A Look At HIVE to HBD Conversions And The Opposite | HIVE Created And Burned

in LeoFinance9 months ago (edited)

Ever since the creation of Hive more and more features for conversions were added. This made the whole thing a bit of a challenge to follow but I have been managing in doing it even with some of the transactions didn’t had an official record on the blockchain.

Here we will be looking at HIVE to HBD conversions and the opposite HBD to HIVE conversions.

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Types Of Conversions

First let’s take a look at all the possible way to convert HIVE to HBD and the opposite.

  1. The HBD to HIVE conversions have been around since the beginning of the chain and they are quite simple to track. There is only one way to create HIVE from HBD and that is when HBD is converted to HIVE via the 3.5 days process. This mechanics has been in place since the creation of the chain. What it does is actually providing a support for HBD on the downside, preventing it to drop bellow $1 as long as the debt limit is not reached.

  2. The HIVE to HBD conversions are a bit more complicated. They come later in development and some things were added on top of another.

There are three ways in which HIVE is being converted to HBD
2.1 HIVE to HBD conversions
2.2 HIVE to HBD conversions from HIVE transfers to the DHF
2.3 HIVE to HBD conversions from the HIVE in the DHF from the ninja mine

The first type would be the standard way for converting HIVE to HBD. When the price of HBD is above $1, users can convert HIVE to HBD at a fixed price of 1.05, that the blockchain guaranties for this type of conversions. When this type of conversions is made, half of the HIVE is instantly converted to HBD, while the other half is locked as collateral and it is been realized after 3.5 days. The amount of HIVE that is given back depends on the price of HIVE in the 3.5 days period when the HIVE was locked as collateral. This feature was added with the HardFrok at the end of June 2021. What is does is preventing HBD to increasing in price, giving stability on the upside. Because this feature was introduced later, we can see in the past there were high prices for HBD, formerly SBD.

The second type of HIVE to HBD conversions is when HIVE is transferred to the DHF (Decentralized Hive Fund). Because the DHF works with HBD, payouts to proposal workers are made in HBD, the HIVE needs to be converted to HBD for this funds to be usable. Unlike the standardconversions that last for 3.5 days, these conversions are instant. As soon as HIVE is sent to the DHF it is being converted to HBD at the blockchain median 3.5 days price. These conversions were added with the HF in October 2020. Most of the transfers to the DHF are made by the @hbdstabilizer, that works in the both directions to provide instant liquidity for HBD. We can say that the function of this conversion works mostly for the stabilizer, that is providing support in the both directions.

The third type of HIVE to HBD conversions are the conversions for the ninja mine in the DHF. These are the funds that were transferred to the DHF when the Hive creation HardFork happened. Most of them were Steemit Inc funds and some other accounts that supported the hostile takeover. Around 83M HIVE were put in the in March 2022. Later with the HardFork in October 2020 these funds were put in a slow conversion mode where 0.05% per day are converted to HBD to avoid price volatility. These conversions should last five years, two of which almost passed.

The period that we will be looking at is from January 2021 to August 2022.

HBD to HIVE Conversions

This is the one type of conversions for creating HIVE. Here is the chart.

image001.png

We can notice that the amount of HIVE created in this way has been growing in the last period with 2022 being on the top.

This is mostly because of the work of the @hbdstabilizer that is now dominant in the volume for HIVE and HBD conversions.
Note that these are not NET conversions. Most of the HIVE created above is converted back again to HBD. We will see details about this bellow.

HIVE to HBD Conversions

Now with the HIVE to HBD conversion. As we have seen above, these are bit more specific and there are multiple types of conversions.
First the standard one.

image003.png

There are two spikes that are dominating this chart. Back in September 2021 when there was more than 2M HIVE converted to HBD per day. Then again recently in July and August again reaching 2M HIVE converted to HBD, but only for a day. When there are no spikes the amount of HIVE converted to HBD is usually very low with a few thousands converted daily.

HIVE to HBD Conversions From HIVE Transfers To The DHF

Most of these transfers are made from the @hbdstabilizer. The stabilizer receives funds in form of HBD from the DHF. If the HBD price is bellow $1 it converts HBD to HIVE and buys HBD on the internal market. Any excess HIVE is being sent back to the DHF.

image005.png

We can see that these type of conversions are growing. This again is connected with the @hbdstabilizer. The stabilizer receive funds in for of HBD. If the price of HBD is lower than $1, it converts the HBD into HIVE and uses HIVE to buy HBD on the internal DEX. Any excess HIVE from these operations is sent back to the DHF.

HIVE to HBD Conversions From The HIVE In The DHF From The Ninja Mine

As mentioned above, around 83M HIVE was put in the DHF. To be useful for the DHF, this HIVE needs to be converted to HBD. Here is the chart.

image007.png

As we can see at the beginning there was more than 40k HIVE converted to HBD per day. As the balance of HIVE in the DHF drops so does the amount of HIVE converted to HBD per day. At the moment there is 58M HIVE left from the initial 83M and 28k HIVE is converted daily. This number will continue to drop in the future.

Cumulative HIVE Removed/Burned From All Types Of Conversions

When we combine the three types of conversions for HIVE to HBD we get this.

image009.png

We can notice that the orange one keeps constantly growing. As mentioned these are the conversions from the HIVE sent to the DHF by the stabilizer. The blue ones are rare but extreme 😊. Those are HIVE to HBD conversions and usually happens when there is an increase in the HBD price. The gray are the ninja mine conversions in the DHF, and as we can see those are the smallest share and keeps dropping with time.

The increasing volume from the stabilizer comes from the fact that its funding is much bigger now, thanks to the increased DHF holdings who have grown more than 10M HBD in one year. The daily budget for the stabilizer is now 180k HBD and growing.

Net HIVE Created/Burned From Conversions

When we combine all the ways HIVE is converted to HBD, and the opposite we get the final net numbers from conversions.

image011.png

We can notice that in this period 2021 and 2022, there is more HIVE converted to HBD then the opposite. More HIVE is basically removed from circulation and locked into HBD.
The big spikes are in September 2021 and now again at the end of July and August 2022.

On a yearly basis the chart looks like this.

image013.png

I have included all the years, starting from 2016 for reference.
We can notice that in 2021 for the first time there was more HIVE removed than created from conversions. This is the year when HIVE to HBD were enabled for the first time and the hbdstabilizer started working with larger volumes. The negative conversions for HIVE in 2021 were so big that they made HIVE deflationary compensating for all the new HIVE that was created.

2022 is just on the verge of being negative from conversions as well, with -1M at the end of August. How will the year ends depends on what happens in the next few months, but even if it ends with more HIVE created from conversions, this will be a small amount.
We can notice the years before, when a lot more HIVE was added in circulation from conversions. 2020 is on the top with almost 25M more from conversions.

The last two years have been overwilling positive for the HIVE supply thanks to conversions. HIVE was deflationary in 2021 thanks to conversions, and 2022 is set to end with slightly more conversions, that is much better from the previous years, especially having in mind the bad market conditions. There is around 9M HBD in circulation now, that is still relatively low amount for a stablecoin. The 20% APR for HBD in savings is attractive and can increase the demand for HBD, that can cause more HIVE to HBD conversions.

All the best
@dalz

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Conversion has helped the stability of hive price and your stats shows if more people convert hive to hbd for amazing return it will continue in helping hive price

Posted Using LeoFinance Beta

It is really nice to know about the conversion of both the hive and HBD

The 20% apr it really nice and I think it will be very beneficial to save the hbd.

A very good analysis. HBD is an interesting option with the 20% APR, but Hive doubling the value in the next period will smash that 20% APR.

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it's a bit strange people convert Hive to HBD when HBD is pumping, seems kinda risky

If you are holding liquid HIVE its literaly free money, as you basicly arbitradging between the internal price for conversions and exterlan price on exchanges/markets.

If you dint have liquid hive and need to buy it in order to convert it to hbd, the risk is in holding hive for 3.5 days and the price between the time you buy and sell hive.

i.e you are getting more HBD than simply selling Hive for HBD ?

Yes ... you get HBD for a price of 1.05, when acquiering it trough conversions, and then you can sell HBD for 1.5$, 2$ ... or whatever the price on the external market is


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Professional analysis
!pgm

I love the conversion system on hive it has a good standard which would keep the system at the top. This is my first knowledge about hive system of conversion and I have found this article very interesting.

I think it´s risky hive to HBD. Are the fee´s expensive ?

What fees?

https://whitebit.com/referral/84962f4a-1ac2-4cec-b279-f5643ef43782 ukrainian exchange wit 30% smart staking in ETH,BTC, USDT and others.
you can google about it) so when HIVE to the moon?

So, @dalz when Hive to the moon?