ago

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edgerik 10 months ago

No Way What GIF by Jumanji: The Next Level

!WEED

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weed.dispenser 10 months ago

@liotes!

@edgerik passed you the virtual joint!
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thepimpdistrict 10 months ago

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^{@edgerik just slapped you with 1.000 PIMP, @liotes.}
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ph1102 10 months ago

It is important to find a balance that encourages active participation in the platform while rewarding savers.

It's all about the balance... Somehow, I have a feeling that we are currently "off the balance"...

Thanks for your reply!

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gwajnberg 10 months ago

it looks like a scam to the outside or it devaluates all the existing Hive and HBD

That shouldn't be a reason to get a lower APR. I don't like the reason to get a lower API just because of rumors, there should be math behind it! If the volume of HBD starts to go crazy then we should go down... HBD will never be a truly stable coin, it is a token with an algorithm to try to get some stability to the USD. If you want to screw the apr just to convince people that it isn't a scam? Transform it in a real stable coin then... And people who don't come to the project because they say that HBD is is a scam because of the APR will find another excuse not join the project.

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ph1102 10 months ago

I don't like the reason to get a lower API just because of rumors, there should be math behind it! If the volume of HBD starts to go crazy then we should go down...

How do you define "going crazy"? Losing the "peg", or? As it is backed by HIVE, only HIVE can go "crazy", or I'm wrong?

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gwajnberg 10 months ago

The marketcap of hbd shouldn’t reach 30% of the marketcap of hive… a way to low down is reducing the apr of savings correct? So less hbd is generated. However currently it is 7% only of the total market cap of Hive

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ph1102 10 months ago

Yeah, it is 7% atm... when we reach 30%, we can raise it to 50%... 😂 If governments can do it, we can do it too... 🤣

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gwajnberg 10 months ago

hehehe there is a nice article written by a witness that deserves to be read today, he wrote that when the change of apr had a bigger buzz last year!
https://peakd.com/hive/@yabapmatt/6-year-anniversary-post

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gwajnberg 10 months ago

lol this question inspired me and some other posts that I read in the same time, I would love to see your opinion about it , if you have time just swing by my blog and check it ( I won't post the link since I don't want to promote my post in you guys post) =)

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liotes 10 months ago

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ironshield 10 months ago

What is according to you an appropriate interest level for HBD?

I think 20% is perfect. Any more and the hype will cause people to sell HIVE, but any less, people may loose interest (pun intended) in blogging and curating to earn HIVE, funding contributions into HBD savings.

There are a number of HIVE investments (like pools) that earn more than 20%. If HIVE were converted into VESTS (Hive Power) it'll earn 3% automatically + curation rewards usually around 7%. So 10% APR just for staking and curating. And currently, if you bought HIVE @0.30 and it goes up to 0.36, you've made your 20% without waiting a year! HBD savings is appealing for it's stability, but HIVE is much more interesting for blogging and curating.

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ph1102 10 months ago

but any less, people may loose interest (pun intended)

hehehehe... I like the pun... 😂

Btw. HBD savings APR was around 3% for years, and people were creating content...

And currently, if you bought HIVE @0.30 and it goes up to 0.36, you've made your 20% without waiting a year!

That is something that I like to point out many times! The only issue is that too many HBD dumped on the market devalues HIVE... It will be harder and harder to see HIVE prices higher and higher... Not impossible, but harder...

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liotes 10 months ago

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sm-silva 10 months ago

These discussions are only happening because the price of HIVE is falling and also because many people think that this APR is hindering second-layer projects. But will adjusting the HBD APR change the price of HIVE? In my opinion, somewhere between 15% to 20% is fine.

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ph1102 10 months ago

In some way, HBD is backed by HIVE debt... So there is a direct correlation between them... If HIVE would get hundreds of new users per day, buying and powering up HIVE, we could have HBD APR at 30%! 🙂

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liotes 10 months ago

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vaynard86 10 months ago (edited)

I think 12-15% will be good. Indeed too high like 20% will end up causing it to just sit there and accumulate vs interacting and being active in the community.

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ph1102 10 months ago

That's an interesting point of view... Thanks for sharing it!

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liotes 10 months ago

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palomap3 10 months ago

I think 15% could be good. But sincerely I don’t have enough knowledge about this…

I am grateful for having Liotes Mission like this. It’s a great opportunity to learn. 😃

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ph1102 10 months ago

It is a great opportunity to see how others are thinking! :)

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liotes 10 months ago

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palomap3 10 months ago

Thank you!! 🙏🤗
!PIZZA

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incublus 10 months ago

From my point of view, 12% to 15% seems reasonable. I don't know if it's doing anything significant to bring people into the Hive ecosystem, but even if it is, 15% might do it. While someone who uses Hive Power effectively gets a maximum APR of 11%-12%, 20% seems a bit too much to me.

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ph1102 10 months ago

While someone who uses Hive Power effectively gets a maximum APR of 11%-12%, 20% seems a bit too much to me.

That's how many people who are powering up see things... Who is right and who is wrong? 🙂

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liotes 10 months ago

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stekene 10 months ago

10% should be fine.
Could be around the hp apr.

I have no hbd in savings (at the moment), prefer to build up my HP first to have a worthy vote :D

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ph1102 10 months ago

Thanks for your reply!

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liotes 10 months ago

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ifarmgirl 10 months ago

I don't know, honestly. I like the 20%, lol! Some people say 20% is high. We see witnesses signaling for a lower APR. It's now showing 19% and I don't mind, if the change is for the good of Hive.

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achim03 10 months ago

Thanks for sharing your point of view. I also like to get 20% of my HBD but I don't like how it devaluats my Hive power on the other hand :-)

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liotes 10 months ago

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ifarmgirl 10 months ago

Thank you :-)

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thegcc 10 months ago

10% sounds a bit more reasonable, and is still quite high compared to say a regular bank's interest rate.

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ph1102 10 months ago

Yeah, 10% is still higher than in that any bank can offer! :)

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liotes 10 months ago

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tokutaro22 10 months ago

20% is fine. We have gone more than 13 months without any incident and I see no reason to change.

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ph1102 10 months ago

What kind of incident did you expect to happen?

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tokutaro22 10 months ago

Let him jump the debt limit.

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liotes 10 months ago

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filotasriza3 10 months ago

This is quite an interesting topic that made me a bit "furious" yesterday when i saw the 19%. Honestly speaking i changed at least 10 witness votes to witnesses that had set it at 20%. I only have 2 out of my total votes with lower than 20% set APR because i highly appreciate their work here.

I have read way to many comments and posts regarding that matter. We pretty much have one side complaining that people will see 20% and think that this is some kind of scam, or that it will increase inactivity in hive, or that it is not sustainable anymore. These people want an APR lower than 20% which varies from 10% to 15%. The other side is pretty straightforward and wants the APR to remain the same.

My opinion is for the APR to continue being 20%. First of all, if you check the profiles of people stating their opinions, the vast majority that is pro lower APR, either have no HBD savings or have less than 100-200HBD. The people who want the APR to remain the same have from 500 HBD and up, with an average of let's say 1000 HBD. Literally, you can check every profile in the comments it's a pattern :p

Thus, i think a lot of opinions are biased, especially from people that are not hold any HBD :p If you check my account, i have basically the same amount in terms of dollars both in HBD and Hive so at the very least you can't say i am biased.

At this given period, the 20% APR is quite sustainable and you can read many relevant posts regarding that. The argument about inactivity is inaccurate. If in fact, you check most of the users with let's say over 500 HBD they are quite active, maybe more active than others with zero. The people that are a bit inactive are those with huge sums that are in the top positions, these kind of people were also inactive having a huge staked hp and simply setting some autovotes. Finally, people from outside not believe that this amount of apr is real, either way, they will have their doubts, and they need to do their own research. before i started with steemit back in the days i was afraid as well i didn't believe that i could write anything i wanted to and earn money. It took me 3 months to sign in, thus if i did it others could do it as well.

I don't think there is an actual reason to change the APR currently, instead, we can pay attention to the DHF and how some people taking advantage of these money

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ph1102 10 months ago

Hehehe... I agree with you that people are biased about this topic, but some people are showing math around this topic... It's not that easy to say 20% is the best, and not, for example, 25%. Interestingly, nobody asks for a higher APR... 😃

Thanks for your comment!

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filotasriza3 10 months ago

but some people are showing math around this topic It's not that easy to say 20% is the best, and not, for example, 25%. Interestingly, nobody asks for a higher APR.

Agree with that as well! Even though i have seen people doing math to highlight their arguments from my understanding they are missing many points and variables. To be honest it's like i can perfectly understand what's going on in this regard but i use to read Dalz and people making relevant posts like that where they take their time explaining everything!

Btw i think nobody asks for more because none believes there is even a 1% chance of this happening :P :P

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liotes 10 months ago

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tengolotodo 10 months ago

20%
Hive has become so inconsequential in the crypto world that nobody on the outside cares.

We were told that 20% is sustainable,we even had lynch mobs going after people on Twitter saying otherwise!

(it's more profitable to put money into HBD than to curate with HP)

Not really sure what this means tbh. You mean to put rewards into HBD instead of powering up Hive?

20% is great...

I have a question, what happens to the Hive that is not paid out if the rate is lowered. I say go and market Hive and get it more known.

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ph1102 10 months ago

I have a question, what happens to the Hive that is not paid out if the rate is lowered.

What do you mean by that? HIVE is minted separately and it has its own dynamics of "printing"... HBD inflation comes on top of it... When people convert HBD to HIVE they print additional HIVE tokens, on top of the "reward pool"...

The problem becomes a problem when HIVE drops under a certain value and can't support HBD debt (sounds familiar from our dear banks... 🙂)... We can raise the debt limit (sounds familiar again) 😃

HBD will not be printed as author rewards, but some other things like DHF will still "print" HBD...

Thanks for the comment!

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tengolotodo 10 months ago

I probably meant to say HBD instead of Hive.
Yes debt limits are fun and games.

Well whatever the rate is set to, in my opinion it has no bearing on bringing people into Hive.

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godfish 10 months ago

We've actually increased the debt limit already. If I am not mistaken, it was from 10% to 30%.

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ph1102 10 months ago

I forgot where was the limit, but I think it was even lower than 10%...

I remember the story about the aflatoxin percentage in one of the milk brands in Serbia from a few years ago... they discovered that it was higher than it was stated on the label... Did they lower the number to comply with the rules? Not... They RAISED the "allowed" percentage and made it "legal"...

I wouldn't like to see a similar image here on HIVE, but seeing some comments, we could end up like that... That was one of the main reasons for creating this post, to spread awareness about it before it's too late...

Thanks for all your comments and replies in the comment section! It helps a lot!

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godfish 10 months ago

This discussion actually inspired me to write down another post on that topic from a bit different perspective. HBD is a great tool with huge possibilities, if only we used it right. Or at least a tad better. That's what I would like to explain in context :)

I appreciate what you guys do to promote that discussion! I believe the community should be aware of such things in order to self-govern the best possible manner.

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liotes 10 months ago

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daddydog 10 months ago

12-16% would be attractive and would not make one doubt the income since traditional banking gives 10%, it does not sound bad to earn a little more but attached to more credible interests that do not make one think of a high-risk investment

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pizzabot 10 months ago (edited)

PIZZA!

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hiro.guita 10 months ago

Post voted 100% for the hiro.guita project. Keep up the good work.

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