I am seriously in awe right now, I can't believe it but its true, I am printing money.
Let me show you how to do it too.
Do you know about the HBD - Hive Backed Dollars? This is our dollar pegged token, and its somewhat of a running joke that it doesn't hold its peg all that well. But I love this token even more after this most recent hard fork.
There are intricate details involved in the HBD mechanics, if you don't believe me try to figure out what tonsure is, and probably check some of @rycharde's old posts.
Anyway, in bull markets it seems, this HBD can shoot above the dollar peg, since there are not all that many of them. This was noted 4 years ago when SBD soared to 10 dollars and higher. That was a very special time in my life.
But while it was good for people printing SBD at the time, a dollar pegged token that doesn't hold a dollar is not a very good token. There were money-making (aka arbitrage) methods of bringing an underpriced SBD/HBD back up to a dollar, but until the last Hard Fork there was no mechanism to bring it back down.
Now there is, its called: Printing Money! (by me)
Its called 'Convert to HBD' by the PeakD team, and its available right in the wallet, all you need is some HIVE tokens to put up as collateral. They take 2x collateral, and the conversion happens in 3.5 days time with a median price for HIVE. The best part is this process en masse, should make the HIVE price rise, generating even more profits on the back end of the conversion.
Here's a warning from the PeakD team about when not to use this:
Don't do this when HBD is under 1.05 (there is a 5% fee), and don't do it if you think the price of HIVE will fall significantly, as that will eat into your profits.
SO THERE IS RISK ON THIS TRADE!
But, when HBD is high, this mechanism should funnel that 'high level of interest' in HBD into the HIVE price, making conditions right for this to be a very profitable trade (aka Printing Money!).
Here's the interface:
This is my 17th trip around the block, and I want to convert all the HIVE I have on hand, so I can click on the blue number and it will put that in for me.
The bank will print me 318.14 HBD today, and keep my 1380.968 HIVE on hand for 3.5 days, when the final price will be calculated, and what is remaining of my collateral will be sent back.
I hit 'CONTINUE' and sign the transaction with keychain.
Now I send the HBD straight to bittrex for dumping! Make sure to always use your memo as bittrex actually can recover funds sent without a memo, but they take a while to get around to doing it, meaning the trade could go out the window while you wait.
Once the money hits your account, check out the market. I would recommend @josephsavage's recent guide on trade types to get more acquainted with working in a market/order-book environment. As he says, 'You're the boss!'.
We can see that the spread is pretty wide, between 2413 sats and 2445 sats. If you don't know, sats or satoshis are 0.00000001 or 1/one hundred millionth of a bitcoin.
I don't want to be a 'taker', I want to be a 'maker', and I don't like waiting, so I tend to crowd the spread, since there are a lot of bots that will automatically undercut you by a single satoshi.
When I say 'crowd the spread', I mean place a limit sell way down near the buy price. Above I did 2417, and indeed you can see a bot immediately sniped me at 2416, in the time it took for me to snap the screen shot. I will go ahead and cancel and replace my order, I'm not sure I will be able to get a shot of it.
This time I managed to pin it! The bot cannot undercut me because the lowest unit is the satoshi. They will be forced to liquidate me or move the price down, remember many of these bots are working both sides of the equation. If you are a bit more patient, you might get a better price on this trade or the next.
While we wait for the order to fill, this a good time to watch a youtube video or curate some posts or play your splinterlands battles.
Then buy some HIVE with the same strategy.
Now we withdraw back to HIVE, bittrex charges 0.01 HIVE to do this.
We can already see here that we used 318.937 HBD bought at 1.05 equals 334.88 USD to buy 372 dollars worth of HIVE.
Back on PeakD wallet, we can see that we have the 728.645 HIVE on hand (plus a bit that arrived from dCity in the meantime), plus a new contract saying
318.937 HBD converted, remaining from 1380.968 HIVE collateral will be returned in 3 days.
Let's say the median price for HIVE is 0.50 cents at the end of the 3.5 days, and again, they will be charging me 1.05 for the 318.937 HBD, or 334.88, that means they will keep x2, or 669,768 hive, leaving me with 711.2 HIVE returned. Adding this to the 728.645 that I have on hand already yields a grand total of
1439,845 HIVE
This from 1380.968 that we started from, an estimated profit of 58,877 HIVE. 58,877/1380.968 is 4.26%, if you like to know those things.
And I did rush some of the trades in order to write this guide in a reasonable amount of time, remember to trade smart and never risk more than you can afford to lose.
That's awesome. I need to give this a try.
I found this post very useful. Seems I have been going about the whole conversion thing the wrong way
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Great explanation and suggestion for Printing Some Money! I absolutely did not understand how this worked before your excellent explanation and demonstration! And on the subject of printing money - SPS Airdrops!
@ecoinstant The King is reblogging this in his personal post. The Kingdom's financial advisor must review this a couple of times to figure out the cost/benefit.
In the meantime, the Kingdom sends.....
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!ALIVE
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Why is there a 5% fee? Where is that 5% fee going?
The 5% fee is burned. It exists in order to ensure that some of the profit of overpriced HBD goes to Hive stakeholders as a whole - similar to a share buyback scheme in the stock market.
with the problem a stablecoin with 5% fee is more expensive as Paypal :P
0,1-0,0.05% would be enough. Special for larger scales. 100k into HBD = 5k fees? lol i would stay in tether.
The fee is for executing the collateralized convert contract, which is not something regular users should do. There is no fee for using or buying HBD, or even the regular convert contract (HBD to Hive).
the problem is, the game to generate HBD is not on demand.
The only reason to have a stablecoin is " on demand".
5% fee does not get in the way of that. Usage and issuance of a stablecoin are completely separate concerns.
I would not say the 5% are insurance. If the time horizon for avg price goes bigger the fee becomes useless.
The fee is supposed to introduce a little friction into the convert process, so that it is a lot harder to abuse this feature.
I don't like it too. Burn or not it doesn't make HBD scaleable. 100
Great guide. Depending on the market conditions at the time (and they determine which way to go for most profitability), I think you may increase your profit if you do the trade on the internal Hive exchange. The two trades on Bittrex accrue a 0.75% fee each, so they eat at your profit, whereas the internal Hive exchange has no fees.
YIKES. The arbitrage possibilities are INSANE here ...
yes, and it seems to be keeping the hive price up on the dips and still pushing up on the pumps! I hope it works out for you, I am still cycling through!
A sensational post about the arbitrage opportunity that exists with Hive and HBD. This is something that hopefully will get a number of people involved. It is the arbitrate that will help keep the peg in place.
I am glad you put together a tutorial for it. Since I dont use outside exchanges, I can pull of what you did. However, all with a few hundred Hive should do the same. You spelled it out here with rather low risk.
It will be interesting to see a follow up post to see how it all works out for you. We see HBD Stabilizer netting the DAO a couple million Hive so it works.
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This is an A+ in my book.
Highly regarded.
@kencode @chrisrice
Thanks for this writeup, I will have to read it a few times but I enjoy the swapping of HBD and Hive also.
This is NICE!
At least by now. I'm just aware there are no free lunches...
Where is the limit? Will conversion be still possible after $HBD reaching 10% value of $HIVE?
Who will pay for this is the long term? What drives people buying $HBD for more than $1.05?
Everytime I ask the question 'who?', the only answer I ever get is 'the koreans'. I really don't know, but everyone is benefitting except whoever would buy and a dollar for 1.20 😅
There is no limit, except the limit of the markets insistence on breaking our peg, so we could print a lot more, as long as someone is paying 'too much' for them.
I'm almost certain that the 10% haircut rule applies.
Where can I read more about this? It sounds very familiar....
I'll dig around. I was thinking Blocktrades wrote about it somewhere.
10% of Hive marketcap can be printed in HBD with the ratio of 1$.
If there more HBD it isn't backed anymore 1 to 1.
But that scenario never happens in the past :D
maybe if hive hits 10$ and falls back to 1$ or something like that. Then we can buy HBD maybe for 0,20$ :)
It is an Arbitration opportunity
If you do the operation yourself, you are selling your HIVE to buy HBD.
That is, you are receiving your HBD at 1.05 dollars
To then sell it and get HIVE again.
You make a profit as long as the price of HBD (*) does not rise, and its value remains high, while you convert.
But still the accounts do not close me, take a look at my other comment
Note
(*) Where it says HBD I meant HIVE
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You use the collateralized_convert contract to convert, not sell, Hive into HBD.
What happens to the price of HBD after you first sell it does not affect your profit - only the price of HBD at the start, the Hive price at the end after you receive collateral and the feed price (ie. the median price reported by witnesses over 3.5 days) which determines how much collateral you actually get back affect how much profit you actually make.
that's how it is
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I just tried this and made a few extra dollars back. I’m not yet clear on exactly how much will be returned and if it will be in hive or hbd in 3.5days. I’ll be back with my report. Thanks
I got my first round back, it definitely comes back as HIVE!
Sweet!
Good post but there are accounts that do not close
Of your 1,380,968 Hives.
You receive today 318,937 HBD. If you convert it today to Hive X2 it would be
639.87 HIVE
You say that you already have in your hand from the first day
728,645 Hive
Why do you multiply the 318,937 HBD to get your 728,645 Hive?
Let someone who understands explain it to me, thank you
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I multiplied by 1.05 and then converted to HIVE assuming a 50 cent price (2 per dollar). I am hoping this is conservative and it will be closer to 0.51 cents at that time.
I do not doubt that it has worked, but the numbers do not close.
The good thing that of this type of operations for me, 2 good objectives are achieved
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Finally I understood the conversion thing! Haha But i got lost when you where explaining the trading thing haha
Despite that, everything good.
Kudos to this arbitrage.
I am giving it a try with
my HPUD funds.
Waiting for the order to fill in bittrex
takes time.
This is crypto after all
you need patience to get going.
!BEER
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I have been reading about this conversion process. I have to try it out. This is the first tutorial that will spell it out better
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HIVE!D
Appreciate how the numbers line up ✌😎🥓👍
@frankscoms @theocu @jonschwartz77
As far as I have seen, isn't the least reported price feed from witnesses used? This could ruin the profit at the moment, since pharesim has not updated his HIVE price since 13 days.
It's way less serious than you think. The chain uses the median value of all feeds during the last 3.5 days. One off doesn't influence it at all, so don't worry.
One thing I have noticed is that while the final conversion does use a median, the amount of collateral seems to be based on the lowest feed number, which was 48.5 cents.
The only effect I see here is slightly more collateral required.
Wow, good find. I've been wondering all the time why that's so low, couldn't make sense of it. Seems like a bad idea imho, is there a reason why that value is used?@blocktrades or @gtg maybe?
I've confirmed with the dev that it works as expected, not as described by @ecoinstant: it is the lowest price among median prices from last 3.5 days. So an outlier price error from one or two witnesses will not cause any issues.
Just had that thought too, price was on the rise. Thanks for confirming!
Thank you for confirming this!
AFAIK it is the lowest median value over the period, not the lowest feed value. That was how it was specified originally. I'll double check with the dev to be sure it was correctly implemented.
I see I wasn't sure, thanks for the clarification! 😅👍
@pharesim lets tag him
Good idea ;)
Yeah, seems legit. I just sold them on the internal market.
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Wow. very useful and interesting tutorial where anyone can go through to cash their money.
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This is a great guide that even a complete newbie such as myself can follow to make some nice easy profit. Thanks for sharing
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It has always been a complex thing to convert Hive & HBD. Thanks for clear post about the trade :)
Have many thanks for this contribution. I will deffinatly give it a shot,
Have my measly upbote and this slice of !PIZZA for your great work and spirit in sharing this with us!
Eythorphoto!
@ecoinstant! I sent you a slice of $PIZZA on behalf of @eythorphoto.
Did you know PIZZA team has a curation trail with 29 followers? (6/20)
I'm happy to see this an other practical articles about opportunities like this. I had already converted some HIVE into HBD, but seeing more articles give me more assurance I'm on the right track.
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Just wondering, is the book inside HIVE or an outside exchange better for the arbitrage?
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I will have to look into that, the internal market might be better 🤔
Love this post! Great tutorial on how to work with your Hive and HBD! Reblogging for the https://coin-Logic.com front page rotating feed!
Ao many people did it that it fell to 1.10 which to me is not worth the risk
Yes I agree, its now too tight to risk doing manually. But keep your eye on the HBD price in the future!
Arbitrage trades are some of the best kind of trades you can make. The risk is nearly zero and profits are extremely quick. The only complain I have is that these opportunities tend to be somewhat fleeting in nature. You have to get the best out of them while they last.
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I completely agree, in fact, the window appears to be closing, the price as of this morning is already down to 1.12!
But this is one opportunity to keep an eye on right from your wallet.
!LUV
<><
@ecoinstant, you've been given LUV from @vimukthi.
Check the LUV in your H-E wallet. (1/1)
Great but as bittrex suspended accounts in my region, I'm using just internal HIVE-HBD market to sell HBD and buy hive and doing the thing.
Khan, good point, are you getting equivalent pricing?
I guess so, Bu i didn't do end math when i receive collaterals, But Interal market seems a good choice for thosewho don't have access to externalHBD exchanges.
I swear I don't know why it is harder for me to assimilate content when it is in the form of a post. Give me a video any day. :)
I will read this post 100 times over if I have to!
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As a newcomer on Hive, the content of your article is too difficult for me to comprehend. I have to bookmarked it and read it again slowly some other time.
Thanks for expanding my brain!
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. Keep up the fantastic work
Nice
Excel ant retort.
Well worth it too.
brrrrrr brrrrrrr brrrrrr
I support your efforts to make things on hive, but I just wanted you to know that I am tempted to downvote you just because this has nothing to do with my post, and seems like a spam message.
I appreciate that getting started is hard, although I think you will find that there is no hate in my message, and no downvote was delivered. Buy soap for crypto, its a great idea, I might buy some. But 'click my link' with no mention to the post you are replying to is considered spam, and might be downvoted for that reason.