I'm sure it's old news to many, but if you're just now aware of this, don't panic. It's really not that big of a deal. By the end of this post, you’ll realize you're just fine, and may even have a different outlook.
What Is HBD?
In a nutshell, HBD is Hive Backed Dollar, a stablecoin designed to be pegged to $1. There are systems in place to allow you to convert to HIVE and back. HBD can be put into "savings" and will accrue interest at a rate based on what the top witnesses decide. It takes only 3 days to remove it from savings.
What Happened
Some of the witnesses decided they felt 20% APR was too much and signaled to drop it to 15% instead. While a 5% drop isn't insignificant, it's also not the end of the world.
Poor Timing
You really don't want to be cutting HBD APR when you're in a crypto bear market. You want to entice people to move from another crypto into HBD and HIVE. Then again, not my circus, not my monkey.
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Is 20% APR Really That Good?
The drop made me reevaluate the 500 or so HBD I had in savings. I did the math, and even at 20% APR compounded monthly, I could convert that into HIVE while it's cheap (Currently around $0.18), move that into investments in Hive-Engine tokens, and make far more. And so, I'm converting my HBD to HIVE and moving it into much more lucrative options.
(Created with Bing)
What About Liquidity?
The advantage to HBD is you can quickly convert it to HIVE and back again. In a bull market and HIVE price is over $1, it's not a bad idea to lock in some of those profits by converting to HBD.
With Hive-Engine tokens, you do have to be a bit more careful. Personally, I'm sticking with HE tokens that offer a similar APR or higher AND have a liquidity pool. This way I can take half of my earnings and put them back into the pool to compound my earnings daily, and sell off the other half to take a small profit. Then, I just convert my Swap.Hive to HIVE and I'm all set.
See? It's not all doom and gloom. Sometimes the wake-up calls are a blessing in disguise.
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