The indirect Hive return model

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The indirect Hive return model.png

What I love about the hive ecosystem is actually all the trials that are started to create tokens and coins. There are almost as many strategies as there are currencies out there. I had a blast to look at dcity lately and to see what the effect of diminishing supply is doing to the market. I see Hive as a very important space to try out things for the tokenization of tomorrow.

On hive, thanks to delegations, staking, second layer tokens and soon also smart contracts, you have tons of different tools to build up an interesting token economy.

In this post I would like to present a possible model that could be used for different things on the blockchain. Probably some people are using it already but maybe with another name. I call it the indirect Hive return model.

What is the indirect Hive return model

Let's imagine that you have an income from the blockchain that generates Hive for you. Instead of using this hive directly, you power it up and delegate it out to a service that pays liquid interests on it. The interests that you receive is your return with this model and you can allocate this return how you want.

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Why use this model?

The greatest advantage of this model is that you can build a pretty regular income in a very sustainable way. The stake isn't loosing substance over the time. Thanks to organic growth, the stake will actually grow constantly and with it also the return of this stake. In theory, this could go on forever...

Direct vs indirect return

Let's say that you are a game owner and you just sold 100 starter packs for 80 Hive each. This means that you have a capital of 8000 Hive. You can use these 8000 Hive once in a direct model.

If you use the indirect return. You would have these 8000 Hive and stake them. They would provide a return of 20% per year (just as an example). It means that every year you would earn 1600 Hive from these starter packs. After year one, you would still be able to earn or distribute the same amount of Hive. Your principle is still there and working for you. After 5 years you would have used the same amount of hive as if you would have used it in a direct manner. The difference is that you still have the 8000 Hive in your stake (+the organic growth) and this stake can work many more years for you.

Use Cases

The game that wants to succeed in the long term

A part from the free and fast transactions, Hive offers a great way to finance play to earn games. Often there is an entry level to play such a game. You have to buy a starter pack and probably there also some items that are auctioned. This means that the game creators have a certain amount of Hive when they launch the game.

With the indirect Hive return model, the game creators would power up all their Hive and then delegate the hive to places like dlease, @leo.voter ... where they get a liquid return on their stake. Thanks to these investments, the game will start to produce an income every day in liquid form. The more people start to play the game, the more this stake grows. Thanks to the organic growth of staked hive, the stake is actually growing by around 3% APR.

With this model, the game owners will have a stake that is growing constantly with every new income and also with the organic growth. However this stake will produce a return of somewhere between 10 and 20% APR. This will be the indirect return of the game and the game owners can decide how they want to split this income. They can take a part for themselves and then they can give another part to the players. The best thing is that this stake will pay them even if they stop the game one day!

An innovative form for Membership sites

When you join a restricted member area you are often asked to leave your credit card information so that every month a certain amount can be deducted from your card. Now imagine that instead of asking for recurring payments, you ask for a one time membership fee. You take this fees and you power it up 100%. You delegate this stake and get a return on it. For every new member that you get, your stake and your return will grow. The more members you have, the bigger your daily income will be. No need for credit cards. No need for recurring payments. Just another way to build your business.

Stabilizing your second layer token

Imagine that you want to create your own hive-engine tribe token. Many of these tokens come with miners that mine these new tokens. The sales of these miners goes into the pocket of the token owner. Imagine now that instead of putting the proceeds of these sales into his pockets, the token owners powers up this hive and delegates it. He will get a daily return in Hive that he will be able to use to buy back the tokens and burn them. This would be a great way to stabilize the token price. The more miners sold, the more stake and the more it's possible to buy and burn tokens.

I believe that this model is very easy to implement. It could be a good solution for many scenarios on the blockchain.


Let's connect ! You can find me on these platforms:

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25 comments
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This is brilliant!

And pretty much why so many of us believe in this blockchain long term.

Great way to look at it, and LOVE the membership model!

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Hive has so many solutions possible that we have hardly scratched the surface of it. I also like the concept of a membership model without membership fees :-)

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I like HIVE for this very reason. There are plenty of ways to use the staked HIVE. I only wish there were as many ways to use our staked 2nd layer tokens. It is nice to have them but I find it difficult to use up all the VP on those tokens. It is possible using the vote multiplier but it would be time consuming.

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There are plenty of things in the work for the 2nd layer. I believe it's just a matter of time before we have something like smart contracts for the second layer. Once this in place, the possibilities will become limitless...

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This is an awesome idea for growing our stake in these tokens on Hive. I especially like the Membership site idea. No more dealing with people cancelling their membership subscription on their credit cards and no more credit card fees. Plus...the reason for wanting an ongoing subscription... residual income is no longer an issue because you are getting your return from staking the tokens from the subscription fees. If I understand correctly, of course.

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You got it quite right Lisa. Instead of asking for a recurrent membership, you simply ask for a one time membership fee that you would stake and your recurrent income would come from the stake return.

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It makes so much sense and why wouldn't anyone do it?! Thanks for the ENGAGE tokens, Achim!

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The Membership model is pretty damn brilliant. I found myself to be a lot more likely to make one time investments than to agree to recurring fees. So this should help to bring in more paying members. At the same time, service providers build a sustainable income for themselves without having to ask their loyal members to pay again. Pretty clever!

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It's the same for me. I will gladly pay a service with some crypto but I hate these recurring membership fees that you tend to forget. I think this could be an answer for many smaller sites to build up their membership base and also keep the whole process quite simple. Thanks for stopping by !

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I like how you lay this out. Especially because there are, and going to be, new people here that haven't been exposed to these layers. It's really the easiest way to earn all in one place. Think about how this will scale if/when hive prices rise.

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In a way Hive is still a very small ecosystem but once the interest comes to this place and the price rises, I think we are in for a fun ride :-)

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I found dlease awhile ago. I've been getting a return on my investment every day. It's not a huge amount, but is adding up nicely everyday. When these expire, I will start again.

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Curating is not everybody's cup of tea and for a lot of people renting out Hive Power over dlease or delegating it to projects like @leo.voter or @ctpsb and get a regular return makes a lot of sense. Thanks for stopping by!

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I generally don't like the high returns stacking/curation rewards. I think curation rewards should be sliced by 50-75% . But that is another topic I guess.

I like the way you describe for game creators and Token communities to garantue a certain hive value and payout for the communities/game . This should be even more profitable in the long run compared just pocketing the "starter pack" fee.

My only Criticism would be that there are ways to invest the money better, ie just holding BTC, but there is also Lapis and LP Mining today. However this would make it so that the application/community act outside of the hive chain which would surely take some of the beauty (risk+transperency)

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My only Criticism would be that there are ways to invest the money better, ie just holding BTC, but there is also Lapis and LP Mining today. However this would make it so that the application/community act outside of the hive chain which would surely take some of the beauty (risk+transperency)

I agree with you that there are maybe better investment opportunities with more return. In a way this is really up to the project and the people running it how they want to use the money. What I like about investing on hive with return on delegation is that you have the guarantee that the hive remains always yours and you get quite a stable return.

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The membership payment option is intriguing.
It will be rejected my many "we want our recurring payments"
Some folks will want to use a credit card only.

But this thought could open doors for so many people.
People without credit cards, or in countries that cannot get one.
Sounds like a great annual sale, or upgrade blowout sale.
Going to give it more thought, thanks for the idea

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Thanks a lot for your comment! When I sign up with a program the last thing I actually want is to give my credit card information. First of all you don't know how well this information will be protected and I don't like to keep in mind where I have all recurring payements going on. For me this is a big barrer that keeps me from signing up to programs and making purchases. Now, if I imagine that I can pay a service in Hive only and that this Hive is used by the website owner to power up his stake and he will get a regular income from this stake. According to my calculations, I believe that at the moment a 15% return on a stake is not illusory.

If you think about all the people that don't own a credit card and all the people that don't want to use a credit card, this model opens a whole new dimension of potential customers.

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