Announcing the HBD Bonds Experiment | A three-month lockup for +10% premium on the HBD interest

in #hbd3 months ago (edited)

Stablecoins have proven to be one of the major crypto use cases. Hive has HBD, a project that has been in existence in one form or another for more than seven years now. In all its existence it has worked as designed. During bull and bear markets.

There is a lot of things to say about the HBD uniqueness and design. A layer one stablecoin, no freeze function, backed by crypto instead of dollars instruments, true decentralization, feeless, ideal for micro payments etc.

I have been following HBD closely with various of posts and reports for years now. I have even built a dedicated website https://www.hbdstats.com/.

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Ever since the introduction of the HBD interest, the debate about what should the HBD interest be is ongoing. There was even a twitter space a few months back, where blocktrades participated in. The HBD bonds have kept coming up in all the debates and has been pointed out to as a possible solution for the APR. Provide a different interest rate for different lockup periods. For example, 10% for a year, 20% for two years, 30% for five years, etc.

This is the inspiration for the HBD bonds experiment I’m trying to introduce here. Also the bond market is the biggest financial market in trafi so why not try and experiment with it.

How Will This Work?

First things first. I will be managing the funds, and this is not a trustless project. By sending HBD you are putting trust in me to manage them and execute as stated in this post. I’m doing it out of curiosity and hope to learn some valuable lessons on the way, giving feedback for a possible on chain solution and maybe build and iterate in the future.

A 10% premium on top of the current 20% for a 90 day lockup

To make this project attractive enough it will be paying out a 10% premium on top of the current APR for the HBD in savings. It is currently at 20%, meaning a total of 30%, for a 90 day lockup.

Users will be sending out HBD to a dedicated account @hbd.bonds.

The first bonds will be capped at 10k HBD.

Meaning the account will be paying the interest for the first 10k that it receives. The tranches are set to be in $1000 and $100. A 9 sets of $1000, and 10 of $100. Users can purchase more than one package, meaning a $1000, $2000, $3000, or $100, $200, $300, as long as they are in the amounts as stated above. Any funds that will be received with different amounts will be refunded back. Any excess amounts above the 10k cap will also be refunded.

Where Will the Yield Come From?

The old question where will the yield come from? The short answer is I will be making up the difference, investing the 10% premium. For a 10,000 HBD, the three months interest at 20% is 500 HBD, while for 30% is 750 HBD. So, I’m risking a 250 HBD to get this project going. Buyers will have a cost of the 90-day lockup and there will be a soft penalty for early withdrawal.

Any buyer of the bond is free to request the funds back prior to the expiration period of 90 days. But in this case, there will be no interest paid. The users will simply receive the HBD he/she putted in with no additional interest back. Any earned interest from early withdrawals will go towards the payouts of the premium for the users that will wait for the bonds to expire or reach maturity as it is known in the finance world.

For simplicity a 1000 HBD will earn 50 HBD for three months with 20% interest, while with 30% interest it will earn 75 HBD. A 25 HBD more.

Any user who asks for early withdrawal of funds will receive the funds between 24 to 84 hours (1 to 3.5 days). If there are incidental withdrawals I will cover up for early liquidity, but I keep the right to wait for the withdrawal period out of savings of 3.5 days in case there is a lot of requests for early withdrawals.

Note on the 30% cumulative APR. I don’t control the base APR that is set by the witnesses of 20%. If this changes in the period, so will the cumulative APR. The 10% premium is guaranteed, so if the base APR is said 18%, the cumulative will be 28% etc.

Sale Period

The sale will last until the bonds are sold, or a maximum of week and a half, starting from today November 15 and ending on November 26 (Sunday). The interest and the maturity will start calculating from the day the funds are sent.

As mentioned, it is on the basis of first come first served. Make sure to send funds that are 1000 HBD or 100, or a multiple of those. This is an experiment, so the sale is small with a cap of 10k HBD. Also, I’m setting these batches of 1000 and 100 for easy management of small number of accounts, since it will all be processed manually.

If in the sale period, the bonds are sold less than 50%, meaning less than 5k collected, I will be dismissing this project and return the funds back.

Updates and Communication

I will post updates here, at the bottom of the post about the progress on the sale and when it will close, as I want to use the Hive blockchain as an official chanel. You can check the wallet https://peakd.com/@hbd.bonds/wallet for live updates and see if the 10k cap is reached. Still the official info will be here, since there might be funds refunded. Any request for early withdrawals needs to be made here in the comments, as official channel, and then additionaly users can contact me on discord as a reminder, user: #dalz3699.

After the sale ends, I will make another update with the list of the bond holders on the bottom of the post, the amount and the maturity date when funds and interest will be paid. If you participate in the bonds sale you might want to bookmark this post.

TL;DR

Send funds in 1000 HBD or 100 HBD batches to @hbd.bonds, wait 90 days, receive 30% APR. Need the funds earlier than 90 days? No problem, just ask, and they will be sent back to you within day, but with no interest earned.

Final thoughts

I’m curious to see how this goes and is it viable for something like this to be built on top of HBD. The offered deal of 10% premium for a three-month lockup period is heavily in favour of the bonds buyers and I will most likely lose some funds in the process. But the sale is small and the difference not as big in absolute numbers. It is also a project that is not trustless, so a decent incentive is needed. On top of it I look at this mostly as a learning experience. Depending on the final result this might get reiterated with tweaks on the locking period (longer or shorter), the way the interest premium is set, etc.

There are further options that are available for the project to evolve in a future smart contract project removing the trust in me, a dedicated web etc. but let’s keep it simple for now.

If you want to support this experiment please join, and let's start building the way forward for more finance on Hive!

@dalz



  • UPDATE 1, Nov 16, 2023: After the first day, there is 3 bonds of 100 and one of 1000 bought. There are few statements from users that have pulled out of savings and will transfer funds after the withdrawals are funished. Follow the status of the sale live: https://peakd.com/@hbd.bonds/wallet
  • UPDATE 2, Nov 20, 2023: After five days, there is 7 bonds of 100 and 3 of 1000 bought. This is 37% sold and its coming close to the 50% limit. Still waiting if some users are yet to withdraw out of savings and transfer funds, as few have suggested. Looks more feasible now.

  • UPDATE 3, Nov 24, 2023: Bonds are sold out! A week into the sale and the 10k HBD is full. Don't sent more funds. Will have a detailed updated soon.
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As for hbd stats site, could you please update it to show hbd transaction volume on chain +trading volume of HBD.

I'm sure you're aware the drama with a guy call lopp on twitter and he said he's not interested in HBD as it only has $10k volume. Which was correct only when you considered trading volume on CEXes.
It should be easy to debunk such statements by simply showing how much HBD is used here - on internal market, claimed, sent to and from savings etc.

The trading volume on the internal dex can be seen on the UI like https://hub.peakd.com/market/limit .

I do plan to update the web with more HBD stats, so will have this in mind

Trading yes, but what if you provided the volume of HBD transactions in its entirety, that's the real volume we want to show (it would include internal market transactions, i guess)

I applaud experimentation and innovation. The question I have is what is the experiment about? What are you trying to prove?

Are you wondering if people will lock up HBD for a longer period, in exchange for a higher return? I think the market of savings bonds and certificates of deposits show people will do that.

Personally I am not sure that time vaults, as a viable entity, are even in question. We know there is a certain amount of money that will flow into these especially if there is another form of liquidity provided.

I guess my point is what happens if 90 days goes by, you get the 10K HBD and all are paid out at the end, what did you prove?

That is what needs clarification.

I wonder too, why not make it super smart with an extra ponzi layer.

APR is an OwnershipToken that can be traded for the ROI that is left behind by people that withdrew early. Lock-up periods 1-5years, OwnershipToken distributed monthly and 1% of those tokens is always 0.95% of the total HBD profits, rest is management fee for the fund.

Whatever I've send 100HBD in, I don't see a huge risk here.

The experiment is about this our small ecosystem and its users. I'm well awere about the demand and use cases in the broad economy.

First thing to find out will there will be enough demand/buyers for the offer. Then will these users are able to go through the 90 days period without withdrawing. If everything goes smooth, the bonds are bought, nobody withdraw, then great! It is still a proof that there is a demand here on this platform and users can hold to maturity. Then I might itterate with diffrent conditions etc... but first lets see how this one goes

It's hard to quantify, as there are issues at hand too. Those with the HBD likely already have it locked up, and will have to take it out over 3+ days. Then you have the increased risk of your entire investment compared to a sure thing. In the end, it isn't a lot to be gained for the additional risk/complication.

Yea I see the small cap on this as a con, as you get a little in absolute numbers. But cant start with big numbers, especially with lucrative numbers and me as the backup. Users are usually willing to extract the maximum, so even this small cap might get filled. Will find out soon :)

I'm surprised people haven't taken you up on it, but I don't think people have the free HBD lying around. The short term also is likely a factor.

Yea I expect more in 3-4 days

Or like this

Leverage on a leverage on leverage like on WallStreet but for degen plebs, Jordan Belford would trade them as Pink NFTs tomorrow.

"The most innovative startup since Robin Hood, reinventing Dollar based digital Derivates with multi layer returns on returns on returns. You invest one time and get rich three times!"

<- repeat everything
->
| Synthetic HBD Lock Tokens |
| FUND Token Pool Tokens |
| FUND Token |
| Minted HBD Derivativ |
| HBD Lock |

While I appreciate your support and the first funds sent, please use that word ponzi with care under a project I announce, that is very simple, transparent with clear rules, conditions and a straight forward answer where the yield comes from

This is not a Ponzi, I don't think anyone will assume that.

Never mind I found the update at the end. So I know it is full. I will check your post list for the next update.

Steps in right direction. I wish the base APR was 6% and the other 24% for longer lock in was made by u taking ppls bonds and using them as collateral to get liquid loan with which you speculate and put the high APR risk on the speculators and not on the community.

Long lock-ins can’t come soon enough. We need to move away from this short lock in high return for nothing mentality whenever the opportunity presents itself

Yea a alot of possibility opens up once you have longer lockups. Usualy how this goes is that bonds are a separate token that is traded, used as colateral etc. In the case above its a simple mechanics, but I want to check market sentiment the most

Isn't the 20% APR with 3 compounds?

Putting 1000HB in savings for 3 months gives you 1050.84 HBD

Yes there is a small compound, but I'm not calculating that. Thats the diffeence between APR and APY :)

The claimed HBD interst goes towards the savings balance, increasing the base so if it is not withdrawn it acts as compounding, the exact math for 1000 goes like this:

  • month 1: base 1000, interest 16.43
  • month 2: base 1016.43, interest 16.71
  • month 3: base 1033.14, interest 16.98

Total 1050.12

I'm in.

I've been reading and commenting on Taskmaster's Bond idea posts for a while and I want to be active in the discussion and experimentation on HBD Bonds. I believe I am account number 3 to participate in dalz's hbd.bonds experiment.

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Best wishes and thanks to dalz for conducting this experiment and to all who join in!

Thanks you!

Great initiative! I am waiting for this kind of mechanism to happen for a while - better APR for longer time locked - as I WILL definitely put a significant part of my fund into it.

For this one, I will put in a $1,000 IF my withdrawal from now on can make it before the quota runs out. So, three and half days...

Write some more analysis or lessons about this experiment, hopefully you get to have little/positive profit after it finishes. And hope this experiment, if deemed successful, can lead to future sustainably designed on chain services.

Thanks!

As for the available funds, a lot of users have their HBD locked in savings, so I expect more to be bought after 3-4 days. For now, there is plenty available :)

never mind! It's on post
Hi dalz! Nice experiment/game you're starting. From what I see all the risk is yours and all the patience from the users side. Really interesting and cool!
Because I'm an old dev, used to looking at all the variables and one more, I have a question. Imagine that tomorrow or somewhere at the middle, whatever, witnesses decide that the HBD interest APR change to 12%.
How do you deal with that change?

From the post:

Note on the 30% cumulative APR. I don’t control the base APR that is set by the witnesses of 20%. If this changes in the period, so will the cumulative APR. The 10% premium is guaranteed, so if the base APR is said 18%, the cumulative will be 28% etc.

If the base APR is 12%, then the cumulative is 22% ... I only guaranty the 10% premium

Trust factor going to play major role....this is definately a lucrative offer for getting a little extra for hodling it locked. will that be you alone who looks after this project or there are others who could manage in your absence ?

For now it is just me as I see this as a small experimet with not a lot of funds in question, thats why the cap of 10k.

The good thing is that this project by its nature is an itterative process, and can be build from here. If things grow in the future I will make sure to have a backup, with an end game to be all smart contracts and trustless.

sounds good....but how those locked 10k hbd will be put in use?

They will be put in savings to earn the base 20%...

and what will be your ROI in case no user withdraw the same within the lockin?

I will loose funds as stated in the post. A maximum of 250 HBD that I'm willing to risk to find out how users will behave here and get the project going

only thing i dont like about this, is that we cant elect to compound our earned interest as the "experiment" is going on.

ignore everyone talking about trust. theyre in crypto because they dont trust fiat or its institutions. their risk tolerance is high as hell or they dont have the hustle to take a loss & make it back.

some will see this project as an investment in themselves and in HIVE knowing they took a shot at expansion & growth regardless of the outcome.
thanks for the opportunity to make some free money.

sending mine in 3.5 days.

@dalz sending soon, have about 2hrs left until the HBD is released.

Don’t understand quite well from where you will get that consistent 10% but I trust on your management so…I’m in probably

Its from my own pocket. I'm risking a max of 250 HBD for this 10k bond sale, to see how things will go. Then I might iterate based on the result

Count me in! 30% is a fantastic APR, and enough to convince me to send in a decent chunk.

Even higher APRs for longer lock-up periods would convince me to send in more, provided the sustainability is still possible over that period of time within the bounds of the haircut rule.

aha interesting project will send the HBD in a few days don't want to miss this opportunity.

!giphy count me in

Interesting experiment, and fair play to you for setting it up as a test run for potentially taking it forward.
I'm glad to see the post is doing well from upvotes. A few more updates like this along the way, and you'll get the majority of your personal experiment cost back (I know that wasn't your incentive, but it would be great if it didn't have to personally cost you HBD).
I hope it works out !

It looks like a very lucrative offer. Let see how this experiment goes. It's a nice move, bravo!

I wish you the best in your experiment! The bonds idea keeps popping up within the community. There should be a good amount of demand for HBD Bonds. Have you considered trading with the HBD gained and see if you can earn yourself more than 7.5% in profits during the next 90 days in these beginning parts of the bull market.

No trading. It does what it says.

Interesting project.

I had the same question asked by Taskmaster but you already addressed it so good luck!

Good luck with your experiment Dalz. That is a very generous yield to take up those bonds and lock up the HBD for just 90 days is pretty great compared to whats on the market.

Definitely more potential for HBD along the lines you’ve noted above so happy to give you 100hbd for a trial run 😀

Good luck with the project

Good luck, I will consider to join.

As a long term HBD investor, I will consider it.

A very interesting experiment - I'm curious myself to see how this goes.
Trust isn't a significant factor here with Dalz solid reputation and existing integration in the Hive ecosystem.

That's a cool experiment :) if I had 100 HDB I would have joined for sure!

I'm not sure how you want to make a profit on this. You really think people will pull out their HBD early?

Math Master @gerber?

It's only 100 x100HBD not a lot of buzz, I'm down for that, let's try.

I already said at the end of the post that the odds are against me, but I see this as educational project ... will see how it goes, might itterate migth not .. cant tell if dont implement it ... about the 100x100, its 9x1000 + 10×100 as stated in the post ...also gerber has nothing to do with this

I just tagged him to chip in, that lazy discord chiller

Good luck with this experiment, will try to buy the $100 HBD bond soon if it still there.

I'm curious if I'm getting it right you mean to invest HBD and make profit to pay 10% premium - right?

Sounds like a Good idea to bring some liquidity from outside.

You invest 100 HBD, wait 90 days, get 7.5 HBD extra (total 107.5), instead the 5 HBD from the regular HBD savings.

oh wow, i wasn't aware about it, 30% for the 90 days lockout, is not bad at all.

I just found this post.
How did this go?
Did you get to 5000 HBD?
I am to late to contribute I think.

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10% extra apr? awesome.

Good Luck with the experiment. I hope it works out well for you! Sadly i have less than 100 HBD atm so i will see if i want to participate or if it fille out before that. ;)

Amazing development @dalz 👍😃
I wish I had enough HBD to participate in bonds, it seems I will have to wait a bit longer to gather more.

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I celebrate greatly the initiative behind this experiment and looking forward with all optimistic how it will work out

I love the idea, let's see how it goes.

It's just like that within the peer market we've seen how stablecoins are controlled and that's what the project team has done and they've also given people that percentage APR and the price does not down.

INTERESANTE
!PIZZA

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Also the bond market is the biggest financial market in trafi so why not try and experiment with it.

a total of 30%, for a 90 day lockup.

Finally, an experiment on HBD bonds. It came to my attention just now.