Final Thoughts: 20% HBD has been a Smashing Success.

in LeoFinance6 months ago (edited)


I very much feel as though I have given too much lip-service to HBD and the interest rates already, but honestly I just can't seem to let it go. There are several reasons for this, including it simply being a heated on-chain political discussion, which doesn't happen all that often. Once in a blue moon. This has seemed to evoke the same outcome as most other heated political discussions: in that everyone has an opinion on the issue; no matter their knowledge or experience level with actual economics or how the platform works.

It's obviously quite annoying to see people who have no idea what they are talking about try to impose their ideology on the network. Even worse is turning it into a popularity context where people just choose sides and act like their side has validity simply because more people are parroting the same message.

But at the end of the day that's just politics, and it wasn't that long ago that I was new here and acting like I had all the answers about how to stop downvote abuse and make sure quality content was getting rewarded. Turns out no, I hadn't the slightest clue as to what I was babbling about, and a couple of my ideas would have required KYC and I didn't even realize what I was saying. These things happen.

Here are some arguments I've seen floating around:
We should lower the 20% because it 'feels' unsustainable.

Well I mean math doesn't care about feelings, does it?
We can not base economic policy on feelz.

We should lower the 20% because people think it's a scam.

Okay so this one is particularly fascinating.
I've seen it at least 3 times within the last couple days.
So... not only should we be basing economic policy on feelz,
but we should also be basing it on the feelz of people outside the system?
Hard pass.

What The Swarm isn't seeming to realize is that politics is a game in which many many people are going to bitch and complain and project blame onto others no matter what decision gets made. The naysayers outside this environment are not to be taken seriously. Today they say 20% is unsustainable. Tomorrow when we lower it they'll say we lack conviction and that this sets a precedent for lowering it again and that the system lacks dependability. That's a battle that will provably never be won no matter what action is taken. Welcome to politics. Yes I know it's terrible.


It will always be the "witnesses fault"

I hope that all of our witnesses understand that they are going to step in a huge pile of shit no matter what. Like it never matters what they do; it's always some political tragedy where they end up being accused of corruption and self-aggrandizement. Every time: that will never change.

Of course this time around if HBD yields get lowered and the price crashes more and people like me are standing on the sidelines like, "I told you so," it could be a significantly worse situation than previous iterations. So at the end of the day I'd like to state my case one last time and point out the minefield that is HBD interest rates.



Looking at the numbers tells an interesting story.

Shoutout to @dalz for always providing such useful information in an aesthetically pleasing manner. So obviously the first question we should ask is: How much are 20% yields costing us? We can see here that they have basically cost us... nothing.

In previous discussions I have pointed out that a debt-ratio between 5%-10% combined with 20% HBD yields implies that the cost to the network is 1%-2% of Hive's market cap. However this is only true if we ignore year-over-year growth and assume that 100% of all HBD yield gets dumped on the market and the only demand to buy that HBD is the Hive conversion backstop.

That's not what we are going for nor what happens in the real simulation. It's a gross oversimplification. Just focusing on "20% is unsustainable because 20% is 20%" is an even more flagrant reduction, and is where the vast majority of the Hive mob derives their feelz from.

In any case over the last year it looks like we've increased demand for HBD by $2M. How much HBD did we print in the last year? Less than $2M. That is a net positive. All the data available suggests that 20% yields on HBD increase the value of the network and cost the platform very little, if anything, to keep active (thus far).


See but nobody cares about any of this. They thought we were out of the woods and a new bull market was starting, and then BTC crashes from $30k back near the $25k support line and everyone loses their collective minds. WE HAVE TO PRINT LESS MONEY THAT WILL MAKE NUMBER GO UP OMG MAKE THE HURTING STOP. CAN DEVS DO SOMETHING?!?!?!?!?!

Rugpulling HBD yields equates to rugpulling Hive spot price.

Honestly I hope that yield does get reduced to 12% just so I can be 100% sure that I was unequivocally correct this entire time. No one seems to understand that we can still dump the price of Hive back down to the classic 10-15 cent gutter-trash levels. That is what I'll expect to happen given tinkering with the economics of the system in such a way that implies such little respect for the balance of the ecosystem.

Like imagine if the Federal reserve just thought they could manipulate rates by 10% at a time whenever they FELT like it because whatever. lol. It's clear crypto has a lot of growing up to do in terms of economic diamond hands and the ability to sit in an uncomfortable position lest we end up in and even worse place due to panic. Discipline is key and seems to be lacking in crypto pretty much across the board. Even I haven't DCA traded a 4-year cycle correctly yet, and there's really little excuse.


Point being is that all evidence suggests that 20% HBD yields are doing great. Fantastic even. Demand is going up higher than the amount that we are printing on the average, and it's been a shit year for everyone. We should have lost this gamble big time, but we didn't, and still people want to roll it back like it didn't work. It worked. It's working. Leave it alone.

But again oh those feelz come into play and those of us who aren't really capitalizing on the 20% and are subjected to Hives rampant volatility see it as risk-off leeching of the governance token. Again, never happened. Show me how much Hive we had to print since April 2022 in order to keep this thing going. Literally never happened. This is a delusional fantasy of persecution not based in reality. The feelz are completely irrelevant. I won't have it.


We can think of high HBD yields as the network taking out a loan.

I hate to put it this way because I've made many good points as to why HBD is NOT DEBT, but in this case it suits me much better to assume that it is, so I will. Context matters.

In any case when we increase HBD yields Hive is making a bit of a gamble. We are betting on demand of HBD (debt) going up more than the cost to print the new money (supply). If demand goes up like we want, we never have to use our Hive collateral to mint more tokens. It appears as though that's exactly what's happened, even in the middle of a very unfun bear market. Although it would be nice if @dalz confirmed it just to be sure. Either way: it was very inexpensive (or free) to boost the yield like we did. Guaranteed.

We can think of lowering yield on HBD as paying back the loan the network took and unwinding the leveraged position. So you're telling me that a lot of people on Hive think it's a good idea to capitulate at the tail end of a bear market and pay back this loan at local lows? Really? Is that what I'm hearing? If so they must think the price is going even lower and we just need to rip off the bandaid and brace for impact. Because that's how leverage works.

Except the logic employed here is hypocritical: all these people are convinced that number will go up if we lower HBD yields. Again, it's a silly notion which I've pointed out in various other ways in the previous posts about this topic recently. APRs are measured on a year to year basis. We save no money today for Hive by lowering yields: we save them a year from today. But we will lower demand to hold HBD instantly given a lower APR. That's just human psychology hard at work.

This is funny because once again it's the exactly opposite of what a person should do. The other day @whatsup told me she wanted to rotate into HBD but is hesitant because of all the contention surrounding the interest rates. I told her it was all good and not to worry about it. The debt ratio is in a very safe position considering the haircut sits at 30% and the current ratio is 7.5%. HBD can not break to the downside from here; our collateral backstop is way too strong at the moment.

HBD holders hear that their yields might get reduced and immediately think, "that's bad maybe I shouldn't hold HBD". Again, the yield is irrelevant when compared to the spot price of Hive. When I hear people talking about the yield reduction right after a dip in crypto at the end of Q3... I'm thinking lol I need as much HBD I can get. In fact let me grab some more as I write this, it's all going back into Hive at the end of September anyway.


Rock Bottom

Capitulating now is like a drug addict that's about to detox (or a stoploss set before liquidation). The drug addict is being told this is the best move, but everyone knows it's not going to be a fun time. If you drink 10 coffees a day and then just decide to quit cold turkey for health reasons or whatever do we really think there isn't going to be any fallout from that situation?

This is what most people who want to lower the yield completely fail to understand. The level of consequence associated with this action is being completely dismissed as a trifle. Again I hope the rate does get lowered just so the wakeup call will be forever remembered. We could obviously collectively use a hard dose of reality when making critical economic decisions on behalf of everyone.

There are only two reasons to lower HBD yields:

  1. The network is overleveraged and we need to mitigate further loss.
    (AKA we lost the gamble.)
  2. The network is doing very well and we want to unwind the leverage before it all goes to shit.
    (AKA we won the gamble.)
We know that both of these things aren't true.

The debt ratio is not overleveraged and the network is not doing 'very well' for itself.
We are near local lows and the ratio is 7.5%.

There is no #3: make number go up.

Again, that is a fantasy.

What about UST?

None of the people calling HBD a scam because "20% is unsustainable" were spouting that nonsense before the UST collapse. Not a single one of those people had the forethought to look at UST and consider their absurd debt-ratio and short it into the ground. A short on UST would have been the most risk-free short of all time with this information in mind, and the only entity that actually did it is the one that brought it all crumbling down to zero. Get wrecked.

And so these same people calling HBD at 20% a scam? That isn't insight. It's a kneejerk irrational response based on another disaster that they never even saw coming in the first place. Now they're an "expert" on scams because they saw of bunch of DEFI tokens crash to zero. These know-it-alls have know shame. Ignore them.



All the on-chain data suggests that the price of maintaining 20% interest rates on HBD is either low or a net-negative cost. The feelz from a random bear market dip are wrong. There is no freeloading going on. "My taxes pay for that," is often a phrase uttered by the ignorant and self-important. The actual situation has far more nuance than that. Respect the reality of the predicament we find ourselves in.

The most alarming part of all of this, I find, is the casual nonchalance of blatantly tinkering with a sensitive economy and acting like it's okay to manipulate numbers like this drastically all at once without even testing it. Sure we boosted it to 20% from 12% 16 months ago and it wasn't that big of a deal, but also printing money & creating inflation vs sucking money out of the system and creating deflation are two very very different things. Just like doing drugs and coming down off drugs are two very different things. One takes a bit more finesse than the other.

At the end of the day I expect our witnesses to make several critical errors when determining economic policy like this one. I mean how could they not? Economics are difficult. Perhaps that's just part of the process. All I can do is state my case and make the argument that determining economic policy based on the feelz of a bear market is perhaps not the way to go. I prefer numbers and data myself. There's a lot on the line here, and a single misstep is going to enrage the mob even more. Just saying. No pressure. kek.


I always enjoy your thoughts on this kind of topic because they seem to take most of the viewpoints into account and you have a sense of humour about it too which is a big plus. I'm an absolute nobody here, but I'm here learning and political debates are always going to get heated and there will always be some really stupid comments thrown around backed up by absolutely nothing and then trumpeted around as if gospel - that's just human nature.

What is also human nature is the "sky is falling mentality" and to run around causing chaos at the smallest inkling of doom and gloom. Diamond hands is a coined term for a reason (see what I did there?)

At the end of the day, the people that are planning on being here long term are going to be here long term because they believe in the ecosystem, not because they are looking at profit alone. If people want to dump their HBD as a threat, well those people surely are not the types of people that you want in any form of governance because that's a rather tantrum like response isn't it?

Math do not care s**t about feelings. If the model is sustainable go for it and let's keep Hive building and ramping.

At the moment I am not accumulating HBD as my priority now is towards HP but when I will reach my HP goal (5k HP within the end of the year) I will start accumulating HBDs as well!

So, where are those witnesses where you rebutted my claim that 'they aren't having a real conversation on the issue' on other Hiver's blogs on the issue? They have said little else, other than announce their intentions, but you feel that users having a side conversation means our input is being heard? It doesn't look that way...

You know what was WAY more annoying in my opinion?

When they named the network Hive after the forced rebrand.
I would have went for something less generic like Hydra or something.

I don't know what to tell you man: you are right.

But also this is just how republics work.
The people who get elected don't have to ask for permission.
They act first and deal with the fallout afterwards.
There are benefits and pitfalls to doing it this way.
Strong leadership and power consolidation are a double-edged sword.

My analysis of the situation is that most on Hive exaggerate the problems and downplay the benefit.
We can argue this is suboptimal and it "shouldn't be like this" all we want,
but at the end of the day everyone on Hive implicitly agrees with the rules.
Whether they like it or not.
It's opt-in governance.

but at the end of the day everyone on Hive implicitly agrees with the rules. Whether they like it or not. It's opt-in governance.

Or just leave, like most do...

The whole point in the beginning was to be a new revolutionary way to govern, but it ended up being just a copy of the current Centralized US Gov... So, Hive is a failed experiment really.

I can see how easy it is to come to this conclusion, but I don't agree for a handful of reasons.
A big one is USG doesn't control USD, but Hive does control Hive and HBD.
Citizens of America do not benefit from a strong dollar, in fact the opposite is often true.
Citizens of Hive directly benefit from a strong currency, and the currency has other utility besides storing value.
I could go on, and have in other posts, but your name is literally Not-Convinced so...
Clearly these things need to be proven rather than speculated upon.

But calling Hive a failed experiment is extremely premature.

This network will continue running until something exponentially better comes along, which I doubt will happen.

A lack of growth year over year shows stagnation, so definitely not a success and in my eyes; A failed experiment, because the end result was not at all revolutionary and at this point will not be seen, at least for years to come if ever.

All Hive has proven is that you only need a small community to make the economics work for a consistent period of time.

By the way, I didn't say it was exactly the same when you get into the details. It's the basics that are close enough. It doesn't have to be that way though, because of the differences, like realtime voting. The problem is mostly with the average complacent human. If that can't be accounted for then there's going to be little difference. Stake weighted voting didn't counter this, it just made it worse.

Those would probably be my final thoughts. I've read all sides but have my own views.

I've lost quite a bit of confidence while studying the reaction to potential change. Actual change? I think I'll start stocking up on popcorn now and maybe buy a new chair for that event.

I accepted 12% knowing it could go up or down. I accepted 20% knowing it could go up or down. I respect people knowledgeable in their fields and learn a lot from them. I also read the fine print.

It's a well-rounded synopsis you bring to the table. You don't expect the world and you embrace change. That's great. Although while I might sound defeated I'm not feeling too defeated with 13/20 witnesses signaling 19%+ rates.

I have no problems with change, lowing the interest rate is a natural process that should happen within the right context. It is the logic being employed in this discussion that I have a problem with. More than half of the reasons presented to change the rate are not based in reality other than the feelings surrounding them. I'm not sure if a successful venture can be operated in this manner. "I feel like this airplane should fly and not crash into the mountain," is a bit cringe. Not looking forward to being a guinea pig in that experiment.

All I can say is that I would sooner vote to increase the rates to 25% before decreasing them to 15%. Which one of those options is the more extreme change? The data laid out before me is screaming that HBD is still in a phase of exponential growth, just like Bitcoin and many other cryptocurrencies. Ideally inflation rate should match the growth rate. No one seems to be coming at it from this angle, and I find it extremely alarming.


Quite the thorny issue. I’ve evolved on it over the past week or so and was against it but now I’m all for it to remain or increase. Bear market stupidity cannot be overlooked and this crap with feeling HBD is too much at 20% is stupid as hell. Best thing we can do is vote to keep the witnesses in there that have 20% HBD in their setup.

My real issue is that I’m trying to accumulate hive as much as I can but I also need to keep increasing my HBD savings as well lol.

What are you expecting at the end of September? Dump before moon?

I always just try to buy in late September is all.
Q3 is usually slow while Q4 all the stops get pulled out.

it is very tempting to invest some money in HBD at this rate, 100% agree

It is true that many people push their opinions on the network without any knowledge of the subject. Nicely explained

You missed one argument
We should lower the 20% because APR for HP Curation is lower

That's actually the best argument for it.

Maybe we should also lower it because Bitcoin APR is 0%.

Yeah, or wait for the carrot season, or change the subject just because.

Yeah I think it's pretty clear that this isn't a conversation we tend to have when number is going up, so maybe it just completely vanishes.

Don't think this is a question of ups and downs, it's more about meaning, and if we want HP people or HBD savings people, at the end we can resume this as a choice, have HP and get 10% or powerdown and get 20%.

Sure, but on the other hand, if Hive goes up to, for example, 60 cents any time in the next year then you've just gotten greater than 100% APR equivalent. The potential upside of Hive can't be ignored in that calculation (of course there's a potential downside too).

"if", "next year"😉

This conversation is happening now.

Clouded judgement and poor rash decisions without facts have made great companies crumble……

Very true. Luckily Hive is much more robust than that and we could run at an unprofitable deficit for years and continue operations. I mean obviously everyone would hate it but I wouldn't be opposed to 10 cent Hive back on the table. I'd just do what I did last time and liquidate all my Bitcoin and shove all in. Easy money.

I have been kicking around here for many a year. I have only invested my time. When the rate went to 20% I began to place some of my meager earnings into HBD. For the past several months, I wait patiently for HBD to break below the $1 mark and then transfer a little into savings and purchase some more HBD.

The point is, I really enjoy myself on the blockchain as an outlet and a social network. Truthfully, I am hoping to enjoy many more years sharing photos and blogging.

The money stuff always works itself out in the long run.

One of the things that bothers me isn't so much wanting to lower the APR but the drastic drop that many seem to want. Dropping the APR to 15% or less feels more like panic (which there is no obvious reason for) than a decision backed by data and careful consideration. If you really want to see the APR go down, why not by 1 or 2 percent and see how things go from there?

Is it dropping, or are some signaling?

It's like holding up a sign that says, "This might happen at some point." Giving people plenty of time to prepare.

It could be several months before any actual change. Or it might not change.

And from what I've gathered, the gradual approach is what most seem to agree with.

As a witness, if you are signalling 15% then does that not mean you want 15%. If you want 19%, why not signal 19%? Last I looked, there was only one witness in the top 100 or so signalling a slight drop. Everybody else was at either 20%, 15%, 12% or something lower.

I realize of course that it takes enough witnesses (or enough hive power) signalling a certain percentage to make it so. Right now the majority are still signalling 20% so that's where it is still at. It's just that most of those witnesses that want a change want a significant change. A majority of people may want a gradual change but a majority of witnesses do not (based on what they are signalling). They either want no change or a big change (with like one exception).

Yes, it's probably safe to say what they signal is what they prefer. Of course I can't speak for anyone. It's also possible now some are signaling 20%, and maybe they don't want to.

It jumped from 12% to 20%. That was significant, and a solid demonstration of how the system works. People knew what to expect. Change. Since its inception, the rate is subject to change, by design. People were happy with a significant change before (not everyone of course). So what changed?

Where was the argument about gradual change when it moved up? It's the exact same system. So what changed? ;)

So I wonder why the change needs to be a coordinated effort (supposed to be decentralized), while the system as is involves everyone signaling their own rate independently, effectively creating a gradual and everchanging process.

It doesn't have to be coordinated yet it's also ok for people to voluntarily get together to discuss it too. Makes more sense to me then everybody working in isolation with no input or discussion with others. Decentralization isn't the same as a gag order. It's supposed to be a "consensus" after all :). Plus, since witnesses rely on their voters, they may feel they need to explain themselves if they are making what may be a controversial decision. Witnesses can signal how they want independently of course. But voters vote independently too. Debating these things out in the open makes more sense than just seeing some random change happen. At the end of the day, witnesses can still signal however they want.

Personally, I would not have minded if the rate went up slower vs. all at once but I think the risks of lowering the rate drastically are different that the risks of raising it drastically. I also don't see that anything significant has changed that suggests the 20% was a mistake or needs to end now hence I would prefer no change or at least a more gradual approach. But as they say, opinions are like assholes, everybody's got one...

I'm sure people do put their heads together, then act on their decisions independently. I'm not suggesting how people should come to their conclusions.

And yes. I'm not here to provide responses to the "popular" talking points and arguments. Just sitting here trying to wrap my head around all this.

I think anyone going into HBD rationally would simply accept the attractive range, rather than picking one round number and cheering for it. Then sit back and enjoy life, I guess.

New Slogan: HBD. For investors who know how to chill.

LOL. That was a joke.

I wouldn't dump my HBD if the interest rate goes down to 15%, but if Bitcoin's dollar price goes down ...

heh Bitcoin is already super cheap right now I think a lot of people are going to regret not stacking moar

We save no money today for Hive by lowering yields: we save them a year from today. But we will lower demand to hold HBD instantly given a lower APR. That's just human psychology hard at work.

Same thing @taskmaster4450 been saying, like forever.



Read how this all have started with Toruk

Glad someone is on the same page as I am

I do think the interest rate on HBD is okay and for the fact that it has been sustainable till date I do believe we can only get better. At first I never knew of the benefits of saving HBD but ever since I knew I've been taking advantage of the opportunity because I do believe that in one way or another I'm helping the Hive Blockchain by doing so and I'm even benefitting in the process.

Like you mentioned, the 20% APR is doing so well and I'm very sure it will continue to do better, hopefully.

Wait. People think HBD at 20% is a scam??? :O
Never heard that before xD

This post has been manually curated by @steemflow from Indiaunited community. Join us on our Discord Server.

Do you know that you can earn a passive income by delegating to @indiaunited. We share more than 100 % of the curation rewards with the delegators in the form of IUC tokens. HP delegators and IUC token holders also get upto 20% additional vote weight.

Here are some handy links for delegations: 100HP, 250HP, 500HP, 1000HP.


100% of the rewards from this comment goes to the curator for their manual curation efforts. Please encourage the curator @steemflow by upvoting this comment and support the community by voting the posts made by @indiaunited.


Sent 0.1 PGM - 0.1 LVL- 1 STARBITS - 0.05 DEC - 1 SBT - 0.1 THG - 0.000001 SQM - 0.1 BUDS - 0.01 WOO - 0.005 SCRAP tokens

remaining commands 9


The tokens that the command sends are: 0.1 PGM-0.1 LVL-0.1 THGAMING-0.05 DEC-15 SBT-1 STARBITS-[0.00000001 BTC (SWAP.BTC) only if you have 2500 PGM in stake or more ]

5000 PGM IN STAKE = 2x rewards!

Discord image.png

Support the curation account @ pgm-curator with a delegation 10 HP - 50 HP - 100 HP - 500 HP - 1000 HP

Get potential votes from @ pgm-curator by paying in PGM, here is a guide

I'm a bot, if you want a hand ask @ zottone444


$PIZZA slices delivered:
@torran(1/10) tipped @edicted

Where can I borrow USDT?

you can apply for a HBD loan with 😏

Thats cool.

lets make it 50%

but we should also be basing it on the feelz of people outside the system?

If you want new people to join Hive, then yes, we should take that also into account.

IMHO, the biggest issue Hive is facing, is attracting new (active) users. Even within Crypto Hive is not really known, especially for a project, which is quite around for a while.

You make good arguments for keeping the APR at 20%, but how many new users did this APR really attract and how many of them actually stick around and are interested in the long-time perspective of the platform and are not just mercenary capital?

Interesting thoughts - especially for a relatively new HBD user such as myself

I did have quite some considerations before starting a HBD savings account. Not necessarily because it felt unsustainable but more because it affects all hive investment / gaming projects.

Being a financial geek - i try to do scenario analysis on all my potential investments before I join in - using the discounted cash flow method both to create a forecast of expected returns aswell as correcting the investment for opportunity costs by using the 20% interest from HBD as the discount rate. This high yielding and relatively lower risk alternative makes it hard for new projects to end up as attractive. Having such a high opportunity yield might prevent funding to solid projects (or force them to make more risky decisions) and thereby slow down innovation.