HBD, Arbitrage, And The Internal Exchange
There seems to be more discussion surrounding the Hive Backed Dollar (HBD). This is a good thing.
We saw a post about front running HBD that triggered a pretty good discussion in the comment section. There were some points worthy of noting in the broader context of what is taking place.
There is some confusion pertaining to HBD. For this reason, let's delve into some of the issues.
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Internal Exchange
Here we see one of the most overlooked features of the entire HBD discussion. It is, however, one of the most important.
Before going any further, we have to clarify a few things. The Internal Exchange has nothing to do with the HBD-HIVE conversion mechanisms. When a trade takes place on the exchange, neither the amount of HIVE nor HBD is changed. This is similar to any other exchange.
With the conversion mechanism, we see the amount of both coins change. When someone is converting HIVE-to-HBD, HIVE is reduced while HBD increases. In theory, no value was created, only moved from HIVE, in this instance, to HBD.
For some reason, when discussing arbitrage which we will get to in a second, the focus is solely upon the conversion mechanism.
With that said, everyone needs to start utilizing the Internal Exchange and acquiring some HBD. Each day, the HBD Stabilizer offers up over 140K HBD for sale. This carries a 1% premium which some might object to. However, keep in mind there are no trading fees. So, what is a premium is greatly offset by not having to pay like one would on a Binance or any other exchange.
The reason why all on Hive need to focus upon this is the HBD needs to get into the free float. Having it in the DHF is not an advantage. Even small amounts, over time, will start to add up. We all believe more HBD will be required in the future. To get there, it has to be on the open market. If we can start acquiring more of the HBD the Stabilizer is selling, it will increase the amount outside the DHF.
Of course, most won't be able to apply big numbers. That is perfectly acceptable. Even grabbing 10 or 20 HBD, once a week helps out. The other night I took about $40 worth of Hive-Engine tokens that were laying around, swapped them, brought on-chain using Hivepay, and purchased HBD.
Arbitrage
This is something that is improving.
As stated, most believe that arbitrage has to come from converting HIVE-to-HBD or vice versa. Certainly this is a possibility yet not likely the best one. Many point to the 5% penalty going when converting HIVE as something that offsets the expansion of HBD.
That point is likely accurate. Few are willing to incur that simply to convert HIVE. However, while it is a setback in that area, this is a security feature. It is designed to reduce the incentive to manipulate the price of HIVE, thus being able to get a deal on HBD. With the 3.5 conversion time (another security feature), we see how a major drop in the price of HIVE would result in a deal being made.
Up to this point, the holding of the peg was dependent upon the HBD Stabilizer. It is now receiving some assistence.
As noted, we have the Internal Exchange, which some believe, lacks liquidity. That said, if people focus upon trading there, we could see that changed.
We also now have the pHBD-USDC liquidity pool on Polycub. This is another area which can set up arbitrate opportunities.
One of the most frequent ways to arbitrage is between exchanges. When the price differs, one has the option of selling on one exchange while simultaneously buying on another. The net result is a profit because the first exchange would register a sale price that is higher than the buy price on the second exchange.
The Leofinance team is going to duplicate this pool on other chains. We are likely going to see the next one reside on BSC. That will provide a third opportunity to arbitrage.
Under this scenario, trades could be made using either the Internal Exchange as well as the LPs on Polygon and BSC. We already have the HBD Stabilizer on former. If things get out of kilter, there will be opportunities for traders to jump in.
As the number of liquidity pools grow, we will see more of these situations arising. This should increase overall trading volume.
Of course, to get there, we require more HBD being distributed. That is why the suggestion above.
HBD - A Lack Of Demand
We still have a lack of demand when it comes to HBD. The markets are telling us that.
It is nothing more than a simple supply/demand equation. If there was massive demand for HBD, the amount put out daily by the HBD Stabilizer would get eaten up. At the same time, we would see the peg break to the high side, most likely on both the Internal Exchange on the Polycub liquidity pool.
That is not taking place. Thus, we can conclude the demand is still not there.
For now, that is acceptable. The emergence of HBD is a process. We are building out key components to it while also ensuring the stability of the network. Security is still a priority.
Harkening back to the supply of HBD, if we simply look at the HBD Stabilizer putting out 140K HBD per day, over the course of a month that is 4.2 million. While that is not going to keep pace with UST, it is a significant jump from the free float of about 10 million we see at the moment.
There is another factor in this. We could see that amount increase with another proposal. If the community found it necessary, we could fund a proposal for an additional, say, 50K per day.
Buy Hive
In the end, the easiest way to get into HBD, from the outside, is to get HIVE off one of the exchanges, bring it on chain, and swap it to HBD on the Internal Exchange. This might not work for hundreds of thousands of dollars but small amounts, a couple grand, could see this done easily. A lot more Hive is available on exchanges as compared to HBD.
Of course, we are still looking for the liquidity pools to step up. While the one on Polygon is expanding, it is still light in terms of the amount of available. Here too, we can see transactions in the thousands of dollars easily handled. Someone looking to get $50K worth of HBD, it is still a challenge.
At some point, the conversion mechanism will become a vital component and is going to be required. If demand increases to the point where the HBD price pushes through the 5% penalty limit, then we could see a lot of people swapping HIVE-to-HBD. It is where we see natural market forces in operation.
For now, we have to use the tools available to us. If you have an account on one of the exchanges that carries HIVE, take $500 or $1,000 and buy it. Then use that to trade on the Internal Exchange and acquire the HBD. That is a level of transaction that will go through easily.
In the end, when people ask the question HBD in savings or into the liquidity pools, the answer is both. We need expansion in all areas. There is no one or the other. For HBD to be fully accessible, we need to get all areas increasing.
What are your thoughts regarding the Hive Backed Dollar HBD). Please let us know in the comment section below.
If you found this article informative, please give an upvote and rehive.
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They told me if I killed myself now it would save the lives of countless others.
Saying the longer I wait to kill myself the more people will suffer.
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Its a terrorist act on American soil while some say its not real or Im a mental case. Many know its real. This is an ignored detrimental to humanity domestic and foreign threat. Ask informed soldiers in the American military what their oath is and tell them about the day you asked me why. Nobody has I guess. Maybe someone told ill informed soldiers they cant protect America from military leaders in control with ill intent. How do we protect locked up soldiers from telling the truth?
How can we get more liquidity in the pHBD-USDC liquidity pool?
This is a question I keep asking myself. It is so important for the adoption of HBD.
Being able to swap any polygon asset directly for HBD through pHBD is essential for mass adoption in my opinion. We need more liquidity to service bigger whales.
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I noticed something weird with shushi swap today, one can't currently buy HBD from there, same with pleo, is this just from my end?
And also faced a lot of trouble trying to unwrap pLeo to leo, got me downloading metamask but still face series of more internal errors, could it still be from my end?.
Make sure you have your gas set high enough to swap on Sushiswap. There should be some tutorials out there that can help you
As far as unwrapping: the process is just to go to wLEO.io/pleo, then select the amount and click the METAMASK icon at the bottom once you hit submit. Then it will go through instantly
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I'm sure it wasn't any of this, when I went on to paraswap if I'm not mistaken, while buying pleo, there was a comparison of markets displayed below and shushi swap was indicating almost -99%
meaning that if I'm to try buy from there, I'd get 99% short of what I'm getting on paraswap, and that was really weird.
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Mass adoption of hbd will be great but there must be increase in liquidity as well , phbd is helping in solving that but to add liquidity is something that might take little bit of time. Gradually we will see more people wrapping up hbd for phbd in coming weeks
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Does this mean you would remove the USDC/USDT pairing to polyCUB and other assets or would this still be an option?
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Have you considered creating a bot that buys from the internal market? It'll be at a small premium, but the indirect effect would be tapping into HBD funds from DHF via the stabilizer and filling liquidity pools where they are needed (first on PolyCub).
It will be interesting to see how quickly pHIVE fills up. A lot more of that on the open market.
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Yeah I want to see a lot of liquidity load into pHIVE. It will actually be an even bigger value proposition for POLYCUB since pHIVE will be paired with POLYCUB directly. I think we’ll see a ridiculous amount of value pile into it
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That is key. Just keep it growing. It often feels like we are trudging along because, well, we are. However, keep the focus upon the power of convergence. That is very powerful in both tech and finance.
We are putting it all together. Each step forward helps in other areas. pHIVE is going to make a difference with POLYCUB, I agree. And that will filter to everything else on the platform.
Couple that with the reduction in emissions in a week and the end of the airdrop this week and we could see a different ballgame by next Sunday.
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I agree this is a major convergence in all the right ways. pHBD really shed some light on the best path forward for PolyCUB. I’m extremely excited
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seems like when you release lending for collateralized xpolycub, a large portion of that could flow right back into pHBD-USDC liquidity, or am I wrong?
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It’s very possible. If people want to use their Collateralized loans to LP stablecoins for a safe and reliable return on PolyCub.com, I have a feeling that will be a very popular strategy
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I think so too... and I think you're Leo team can push educating the masses through blogging in the hopes of furthering that goal
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That’s our ambition. Put web3 into the palm of your hands
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yes that's the bigger picture...but I really meant it as a solution to deepening the liquidity...which i'm certain you're already considering. great work so far, you've got my support!
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Yes absolutely. Liquidity is ridiculously important and we’re always pushing new limits to try and deepen it. For POLYCUB, we’re about to see this happen in a massive aY
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My favorite way of getting HBD is, buying HIVE from the exchange and then buying HBD with HIVE in the internal market. Although you may not do it with a big amount, you can do it in a small amount and get more HBD slowly.
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That is an excellent way of doing it. This also brings some more HIVE back on chain. In the long run, we will see if that is a good thing.
However, getting some HBD out there, even if just creating more HBD is a positive.
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I don't believe hive is burn but in the long run if hbd this pace and more people buy hbd there will be increase in price of hbd for sure
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It is
That's very good
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It essentially is. The amount of HIVE outstanding is reduced. Of course, the reverse does increase the HIVE, when someone converts HBD to HIVE.
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with Hives’s internal exchange system, it is paramount the use cases for Hbd will keep expanding . As this happens demand for the Hbd starts to come into the picture. As a result of this , resources will be available to get some more HBD into the hands of people. However, for this to happen, people need to make use of the internal exchange and trade HIVE for HBD.
Agreed. People are quickly seeing how it all ties in together. We need to keep pushing each phase of HBD out because it is dependent upon so many other areas.
Use cases for HBD are essential. That will have a positive impact upon the use of the Internal Exchange.
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well said .
Shatter the lack of demand on hbd by giving a higher interest until enough hbd is distributed to lower interest could be one option. 25% or more would lure in more demand .
Lol we just raised it to 20%! I don’t know that raising it more will increase demand.
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The problem is getting a hold of it. Demand isnt there but that doesnt discount the issue of most people not being able to get a hold of it.
If someone wanted 100K worth of HBD, it would be tough for that person, especially if they are not truly familiar with Hive.
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I use several methods to get HBD. The first one is 50/50 in author rewards, it would be nice to be able to choose 100%. The second is in the market selling Hive. I am also planning to exchange usdt for pHBD soon.
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The 50/50 is a great option. That helps to generate more Hive daily. It is a positive move overall. It could create tens of thousands of HBD per week. Not Earth-shattering but a step in the proper direction.
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for me there is both getting HBD into savings and on polycub LP. i will try to balance it but for now most of my hbd goes to the lp on polycub because it is simply the best APR for stablecoins right now.
every HBD I make on Hive goes to savings that is a few cents daily, but slowly adding up.
It is very true. We do need both; it is not an either/or situation.
In short, we need to get the producing of more HBD and get it out there.
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I will try to bring up the use cases of HBD in the next HIVE Vienna meetup. I think since we have a few hivers, all with different profession but in the same city, we could establish HBD in a small circle of businesses who want to accept it as a payment. I totally would take HBD for doing a photoshoot or designing a flyer or editing a video. I think true decentralization starts with connecting people also in their very own environment. How many HIVE people are there in a few hundred miles in Europe? How many of these are owners of businesses or have various professions or services they can provide? Imagine we could produce a complete commercial spot for any business and keeping all financial movements on chain. Go further and say sorry I do not take FIAT money as a payment. Go buy HBD and send it :) Maybe we can work something out with @manncpt I really hope I can make it to the meetup.
There is a sensational idea.
The advantage to HBD now is the fact that it is fairly stable. While the price does bounce, people are able to see it move back closer to the peg by waiting a little bit. It is no longer days.
Also, when accepting as payment, as a merchant of vendor, there are zero fees. Try that with Visa or Mastercard.
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There is a reason why most of the smaller shops owned by a single person require you to do a minimum of 10 € purchase if you wan't to pay by card. The fees for the vendors are simply too high.
Now combine HBD payments with collaterized loans from polycub and basically you have a self paying credit card.
I hope we can work out our small local HIVE economy in Vienna. Would be awesome.
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Or some of the other second layer solutions that are going to pop up.
We are going to see a lot developed. Please keep us updated on your progress of getting some real world shops to accept HBD.
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Will certainly do! I hope I will have some good news to report about SOONtm
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It is spreading.
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I am using the term quite a long time now you can check out my leofinance nfts on nftshowroom. There is one which is called like that.
Hope you don't mind me posting the link HERE
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NFT it and make Khal rent the NFT from you so you get some of the royalties off it.
I can tell you money coming from Khal's account is so much sweeter.
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good idea!
It is the sweetest.
Unfortunately stablecoins aren't sexy to the average investor. We just have to keep getting out there and educating people. I think HBD has a much better model than UST. I see some major centralization issues with Terra. But many find that to be okay. I think Hive itself has to grow overall and HBD will grow with it.
I like what @khaleelkazi and the @leofinance team are doing with Polycub and the pHBD and I know that @hivelist has something up their sleeve for a pHBD use case, so hopefully we can see some growth soon. I am finding that the impatience starts to really get at people in this space. They don't realize we are in a marathon, not a sprint.
That is very exciting.
This is how things work with a complex system. Some things are developed and other pick up on them. It is how things keep growing, like a forest.
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What does the HBD stabilizer offering 140k HBD in the internal market
Sounds better to me, HBD on savings or HBD in LPs, it's both for the greater good.
The HBD stabilizer sets its sell orders 1% below what is there. Hence is a buyer wants to get the HBD from it, there is effectively a 1% premium to buy. Not the end of the world when you consider that exchanges often charge a percent or two in transaction fees.
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Damn, that's a good deal that worth to be called a premium.
Thanks for shedding light...
Can any one elaborate on how the convert HIVE to HBD function works in the Keychain?
"You deposit collateral (HIVE), then you are given HBD up front worth half of the collateral amount (minus a 5% fee). Your official final payment is in 3.5 days. At that point remaining collateral (HIVE) is returned."
So if I understand this correct
I convert $10 HIVE. I would receive $4.75 HBD up front. But I struggle to comprehend the function after this. Essentially I have $5 still in conversion for 3.5d. My question is do I get $5 more HBD or HIVE returned?
Asking for a friend 😎
I am not sure how Keychain works but it sounds like it is simply tying into the conversion.
If you go to convert $105 with of HIVE, you will get 100 of HBD.
At this point, there is no reason to convert any HIVE to HBD. One is best going to the internal exchange and trading HIVE for HBD there.
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You get HIVE returned after 3.5 days. The amount depends on the HBD you received and the average (median) price of HIVE over the next 3.5 days. So if you received 20 HBD, deposited 50 HIVE, and the average price of HIVE over the next 3.5 days is $1, you will receive 29 HIVE back (20 to pay for the HBD received and 1 HIVE charged as 5% fee).
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I still think there is a severe lack of demand for HBD. I know you talked about a different gambling platform using HBD recently but we need more of these applications. I am guessing Ragnarok might be able to stimulate some HBD usage but I don't know if this is enough and it, of course, is dependent on whether or not it becomes popular.
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The gaming site isnt even running yet. So that is a future use case for HBD, not a present one.
I agree we need more use cases built out. Hopefully more of the applications are starting to integrate them into all they do.
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This is important. Since HBD is pegged, you can't really speculate on future usage (except by buying HIVE!). All you get while holding is the 20% interest. So people have to be buying it now either for the 20% interest or for some current use case.
And the only other currency use case that stands out to me is putting it in the liquidity pool as pHBD.
There might be a few other apps using it as payment that I am not aware of. However, the options are rather limited at the moment.
Nevertheless, the 20% APR is a pretty good starting use case. Happy how things are unfolding so far.
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Others would be: Market making on the internal market or on other HBD exchanges. You can use it to create DHF proposals (burn) and if you're operating a DHF proposal you get paid in it and can use it to hold proposal project funds (w/stabilized purchase power) for expenses without needing to constantly do additional trading (into some other stablecoin or fiat). I think some on chain games/apps may accept it. Other than that, agree, not much at present. Yield is the main current draw. Future potential demand for HBD appears in the valuation of HIVE.
That is ultimately true. I do see a massive future with HBD as a payment mechanism. Hive will always have a degree of volatility along with the potential of speculative gains.
For this reason, I think HBD can take over in the medium of exchange realm.
That alone could provide enormous use cases down the road. We will see how quickly developers integrate it into their applications/games.
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Hbd is making progress gradually and we can see increase every week in people transferring it into saving but we must never forget we still early days for this 20% apy but we will see more people at the long run I believe
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You are right, it is the early days. As for more going into savings, that will be interesting to see when the stats are run. @dalz usually does that on a regular basis, so it will be good to get a comparison.
Either way, we have over $300K in the pHBD liquidity pool and hopefully more HBD in savings than before.
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Hbd still have a long way to go and we are starting to see it's full potential and how this can be a game changer for us all
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You hit the nail on the head with that. It still has a long way to go.
There is a lot of potential.
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Btw I'm curious where did the 20% APR come from ? why not 30 % or 40% ?
It comes from inflation that is being applied to HBD.
That is what the consensus on the Witnesses came in at. They could have set it higher (still can) if the all agree.
For now, I believe the idea is to put it at the upper range of the stablecoin ROI market. We have the increase in haircut with the next hard fork which might help also.
I hope the next increase is tied to some time locked vault system. Maybe 1 year for 25% or 30% return.
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I didn't phrase it properly. I meant how did the witnesses reach that consensus because some could have said they prefer 19% or 21%. Anyway I understand the main gist of it :)
My guess is because that was what UST was paying through Anchor. I have no hard facts to cite but my view is they looked to match that, which subsequently dropped.
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20% is enough to be attractive for anyone looking to earn yield. It's more than you can get just about anywhere else. If people aren't buying it, that's because they aren't that interested in yield (or aren't aware of it at all). Moving it up even higher might move the needle a little but there is a question of diminishing returns vs. cost.
that's what I was curious about, the rationale behind the number. Thanks for the explanation :)
I would say a lot of other things to work on surrounding HBD at the moment rather than raising the APR.
I am sure the latter factors in a great deal. Word has not spread a ton.
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It's a combination. The people who are aware of it aren't interested in investing much more than they already are for yield and many more aren't aware.
Question for you:
When is HBD considered in the circulating supply that shows up on Hiveblocks? Is it when it is claimed in our wallets from staking in savings or as it is earned?
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Interest isn't included until paid out/claimed.
On the other hand, post rewards are included in supply when paid out, before being claimed.
Thank you.
Good point about the rewards.
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The question for me is, let’s say u get a one or two standard deviation move up in hive over the next year (a reasonable assumption), what % of the market cap would the current HBD float make up? Like 0.5% or 1%.
Let’s assume 30% of that can be dumped in one day if something crazy happens (converted to hive).
That’s a one day expansion in hive supply of 0.3% or one million tokens that could come to market. How much would the price be affected by that type of one day selling. Maybe it happens consistently over several days. One million per day for 4 or five days. How badly will this affect the hive price?
On the flip side let’s say hive has dropped 50% (also reasonable assumption). And now the HBD market cap represents say 4% of the market cap of hive. Conversions of say 30% of this would represent additional selling of about 4.5 million tokens per day for a few days.
In this second scenario, I’m not sure liquidity is there to absorb selling.
This is the question that would stop an increase in the inflation of HBD from the current levels until longer term lock-ins are built into layer one.
So for now, we need to find a way to encourage existing HBD that is locked into the chain in illiquid accounts to come into the places where it can earn more by providing liquidity to the market.
The liquidity providers needs to be rewarded more by the chain some how so that there is more benefit in providing liquidity than keeping the HBD locked away in illiquid states.
LEO finance are setting a great example of how this might be done.
I have to say tho, as a die hard hiver, my powered up hive is staying powered up as the likelihood of a sixty %move higher in hive over the next year is high even if we have to go through a 50% draw down.
(I will look at options to get into HBD with other liquidity, but buying it in large quantities is super hard.
The key is to finding ways to incentivise existing locked up hbd to come out into the liquidity pools.
(And an increase in the hive price would be nice - but that can only be done by building, which the community is doing).
There is another angle to this which we will bring up on Tuesday. It is along the same lines in terms of thought process with similar results.
The game theory here really gets interesting.
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My hopes are that @psyberx and @ragnarok.game have huge HBD sinks. This will add a lot of demand for HBD in my opinion.
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Psyberx? Are they doing something with HBD? I didnt read they were incorporating that into the game (doesnt mean they arent, I just didnt see it).
It would be cool if they are doing something with it.
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I don't think it was mentioned. Just think it would be really cool if they did integrate it somehow.
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Ah okay. I didnt know. It makes sense for them, if they are committed to building as much on Hive as they can, to implement HBD as their Stablecoin in their game.
We will see, they are an innovative bunch. Very impressive so far.
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They were selling land plots and starter kits with HBD as a payment option for sure. I don't know how many paid with HBD as opposed to USDT or LVL, but it was an option.
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That is a great start. We need more of that. Taking HBD as payment is one of the things the ecosystem needs to focus upon.
Terrific news.
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What I actually do is buy Hive then convert it to HBD from Hive.blog wallet option. Well it's more reason why I jeep wondering: what if an external investor is aiming to buy $500k of HBD?
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Are you converting or trading it? These are two different features that can be done from the wallet.
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I externally buy Hive, or buy from a user, then pay them dirty to their bank account, then use the hive to convert to HBD, rather than seeking to directly buy HBD
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The whales will surely arrive once they see what is happening here. Liquidity is going to be a problem and there is no quick fixes.
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That might be true. As many pointed out, right now, if one wanted 500K of HBD to drop into savings, it is going to be very difficult to get.
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Something messed up about this sentence. Maybe the word neither missing?
Thanks. Fixed.
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I think you are correct in thinking HBD will play an important role. I know using the internal market has been great when hive pumps. You can buy HBD and then if hive sells off you buy it back.
Yes there is no doubt it does operate as a true exchange. The stabilizer is in there making trades throughout the day.
I hope a few more people are buying it and investing it into savings.
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I know I'm adding to savings the apr is good while the rest if crypto takes a dump.
It is the way to play it. HBD can be a terrific parking spot if one is timing the market.
When things are looking bleak, move the value into HBD and park it there for a while.
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@taskmaster4450 what's with the 2025 vision banner, is there something special that I don't know about?
This is something I would like to know as well lol
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It was a concept I was toying with a number of years ago.
Basically I have it there as a reminder to have long term focus with Hive and what we are involved in. People too often look at things in a 3 or 6 day window in crypto.
Where will Hive and some of the projects be in 2025, that is the question.
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I buy HBD on the internal market every day.
Terrific. Now if we only had 1,000 more people like you...or 5,000.
It all starts somewhere.
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I would have been buying tons of HBD for the past 2 months but I have had all my Hive posts downvoted to zero. Oh well… I still buy HBD every single day.
Hive whales seem to hate people who invest heavily in HBD or Hive ???
So weird.
I guess they didn’t like me powering down 5,000 Hive to buy HBD in the internal markets.
I am closed to getting into the pHBD-USDC liquidity pool.... Just one more step and I am in.... I just need to set up a trust wallet since the last step is difficult with my safepal wallet.
It might not be a big input but I am happy to be a part of the users out here supporting HBD liquidity in a bit to gain adoption
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That is a viable option with the HBD you acquired. Over time, we will see things grow. As more people start to focus upon the expansion of HBD and the different tentacles that are forming, we can see a shift in a forward direction.
It is going to be slow for now but we can accelerate it. We have many areas to focus upon with it, as I stated in another comment.
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Thanks alot @taskmaster4450le for being supportive right from the beginning. I appreciate your endless support and advice. 💚💚
We'll all be here to lend a helping hand in the growth. And we'll reap the benefits as well..
I agree. And we have the patience to work through it all. Together. Cheers.
Hello!
It is interesting what you explain here. I recognize that I don't know much about the demand for HBD and how important it is for the whole Hive ecosystem. But there is one thing I have noticed for a while now, and it is the lack of use of the internal market. I see a lot of people using the conversion mechanism that takes 3.5 days for really small amounts, and I always wonder why they don't go to the internal market and do the operation faster. And I have been surprised when I asked users who have been on the blockchain for much longer than I, and they answered they don't know or don't remember that there is the possibility to go to the internal market and exchange the HBD and the Hive there. So there seems to be some ignorance about this.
I for one have always exchanged small amounts and I have always done so on the internal market, I have never used the conversion mechanism. And I do it quite often.
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People should use the internal market in my opinion especially for smaller transfers. Some might say they are reducing the HIVE supply, which they are, but to me it makes little difference unless being done in huge numbers.
The internal market needs more activity. That is why I bring up these people periodically, to make people aware of it and that it should be used.
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Yes, in small quantities the effect of the reduction of the Hive is very small. And I agree it should be more active. But I think many people don't know that this option exists.
Have a good week! :)
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Liquidity has always been HBD problem both on the Hive internal market and now on Polygon. Are most HBD locked is my question or are they burnt?
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Most of the HBD is in the DHF. There is almost 16 million HBD there I believe. So when we have a supply of 25 million, that means 9 million is outside.
The HBD is used to payout proposals along being used by the Stabilizer.
You can see all the activity looking at the two wallets:
https://peakd.com/@hive.fund/wallet
https://peakd.com/@hbdstabilizer/wallet
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I am a big fan of arbitrage! Keeping that in mind among all the issues one issue is mostly to be seen how well is the liquidity. I mean how well the volume is and how much of the orders are being filled out. In both the scenarios we need a huge supply and demand to turn this into an actual scenario of arbitrage. The more opportunities there are in arbitrage the more benefits our HIVE/HBD shall get. I am really keen on seeing how this turns out. And if only the bridge fees would decrease, it would be a game changer for Phbd I suppose!
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Without a doubt. Arbitrage is best when there is a ton of liquidity and volume. That helps to tighten the volatility. Without both, it is still possible but the range will be larger since a big move is required to make it profitable.
So we end up back at the same starting point: getting more HBD out there.
People need to start buying it off the Internal Exchange each day. That is the starting point to me.
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I know HBD has been around for years, but we are still really in a bootstrapping stage. It is hard to need supply with low demand and it is hard to have demand with a low supply.
HBD really needs a demand stimulus. High interest is one possible demand stimulus. Check. Happening. Both the witness interest raise and the polycub pool should help with that.
The other white whale is a use case for spending. It needs a place to be spent. A game, a gambling site, an offline shop etc. These are coming, but they will take some time to grow slowly. No one will take HBD as payment if they can't somehow change it into goods they want or fiat etc. The liquidity pools will help with this. I don't knwo if it can catch on but if it does then we will be ina virtuous cycle.
It needed some sparks and currently pretty good attempts are being made. Coud we do better? sure, but acceptance will probably not be as fast as we all want until it is suddenly faster :-)
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I agree we are still in the very early stages. The focus only started with the emergence of the HBD stabilizer (at least from the public perspective). So we are a little over a year into it going from my memory.
This is certainly true. The medium of exchange feature is enormous. Here is where the network effect kicks off but not in the way of sending prices appreciating. Instead, it insulates the stablecoin against market fluctuations since many are not paying attention. They have other reasons for having the token in their wallet.
I do think we have two other things to focus upon which will help a great deal:
Put all four of those together and we have a very powerful stablecoin.
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Good post
We seem to be in a strange pickle with HBD. The 50% APR on Polycub would be a great selling point for newcomers to acquire it on Polygon and provide liquidity but on the other hand, if you attract a whale we will likely not be able to provide them with enough HBD...
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The chicken or the egg.
That is why it is incumbent upon each of us to get what we can out of the DHF and into individual wallets. What people do with it from there will vary. However, there is 140K the stabilizer is throwing on the Internal Exchange. This is there to be swallowed up by individuals.
I used some HE tokens to acquire a smidge a couple times. I will keep doing it every couple days to help out.
Hopefully other do something similar.
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Reblog your information post
Interesting article and different point of views for Hive, HBD and liquidity.
I am onboard with most of these but I was having nightmare about a particular scenario. If people lose trust in stablecoins due to let's say UST being a Ponzi that exploded. HBD might lose its PEG for a few days let's say at $0.6/0.7.
Investors and users might then convert their HBD to Hive to get 1$ worth. Therefore as soon as they would get Hive, they might dump it. which would put HIVE down and less trust into HBD.
What are your thoughts on this? This is a catastrophic scenario and I own HBD in savings and LPs, so not a bearish investor here :D
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A few things pertaining to this:
The HBD stabilizer is always at work so it is out there working to prevent such as massive drop. As the selling begins, it is buying, an increasing amount with each leg down.
The haircut limit is still in place meaning there is only so much that can be redeemed.
We have a lot of whales who are now watching this situation. If there was a lot of dumping, they could help to reverse the selloff by jumping in and picking up some cheap
This situation is looking at HBD through the limited lens. It is natural since we do not have use cases. That is why development of commerce surrounding HBD (utility) is crucial. In that area, people will have less incentive to use the conversion mechanism because they will not care.
Here is where time locked vaults really come into play. When taking our yield seekers and giving them incentive to lock up HBD, the threat of conversion is reduced.
Finally, as more non Hive people enter, most are not going to know or care about the conversion mechanism. They are looking for the 20%. So, if they decide to exit, they will do so through exchanges and LPs. The conversion feature will used, for the most part, by big players. This is what some of the security features are meant to impeded.
By the way, do not be surprised to see a fee similar to the one on the upside proposed for conversions. This would help deter the ability to manipulate on the downside too.
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You are mixing up two different things. HBD is HIVE Backed Dollar so until the value of HIVE goes down enough not to provide proper backing for all existing HBD, you get your $1 worth of assets. Obv, conversions are not instant and the bank run is going to happen.
So UST explodes and trades at 0.50 or 0.10 or 0.01. An individual HBD holder that loses faith in stablecoins can sell or convert (both for HIVE). The preference does not matter because if they sell on the market (at say 0.9), the buyer is probably going to convert it themselves. So a lot of HBD->HIVE conversions are started on that day.
Obviously, the crypto market loses double digits. After 3.5 days, two things can happen:
Either way, holding HBD was a clear winner over holding HIVE. In (1), HIVE went down and HBD was stable. In (2a), you lost 10% holding HBD and holding HIVE would lose like 40%. In (2b), HBD lost 50% while HIVE lost like 70%.
Also, when the doomsday conversions are done, HBD supply is down, HIVE supply is up and the pressure eases as more HIVE coins are backing fewer HBD.
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I'll need to read this a few more times to completely understand the goals. I do think @solymi's idea of asking to be paid in Hive/HBD vs. FIAT is worth a test. I know there are folks who accept payment of their own Rally.io coin.
Do you know if anyone has fully tested this idea out with Hive/HBD?
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