RE: Request for comments: HBD stabilization DHF proposal

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RE: Request for comments: HBD stabilization DHF proposal

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ats-david in #hbd • 5 years ago (edited)

I'm not so sure that this kind of internal mechanism can actually help keep the price pegged when these issues usually arise due to pumps on exchanges that lack liquidity. The recent price increase appears to have begun on Upbit, one of only a few exchanges that even offer HBD pairs. The other major listing is Bittrex, which currently has wallets offline again.

The small market for HBDs is too easy to manipulate in either direction, especially when the pairings at the exchanges that carry it are seldom traded. So while this might help with the internal pricing mechanism, it doesn't do much for the more visible external exchange pairings and prices.

5 years ago in #hbd by ats-david

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smooth 5 years ago (edited)

Correct. In fact this proposal wasn't intended in response to the current pump at all. I started some private discussions of it prior to the pump even happening. The timing is a bit of a strange coincidence. The original concept goes back to last year with this post of mine, which was then implemented in the last Hive hard fork (AFAIK it was never implemented in Steem).

This is more of a longer term proposal to stabilize the price over time, and create a clear linkage between demand for HBD and demand for HIVE.

Shorter term pumps and liquidity issues need to be addressed different ways, including by improving the number of platforms where the assets can be traded. That's obviously also a longer term challenge and effort.

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ats-david 5 years ago

Oh, gotcha. Yeah, it's something that can certainly be used for our own purposes to help stabilize the internal pricing and to outwardly demonstrate both the intent of the token and the ability of our own network to handle its stability. So that would make sense to me.

I think we're just back to the same old issue of simply not having a large enough ecosystem and user base to have things like this properly functioning. Low distribution, low volume, and low liquidity always make the economic and pricing aspects more difficult to manage. We need more growth, we need more commerce, and we need more trading options, as you said.

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disregardfiat 5 years ago

Stability internally would cause the Asset to be more desirable and cascade to increased liquidity elsewhere. Ultimately HBD as a stable coin is the goal, and it would be even better if witnesses started offering HBD interest for savings again. More reasons to hold Hive... and to hedge against ever increasing transaction fees on competing ecosystems.

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ats-david 5 years ago

I would love to have HBD interest and have witnesses actually using their parameters again. That's something I've called for many times in the past to no avail. And then I realized that many of our witnesses aren't that versed in economics/finance anyway, so it might be better that they didn't use the parameters. (That's also one of the reasons why I have continually called for new/better witnesses to fill the most important slots.)

In the past, one of the arguments made for not paying interest was that exchanges were the largest holders of tokens and the rewards would be going to them. But many exchanges now have the ability to stake with them, especially with DeFi tokens, so in my opinion, this is something that could encourage more holding and spark new/more interest in HBDs and the Hive chain.

Why not give it a shot?

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smooth 5 years ago

One problem with interest would be the potential overvaluation, so...

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antisocialist 5 years ago

What do you think about interest on savings accounts?
Maybe bring some of that hive back from the exchanges and lock it for 3 days?

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svamiva 5 years ago

Interest on 'almost liquid' funds (3 days lock) is not something my bank would offer me.
The alternative might be to introduce the option 'to stake' HBD in the same manner we stake Hive ( for 3 month)
Both 'staked Hive' and 'staked HBD' should be taken into account for calculating 'vesting shares' then.

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antisocialist 5 years ago

I think your bank would call it a cd, and require a longer lock.

Interest on locked liquid hive brings the hive back from the exchanges, gets diluted a little less, and still rewards authors by inflating the inflation.

HBD was designed to be a currency, not a store of value, though it does that, too.
It primarily gives us a way of avoiding 10k hive pizzas being worth 350m usd at some point in the future.
Hold your hive, spend your hbd.

What benefit does staking hbd give the chain?

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svamiva 5 years ago (edited)

HBD is 'Hive But Disguised', there's no reason to give any special preference to the Hive holders over the HBD holders.
Let's say Alice spent $100 to buy 1000 Hive and Bob spent $100 to buy 100 HBD.
I can't see why Alice should have more 'rights' than Bob.

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antisocialist 5 years ago

I'd go for the witnesses to pay interest on hbd when it is below the peg, but getting those folks to do things from outside their own worldviews is like pulling teeth.

I'm not sure that paying interest on debt outside the witness parameter is a good thing.
We'll have to consult a better mathematician than me.

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smooth 5 years ago (edited)

When people stake, even for 3 days, it takes those coins off the market. They can't be sold even if the price were to increase above $1. That removal from the volume of potential sellers should tend to increase the price a bit more than paying the same rate interest on fully-liquid HDB.
Since some people do want fully-liquid HDB, they would not receive interest and the total cost of interest would be lower and/or the rate of interest higher for those who do get it.

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antisocialist 5 years ago

I just hope we can get some movement here, it's been several calendar years that we have been waiting.

We've been having these conversations since hf16.

At this point, any forward movement gets me excited.

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themarkymark 5 years ago

Upbit was also the one responsible for the great SBD spike.

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