The Negative Impacts of 20% HBD Savings on Hive-Engine Tokens + Way Forward
Greetings to the Lions 🦁 on the LeoFinance ecosystem! I special acknowledge everyone here for your efforts to stimulate innovative ideas on your LeoFinance contents that has kept the hive blockchain moving in an upward trend. It's your friend @faquan saying hello! Do have a nice time ahead.
I believe that by now all Hivers and my fellow Lions 🦁 are aware of the changes in native HBD by the hive witness in April. For benefit of clarity for those who aren't on the LeoFinance ecosystem, in April, the Hive Witness took a unanimous decision that changed the interest on HBD savings from 12% to 20% APR.
This have seen the swift migration of HBD to the savings, most Hivers by the Hive Whales. It has brought both joy and sadness to the entire blockchain.
Yesterday, I wrote a post on the #Hivehustlers community on this topic: On-chain HBD Savings Vs Staking Hive Engine Tokens: Which have the best hustling strategies on the Hive blockchain and the traffic generated by the post on the comment section, led to the writing of this post.
Today's post will focus on analyzing how one good act has affected many other sectors of the hive blockchain.
My question is, was there anything wrong with the paradigm shift from 12% to 20% APR on HBD savings interest? Has it affected other sectors of the hive blockchain negatively.
According to @yintercept:
A large number of the coins on HIVE-Engine crashed when the witnesses raised the interest on HBD to 20%.
The smart money on HIVE knows that HBD has a higher rate of return than alt coins than the HIVE-Engine coins.
I noticed that many of the smartest players on HIVE simply dumped whatever alt-coins they had in their portfolio and transferred the money back into HIVE to buy HBD. This is easy to prove by following the Honey-Swap account which is the primary mechanism for moving money between HIVE and HE.
This fact is very true for those who have been sensitive about what's happening around the Hive-Engine Smart Chain platform. Immediately the decision was reached by the Hive Witness and the news/changes made known to the entire hive blockchain, there was these excitement around the blockchain and a subsequent move of HBD towards that direction.
This migration, saw most of the alt-coins dropping in values because there wasn't any adequate liquidity pools for the coins.
The major reason for moving HBD to savings after the 20% increase is because most of the smart money 💰 holders on hive needed safe place to dump their stake and still earn more values out of it.
I believe that the reason why most of them are still keeping their Hive-Engine tokens is because of the liquidty challenge facing HBD on-chain. Although this problem has been solved by the launching of pHBD-USDC vault on the polygon network in April.
Are all Hive-Engine tokens die at the moment!
Layer 2 tokenized communities like the LeoFinance, have also strategized means to preserve the values of their alt-coins. For instance, immediately the unanimous decision was reached by the Hive Witness, the LeoFinance team worked out a follow-up strategy to fix the liquidty challenge facing HBD by providing liquidity pools on the polygon network through the launch of pHBD-USDC vault.
Cent community admin @anadolu also burned some large quantities of Cent tokens to help stabilize the cent price.
The truth is that most Hive-Engine tokens are not making any progress due to the mass movement of money from the H-E to the HBD saving arena.
What's the way forward
I think the biggest way forward for the Hive-Engine alt-coins, is to encourage Hivers to do mass staking or Power Up. This mass staking have been scheduled by the LeoFinance ecosystem in the upcoming #LPUD on June 15.
Powering up an alt-coin will help the coin to gain a little strength and move the token upwards. Although, is will take much time because you can't force anyone to stake a particular token.
To achieve mass staking, there must be an incentive attached to the Power Up Day.
I'll end the post by saying that, everybody who have an alt-coin in his or her Hive-Engine wallet has a propagation duty to fulfill. This is for everyone to encourage one to stake an alt-coin.
Thank you for your time and patience.
Blessings and peace to you all
Posted Using LeoFinance Beta
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I think one of the points of the interest rate increase is to attract outside money... paired with the hbd/usdc lp... it just isn't big enough yet... but if it succeeds in attracting a significant amount of outside money into the hive ecosystem, all the second layer tokens stand to benefit too, right?
You're very correct my friend, but the reverse I think is the case, because Hivers on-chain are taking all the HBD available. The end result can still be a win win senerio.
Thanks for your amazing thought and comment. I appreciate.
Posted Using LeoFinance Beta
The high interest attracted a few institutional investors. Last month Eight Accounts received over 50% of the HBD interest. The top 100 accounts received over 84% of the HBD interest.
Since interest compounds, this imbalance is getting worse by the month.
There are tens of thousands of active accounts on HIVE. So this high HBD interest is hurting 99.5% of the users on HIVE so that the platform can give outsized rewards to less than half of a percent of account holders.
It is the most ridiculous thing I've seen on this platform to date.
The system guarantees HBD with HIVE. IF the crypto world has another major market dip, we will see the HBD holders converting HBD to HIVE by the millions.
Lets say HIVE fell to $0.25 and HBD holders converted 1 million. They would create and dump 4 million HIVE on a weak market.
If the price fell to $0.10 (which is near the feared hair cut), the HBD holders would dump tens of millions of HIVE on a weak market.
BTW, you can prove that HBD was behind the recent crash on HE by following the transactions of Honey-Swap account. The interest rate crashed prices on HE in the short term and threatens to crash the price of HIVE in the long term.
The move was pure stupidity.
Posted Using LeoFinance Beta
Most hive-engine tokens aren't very useful and I don't see anyone trying to create more utility for the tokens.