In the last few hours, witness @gtg brought up an interesting discussion that has been on the table for many months (since it was implemented tbh).
20% APR on HBD Savings Yes or No?
I understand that there is no right answer, as there are as many points of view and approaches as there are people.
My view is that we need more liquidity in HBD, and having explored 20% APR in Savings for some time has given us a lot of valuable information.
Having a native decentralized stablecoin is a powerful tool. But in no way should it place a disproportionate burden on Hive's monetary system over time. Hence, it's all about balancing incentives.
Always remember that HIVE backs HBD, not the other way around.
For this reason, I will begin to signal a reduction from 20% to 12% 15% in HBD Savings.
EDIT: After thinking about it a bit more, I just decided to let it at 15% as a reasonable middle ground.
I honestly have as many arguments for as against and I understand both sides. I am aware that significantly reducing the APR at savings would result in an immediate drop in the price of HIVE.
I also think that we need more people with strictly financial backgrounds making/discussing these types of decisions.
My witness doesn't matter since I'm a backup low in the ranks, but I think it is healthy to be able to share different opinions and to be free to choose different things among the different witnesses. I'm going to keep 15% for some time as a somewhat more conservative option and then reevaluate.
I recommend also checking this post from @deathwing to keep broadening points of view.
What do you think about a hypothetical reduction of posting rewards for increasing HP APR?
Hive inflation is currently distributed as follows:
- 65% posting/curation rewards (32,5/32,5 equally split).
- 10% Witnesses
- 15% Hive Power APR
- 10% DHF
Substrating 10% from the first category would net as follows:
- 55% posting/curation rewards (27,5/27,5 equally split).
- 10% Witnesses
- 25% Hive Power APR
- 10% DHF
Which in practice would equal a -15.38% reduction in both curation and author rewards in exchange for increasing +40% of the rewards for holding plain HP (Please feel free to correct me If I'm missing something obvious).
-15% in voting power (with its consequences for authors and curation) in exchange for a net APR of +4,03% for holding Hive power (increased from the actual 3,09%).
I won't deny that the idea appealed to me at first, but I'm not really a fan of changing this kind of economic rules on the go and at this time of the cycle. This should be discussed at length and let the idea mature.
What are your thoughts?
Vote for my witness: @empo.witness
https://vote.hive.uno/@empo.witness
Thank you for your calculations, this puts things in better perspective for me. As someone benefitting from the sweet %20 APR, I'll miss it :P
We got to 20% too fast, so I understand many people are making quite a profit off of that
I found it hard to onboard people on Hive but I was able to convince a few people and let them join for a 20% APR. They are passive investors. If they find out that the APR is reduced, they would take their money out and leave.
It is assumed by a few people that people would liquidate HBD and convert it to Hive and power up. I don't think so. There are so many accounts with just HBD in savings and no HP at all. It is quite possible that they might leave Hive.
I personally would keep the APR at 20% for my witness and even if there is a pressure to reduce it, I think 15% is fair.
After thinking about it a bit more, decided to let it at 15% rather than 12%. Agree with all the points and I see valid arguments on both sides.
16%, 15, 12 and even 10%....
All those proposed numbers are at least 50% higher than the US treasury and they are highly competitive with curation rewards.
It is difficult to onboard people on Hive in general and that is not news. Even at 10% we have one of the best yields out of both real world and DeFi platforms.
We make onboarding easier we attract users with those APR even at 10% because that is objectively a high interest rate.
I'm also signaling for a reduction, right now I am signaling at 16% but since many witnesses are aiming for about 12% I yhink we will get there regardless of my signal (since I am low on the rank)
That's also my case (I'm just behind you in the ranks) But I guess as a backup witness keeping these kind of things up to date is important.
Finally decided to let it at 15% rather than 12% since I also agree that 12% feels like a bit drastic and we aren't in a rush anyway.
Thank you for your service 🫡
Pleasure is mine Igor :)
@tipu curate
Upvoted 👌 (Mana: 25/55) Liquid rewards.