There's something on my mind ever since I noticed the elasticity of the HIVE rewards pool (a few years ago, when I started to be a witness and got more involved with the tech). By "elasticity" I mean the number of the HIVE tokens minted in one week period.
During the last few months it went from over 800k, to under 750k (748k, to be more specific). That's almost a 10% decrease in minted tokens.
We know HIVE is a hyperinflationary token, and we kinda love that about it. It's this hyperinflationary nature that makes it so appealing as an entry point in the web3 world. But, to be honest, any adjustment towards scarcity is something that I find useful. Scarcity creates demand and it usually increase value. Ask any Bitcoin maxi about that and you'll get at least 15 minutes of continuous talking about how important it is that BTC has only 21 million created ever.
I don't know the exact mechanisms by which the rewards pool is shrinking, without looking into the code, but I assume there must be some algorithmic adjustments between the number of HBD in circulation (also known as the HBD / HIVE ratio), the peg and the actual market value of HIVE. The correlation that I see from the top of my head, again, without looking into code, is that the higher HIVE goes against USD, the less tokens are minted.
You can see that easier in the rewards you get for your posts. A couple of months ago, if you were to cash 20 HTU* for a post, with a 50/50 split, you would have gotten 5 HBD, the rest would have been 5 HIVE (assuming HIVE was trading at $1). But while HIVE was trading around $2, you would have probably gotten 5 HBD, but only 2.5 HIVE (as you get the amount of $ in HIVE for the second part). I know it can make your mind hurt, so I won't insist on the calculations, I just wanted to point this out.
If this trend continues - which we all hope will do - we may see the rewards pool shrinking even below 500k. At that point, the value of HIVE compared to USD may be in the $3 - $5 range.
This looks like a virtuous cycle: if the HIVE price goes up, the number of HIVE minted goes down, creating more scarcity, potentially driving the price even higher.
* HTU = Hive Token Units, the value displayed near your posts, which is not HIVE, nor HBD. For an explanation of how the rewards are working on the HIVE blockchain, have a look here.
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This is indeed the push that Hive needed. Higher price means more activity, more new users and a shrinking reward pool, which creates more demand and higher price, once again. A nice vicious circle in my opinion!
I call it a "virtuous" circle for the same reason :)
Oh, I thought it was one of the little English words, I hadn’t heard of! 🤣 But I got it now! 👌
The unit used for post payout always confused me even after being here for four years, in the end I just accepted it is what it is.
The link at the end of the post is very useful, that I understood but it's still very useful bto have a slider to player around with. Thanks
Even the non-technical like myself should be appreciating Hive exhibiting scarcity characters as the consequence of that will be rise in value of Hive which is all we want.
May the shrink in reward pool continue!
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First time I remember checking on this one, through your rewards calculator site, I guess steem.supply was it, there were 800,000 HIVE minted. We've gone a long way down to 750,000. The best strategy then is to amass as much HIVE as possible during bearish times.
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Word!
With more and more second layer tokens, the demand for Hive will increase exponentially
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Yeah, that's also a very important demand driver.
There is another factor that people do not consider. Everyone want the price to go up, so that is all the focus.
However, scarcity is also a liquidity crisis. Hive as some vital attributes that are necessary for growth. We all know Hive powered up is what gives us the Resource Credits to allow people to operate. At the moment, there is no problem with a lack of overall RCs. But what happens if there 10 million people on here?
The biggest problem with crypto is people look at it like a stock, not fully grasping the dynamics of currency utility.
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Agree, it's all dynamic and it should be flexible enough to account for all situations. In the beginning, though, liquidity is important to bootstrap the mechanism. As we advance, we may find mechanisms to decouple RC from the powered up HIVE, by simply adding a multiplier to the quantity and not "pegging" it.
Correct. The reward pool will decrease every year until we reach an inflation rate of 0.5%. It'll never completely cease, but that's why I keep telling people the best time to get into Hive is now.
That's an informative take on the thought put intobuilding our little corner of t,he blockchain. It's something I'd wondered about, and it's good to see the breakdown of the virtous flexibility built into the tokenomics of HIVE and HBD.
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I really loved the effort you spent doing the calculations in this post.
I assume you're talking about the link at the bottom, because there are no calculations in this post. :) Thanks, anyway!
!PIZZA is on sale right now, dont get left behind....
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This is very cool. I hope more progress and the Hive coin will become more valuable over time
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I really appreciate your rewar calculation and ninety percent of your explanation is similar to myself assessment of reward pool, anf finally under standard the equation how it work, but look at the below picture on grern tik equation......
Is it both paid same reward with various equation. I am not arguing but asking any mistake. And thanks for the information.