A 10% "debt" to equity ratio with "debt" that self-extinguishes in the case of distress is not something anyone should be concerned about.
The debt ceiling really doesn't matter in the case of HBD. It could be set at 1%, and the problem would be the same, if not worse.
Raising it just buys more time, but in the end the problem is the same. It's just about market timing, not the quantity of debt. If speculators were to sell HBD when hive is at the top, HBD to hive conversions would create very small amounts of additional hive. But that never happens sadly.
The timing of changing the debt ceiling is important though. If we decide to raise the debt ceiling now, it would be a great time, as we will just use that to burn more hive. However, deciding to raise the debt ceiling in a bear market will just make the hive printing occur at even lower prices and result in more inflation.
As demotruk pointed out, we need the HBD to hive conversions to occur as soon as possible in a downturn.
but by expanding the supply of HBD more rapidly, while it is a bull market, it forces HBD conversions to happen sooner after the market turns
Saying "over time Hive will go up" so HBD will be beneficial long term completely ignores what happens empirically. Hive will probably see 95% dumps (it needs to go up a lot quickly first).
Anyway, as I said in another comment, I feel better about HBD now that conversions will occur much sooner in downturn.
No, it would be completely different because no matter how far the price dropped and how much HBD were created at the top, only an additional 1% HIVE would be created even if 100% were converted entirely after the dump. This would be better, in a way, but it would be worse since there would be less deflationary effect in a rising market too (and also less ability to benefit from natural demand for the HBD "product").
Hive doesn't have a floor, so the ceiling could be breached infinitely many times, causing more inflation every time.
This is only true for a single point in time. But inflation can be infinite with any percentage as long as hive's marketcap keeps dropping.
In which case, it won't be worth anything. This is silly. The effect is to slightly increase the effect of any decline through inflation/leverage (and conversely for increases), but it doesn't change anything qualitatively at all.
You're overly concerned with the proportion of your slice of the pie and not the size of the pie and even more directly, the size of your slice.
No, because HBD inflation helps it go down. So a bad price action + hbd printing lead to more hive supply 3 days later, so bad price action and more HBD printing 3 days later. This feedback loop finds no end. We already had a 99% correction in 2018-2019, that's pretty much infinite downside...
Absolutely, because I believe the size of the pie will grow massively long term without additional leverage, and I don't want to trade faster gains for more blow up risk.
Of course there is an end. In your scenario all the HBD gets converted and that increases HIVE supply by 10% (or only 1% in the hypothetical alternative which you claimed makes no difference, but of course it would).
For the cycle to repeat, the price has to stabilize or increase substantially enough (which absorbs at least some of the inflation as deflation) to rebuild the HBD supply and then start going down again for some reason. The reason for it to go down again is people not seeing value in the blockchain.
You're entitled to believe what you like, but I don't believe the pie will grow massively from the failed social platform. We need to build additional value to the platform which includes a stable value component IMO.
The leverage is minimal and the blow up risk is entirely nonexistent because of the cap. What you're describing with repeated declines is not a "blow up" at all, it is just a small amplification of what would already be a catastrophic decline anyway.
The 99% decline was simply because the extreme speculative demand driving the price to $10 or whatever it was during a brief crypto boom based on thin air and went away, and was replaced by nothing (Steemit essentially abandoning the project and treating it as a naked cash grab, which happened long before the sale to Tron, for sure didn't help). The decline would be very similar (and was similar for many other cryptos, many of which didn't survive at all) without SBD/HBD.
The 1% or 10% doesn't matter because it doesn't get fully converted at once. It's all about constant sell pressure in an illiquid market because of timing. Market timing is everything, amplification on the downside is worse than amplification on the upside.
That said we can disagree about about HBD forever, so I'll stop arguing that point.
I definitely agree. I don't think hive will have a reward pool for many more years. I also think a stablecoin is a great asset, but backing it with the governance and resource credit token is not necessary and dangerous. We could have a completely different collateral system.
Oh no. That's a huge assumption. In a bubble things go up 100X and crash 99% for no reason other than humans are dumb and emotional. Fundamentals don't matter clearly, it's obvious with what is happening to HBD.
If bitcoin goes to 100k+ soon (which is very likely imo). We will see hive go above the 2017 all time high and then collapse again as bitcoin goes in a bear market too. It's impossible to predict price accurately but a massive pump and massive dump is a very high probability scenario.
Sure that happens, and in that case the maximum added inflation is 10%. But in practice it is much less than that because: 1) not all HBD will get converted, and 2) even in the bubble-crash scenario, there is still some benefit from the deflation on the pump side.
Will this happen a few times? Probably, in fact you could even say it is a certainty. But there still has to be a long term price increase due to people seeing value in the blockchain or you're just trading a speculative asset like the rest of the gamblers. If that's the game you want to play, fine. If not, then you can't disregard the long term benefit of reduced inflation from the long term price trend.
You might prefer not to have the leverage, that's a fair preference, but you can't dismiss the benefits of it in calculating the overall cost.
I still maintain that 10% (or any reasonable percent) maximum possible (in practice significantly lower) added inflation from a large boom bust cycle is not a "blow up" risk at all. It's, at worst, a bit of drag on the way to longer term success.
liqudity pool, people lock up Hive and HBD under the promise HBD it's worth 1$. 10% interest rate moves there.
If we have 10M HBD and in the pool are 5 Million HBD. It would need 10 Million Hive for current prices.
There could be additional to the 10% trading fee reward.
The point would be, Like fiat money, it would become trust-backed. As long someone trades for 1$, it's worth 1$.
If you can convert cheaper and buy back, you can make a profit.
If the pool would become deep enough, it would make HBD super stable. Important for that would be delete the 5% fee.
what if 30 days MA converting price? sucks on spikes but would it make it close to impossible to manipulate the market in one direction. Even in a bear market. With a security feature in time, we could get rid of the 5% fee.