How was Hive doing over the last year?
This week we asked the community a question in the context of the weekly Liotes Mission. We wanted to ask what they thought was an appropriate return on interests for HBD in savings. We tried to asked this question in an open fashion without judging.
It was very interesting to see the participation and the quality of the answers we got. I deducted that people really care and would like to understand better what is at stake. Also it matters directly to them and I believe they should have say when it comes to such decisions. I was quite surprised to see that many were looking at it with a lot of realism and by far not everybody was in favour of the status quo.
These answers started a process in me in which I wanted to see how Hive is evolving. I see a lot of pessimism these days. I believe that it's better to look at things in an objective manner and for that I like to look at numbers. I love to look at the reports by @dalz and @arcange. They both give a lot of indications as to how things are evolving but I think not enough among us are looking at it carefully.
Comparing the situation today with what we had exactly one year ago
Well, I actually looked at two sets of posts to compare the numbers. One set of posts was regarding the data from the 31st of january 2023 (post 1, post 2) and another set of posts was looking at the data from the 31st of january 2024 (post 1, post 2).
How is HBD savings evolving?
The first question I wanted to ask myself was how the savings of HBD are evolving since last year. For that I simply compared the numbers. The amount of HBD in savings has increased by around 55% in one year. However the number of accounts who save HBD only increased by around 13%. The amount of HBD per account increased by 37%.
So what does that tell us?
The growth of HBD in savings is pretty consequent. In 2023 the percentage of Hive locked in HBD represented 3%. Today, it represents 5%. There are more accounts who save HBD now but the increase was much smaller. What we can see is that it's mainly the size of the HBD in savings that increased.
If the 20% on HBD was meant to attract a lot of users, it worked not that well. It's rather the same people who have more in savings and earn more from it.
If the Hive supply in the form of HBD saving increased by 2%, where did it come from?
This is something that I found very interesting. Hive in the form of HBD increased by 2% and liquid Hive also increased by 2%. But the part of Hive in the form of Hive Power decreased by 4%. So, People reduce Hive Power in favour of liquid hive and HBD savings. I believe that this isn't that great in terms of price and stability for Hive. The percentage of Hive in its staked form is today only 32% of the total supply. It was 36% a year ago!
What about decentralisation on hive?
Another interesting question that I wanted to have a look at is how the decentralisation on hive is evolving. I wanted to see mainly how the ranks (whales, orcas, dolphins, minnows and planktons) have evolved over a year. And how much each of these ranks owns in terms of Hive Power.
| Indicator | 2023 | 2024 |
|---|---|---|
| Number of Whales | 36 | 39 |
| Number of Orcas | 259 | 271 |
| Number of Dolphins | 1662 | 1745 |
| Number of Minnows | 8905 | 8943 |
| % owned by Whales | 48.55 | 48.25 |
| % owned by Orcas | 22.73 | 22 |
| % owned by Dolphins | 14.87 | 15.75 |
| % owned by Minnows | 8.54 | 8.65 |
I deduct from these numbers that all categories are growing in number and also that the percentage owned by whales and orcas has actually gone a bit down in favour of the wealth owned by dolphins and Minnows. This shows a slow tendency towards decentralisation of wealth which is nice but could be faster.
My conclusion
When I look at all these numbers, from a very personal point of view, I see several things that I would like to write down. First of all, Hive is growing in terms of users. Maybe the activity isn't that great but the number of transactions are not lower than a year ago. I also see a step toward decentralisation of wealth which I believe is very important for the nature of the blockchain.
What I like less is the reduction of the staking rate. I believe that here the high return on HBD comes into play. Putting HBD into savings gives a better return and in addition is less a hassle than curating content with Hive Power. In addition you can take HBD out of savings within 3 days and you need to wait 13 weeks to unstake Hive Power. It's totally understandable that people go rather towards HBD than HP. However, this means also that there is maybe less focus given to curation and content creation. If less people own hive power and less people are curating, it weakens the very thing that makes hive special and that encourages decentralisation of wealth.
So what about HBD interests?
This is definitely a very emotional discussion and I see also a lot of ideological reasoning around it. The Liotes Mission showed that not everybody sees the 20% as being the best solution. I also realised that many people wondered where these 20% were actually coming from. The thing is that these interests are defined by the witnesses and they come in addition to the coded hive inflation. Basically the HBD interests are freshly minted tokens that increase the inflation. The bigger the savings are, the more exponential this HBD inflation will become because of compound interests. There is a price to pay for these 20% and we are actually all paying it by diluting the Hive and HBD that we own.... According to the law of offer and demand, if demand stays the same (and we didn't really manage to increase the demand in spite of the 20%) and the offer is increasing (more tokens in circulation), the price will go down... The more HBD interests are printed, the more we push hive prices down and the faster we will get towards the haircut where the peg for HBD will be lost.... This is something that should be avoided at all cost because it will not only reduce the value of all HBD, it will also undermine Hive and accelerate the negative price evolution.
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Hive usually has a good staking record, I wonder what could be done to make it more attractive.
The easiest would be to lower APR on HBD to make HP more interesting I believe. In the end it's the owner of HP that finance the 20% on HBD by devaluating their own Hive.
When looked like that, it certainly doesn't make staking Hive attractive if you provide other people yield.
Very good analysis. Well, I would ask here, why did this start in the first place? Or why do you get 50% HP+50%HBD as a reward, after default (that's the way it's set in all wallets)? You can of course set it there at 100% HP, or without payment. But did you also consider the HBD from the rewards, for authors and curators?
For me, HBD was piling up and I didn't see any use value until savings came along. Use case.
Otherwise, it's not static, through ready mechanisms - consensus of witnesses and @hbdstabilizer the thing will surely balance when needed.
On the other hand, I've not diminished my content and vote in any way. I still try to write one post a day and comment up to somewhere around 70%. Mostly in person, because I only participate in a couple of trails. But do you write and comment any less than before?
When you get HBD from post rewards, this is part of the normal hive inflation which is at around 7-8% at the moment. The interests on HBD is in addition to that and the more HBD is in savings, the higher the inflation will be.
I'm doing the same than you. I put my HBD in savings and still comment and curate but there are other people who just gave up on it and put all their money into hbd savings. Like that they get a fix return that is higher than what they would get with HP.
Well, I don't know them. They're probably some kind of whales. But they make their money from delegation and automatic upvotes anyway.
I only know people like you and me who are doing something with posts, comments, and something in savings.
Well, maybe we could also comment on "normal Hive inflation". It's based on some calculations, surely, just like HBD savings...
I can't disagree with this statement, although I might add that anyone (with lots of HP) who views curating content a hassle, shouldn't manually curate content at all. If they want to support the community, they can set auto-votes on their favorite authors, and spend their time on "X" or Facebook, posting for free. Curators and long time bloggers here are in it for something more than just a financial investment. I've said for a long time, "came for the crypto, stayed for the community". Really, any long-timer would have sold all their HIVE when it was $3.00, if it was strictly as an investment.
The advantage I see in 20% HBD savings interest is that if HIVE goes very low, investors (if they so choose) can easily divest some of that HBD and put some buy pressure on HIVE to help it go back up. The more HBD they have sitting around, the more HIVE they can buy. Keyword there is "EASILY". They don't have to go off-chain or touch their BTC or whatever, just click, click, click and boom, you have lots of HIVE.
On the flip side, if HIVE goes up to close to $1.00, it would be good to drop the savings ARP to 10% or 15% to provide incentive to divest from savings and sell their HBD for HIVE. It's all about providing reasons to BUY HIVE, either cheaply (FUD) or while it's on the rise (FOMO).
I am of course assuming HBD will always be $1.00. The sad reality is that under the right conditions it can overvalue or devalue, breaking it's peg with USD. Just my thoughts.
What you say is not wrong. The problem I see is that things could evolve quite fast if hive drops more in price. The lower the hive price, the higher the dept level and the closer we get to the haircut, where HBD automatically depegs. Suddenly you get 20% on your investment that might be worth only 80% of the capital. High HBD apr favorises a decrease of Hive prices which gets us closer to the haircut which in turn risks the peg. In my opinion the present situation isn't sustainable even if we don't see the effects yet.
Thanks for this, Achim. I don't pay attention to Financials. I'm definitely here for social part of Hive! But you made many things that I have never taken the time to understand clear.
I like the social and the financial side of hive and it's interesting I believe to see that the financial side can have a real impact on the social side. At the present moment, I think there are incentives given to people who neglect the social side.
Excellent explanation of what is happening in HIVE, thank you for your contribution to the community.
!COFFEE
You are welcome!
Thanks for your analysis. I might have inadvertently been one of those people who’ve diverted possible staked HIVE into HBD instead. However, I will still withdraw it all to convert into HIVE whenever I find that the price dips below a figure I find attractive.
Don't worry, I also put money into HBD. It would almost be stupid not to do it but I think in the long run these high interests aren't that good for the blockchain.
Great overview. Reading this very interesting.
Thanks!
Interesting sharing! As I have shared, I think I am quite indifferent and leave it to those who know better to decide on this issue. Cheers!
No problem ;-)
It's a good discussion to have but I think Hive could easily outperform HBD when it pumps. HBD is a stablecoin because it's more or less tied to the USD right now. If Hive's price were to go up 500%, then the APR would naturally be way higher for curation. So there are advantages and disadvantages to both. I prefer having both because I want to be earn during all situations.
The inflation has a direct influence on prices. So it's possible that because of high inflation from HBD savings, Hive can't evolve parallel to the rest of the crypto market.
I don't think that is an issue given the current debt ratio for HBD. It's quite low when you consider how much debt existing governments have and I am sure that the witnesses are considering it.
This means that we’re growing. Even if the growth may seem little, we’re getting there.
Go Hive!!!
There is some growth. It's not fast but it's there :-)
!giphy great
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You have done a great analysis here. And very easy to understand even for those who don't usually look at numbers;)
I am one of those who think that the HBD APR should not be higher than the yield we can get from the HP, as I said in the Liotes Mission. And that for the sake of Hive's growth and stability and your analysis here shows it very clearly.
Thanks for sharing it!
Thanks a lot for your feed-back! I believe it's important to try to answer such questions with facts and not with ideology. That's why I like to find the according numbers to demonstrate a situation. I agree with you that HBD shouldn't yield a bigger return than hive. I don't think it does the blockchain any good to have too many people just getting interests for doing nothing and then knowing that these interests are financed through inflation that is paid by all the Hive Power holders.
It's good move , perfect record
Nice analysis, yes hive is growing in terms of users.
It's a small growth but a growth nevertheless :-)
I really think to an extent, hive has really grow to a big extent but I believe as time goes on, hive will increase
Probably...
Great analysis! I do believe that before people adhere to one point of view or another they should try to understand what truly happens and what are the perspectives. Not all opinions are unbiased, and not all of them are correct or take into consideration different parameters or de facto situations. And some opinions evolve based on changing conditions. Let's just keep an open mind for different scenarios, and not be... inflexible.
I see a lot of opinions that are based on ideology and not objective parameters or only certain paramaters. It would be important to have a broader look at all things that are related to the situation and try to deduct what scenarios are probable and then accordingly take decisions.
Hive has really come a long way and I am so sure it is just a matter of time before we see the full manifestation coming to reality