By @Zestimony
In this post Avoid HBD I made some sweeping statements that didn't go down well with some Hive experts. Nonetheless, I appreciate all the feedback provided, and I learned a lot as a result. So, I feel it would be nice to provide an update to address a lot of the issues raised in the previous post.
In the previous article, I was trying to highlight why Hive users shouldn't be hyped by HBD pumps and price hikes. While my intended audience was the average Hive user, the post's content was somewhat inaccurate, controversial, and, to most pro-Hive users (so to speak), it was a clear indication of my total lack of knowledge on the subject. I accepted all the feedback and promised to do better this time. So, here are the things we learnt from all the debacles last time.
HBD is an Aspirational Stable Coin.
According to @cmmemes, Hive Backed Dollar (HBD) is not yet fit to be called a stable coin, but rather, an aspirational stable coin. This, according to him, is a result of HBD being unable to achieve the sustainable level of stability as desired by a true stable coin, but at least it is approaching that height, and according to @cmmemes, we can definitely make a lot of money off HBD when it pumps by even using it to acquire other stable coins.
However, @Hivecoffee seems to disagree with the use of stable coin in relation to HBD, because, according to @hivecoffee:
"that would suggest putting the fiat feature of instability into a crypto, and calling the dog a cat. HBD is not a stablecoin, but rather a Hive-Backed Dollar. You can hold it, but it is a debt to Hive. You can always trade 1 HBD for about a dollar worth of HIVE, but the peg is only approximated by traders and some trading mechanics. Still, it is great because you can use collateralized conversion to swap HIVE for HBD when Hive goes up, and you'll get the change back in 3 days. Vice versa, you can swap HBD for HIVE anytime, and that would be like trading paper money for silver coins. The HBD is a debt to Hive. Not a dollar. The "price" is only a visual conversion for our benefit."
I couldn't agree more nor could I agree less with the above argument. While most parts were obviously true and inarguable, I made an argument (not exactly a counter argument) that even though HBD is not yet as stable as it is hoped to be, it was designed to mimic a stable coin (I think that was the whole essence of the HBD stabiliser feature he pointed out later). I cited Steem Backed Dollars (SBD) as an example. SBD was never designed to auto-rebounce to a particular value. That was why it could sometimes hit a value of 5 USD or even more. HBD definitely spikes a lot in value, but with its recent implementations and algorithmic backings, it usually finds a way to retrace to around 1 USD at all times.
Additionally, as I highlighted in the previous post, a stable coin must not be backed by fiat but must have a value-backing to it. HBD, as highlighted by @Hivecoffee had its value from Hive as it is, in his words:
"not really a 1 USD peg, HBD is 1:10 HIVE as the HBD market cap will not exceed 10% of HIVE's market cap".
However, I felt there was a need to find a sweet spot with @cmmemes and @hivecoffee, as both positions were hard to fault entirely, so, I agreed that HBD is not a stable coin, but rather, an aspirational stable coin. @Hivecoffee expressed legitimate concerns with the nomenclature "stable coins,", as it was further stated by @hivecoffee that since stable coins will soon be facing some regulatory backlash, it could be safer to refrain from using the term for HBD.
With respect to pegging HBD to 1 USD, that seems to be a logical thing to do, as the USD has become an almost global standard for measuring a currency's worth, and as noted by @hivecoffee, it is "nice to have a visual conversion for our benefit".
Liquid HBD
A lot of issues came up from my previous post, as I failed to properly highlight the utility of liquid HBD other than converting it to Hive for sales in exchanges. Thanks to @sorin.cristescu who first highlighted and reminded me that liquid HBD can easily be traded when HBD increases in price for some quick profits. That was a good way of taking advantage of any spike in HBD value, which is definitely possible if you have liquid HBD on hand.
Liquid HBD is simply HBD that is ready to use and not locked into savings for the 20% APR. So, holding it means that you are missing out on the 20% APR but ready for quick market action in the event of a HBD value increase. So, we can simply take advantage of the internal market to buy more Hive with HBD when the value of HBD spikes.
@leprechaun I also highlighted that HBD could be traded easily on external markets such as Ionomy, which I have confirmed, but not tested yet (proceed with caution).
Finally, @forexbrokr highlighted the need to always dump liquid HBD into pumps so as to quickly take advantage of spikes in HBD value.
So, the take away is this: liquid HBD will help you take good advantage of HBD price hikes in a way and manner that just converting HBD to Hive through the routine 3.5 day averaging process will not afford you.
Final Words
It feels good to have learnt a lot from my mistakes. While the above does not 100% fix the flop I made, I am sure it will go a long way. Thanks to y'all for your contributions, and I promise to do more digging next time before publishing. Nonetheless, it was an excellent conversation with y'all.
As usual, do your own analysis before investing or trading | This piece is no financial advice.
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Yay more Crypto! So much more than money.
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You at least got great response to your first post (grin) now lets hope you get an equal amount of comments this time.
!CTP
!PIZZA
Lol. Thanks Eric.
Twas really a mix of emotions the last time. Some persons were outright unforgiving that I had to make this to correct the first. It was a learning experience nonetheless.
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I guess I'm confused? Did it get that high on the internal market briefly? What has everyone's response been to getting it on more centralized exchanges with it since a lot of us feel like we have to go through Hive to get to HBD
Yea. That was the point I made last time. That to get to HBD you must take the Hive route through the 3.5 days conversion process and vice versa. But I was corrected, and reminded, that HBD could serve as a single entity without needing Hive in the internal markets, and interestingly some exchanges such as Ionomo are now accepting HBD.
Has anyone used the Ionomy exchange? DTube tokens are traded there but I wonder why it never shows up on Coinmarketcap or CoinGecko.
I haven't actually used the exchange myself. But I confirmed that HBD is tradable there.
But @leprechaun seems to have an experience, leprechaun recommended it.
But certainly, he wasn't giving a financial advice. But you could reach out for more help.
I have used Ionomy in the past just because I could.
It was easy to use but I felt it was expensive.
Coinmarketcap and CoinGecko are not all inclusive meaning that just because a project exists, doesn't mean they acknowledge it.
You can also buy and sell HBD right on the Hive Network without having to convert.
Yea.
If one has liquid HBD on hand
In reality, I've always appreciated your views here. The truth is, I understand your perspective about HBD and seriously yesterday I even expressed surprised that some people are happy it spiked.
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Yea. There's always the gold rush and for most newbies out their, it's hard to figure out what to do when it spikes. Thanks for last week's conversation, the experts taught me an important lesson though the tough way. 😂
I had to humbly take the corrections even though some feedback weren't presented the best way.
Well, we learn everyday, some criticism might be porously delivered but then, there's always a positive to take.
In my opinion, I feel HBD isn't there yet, we would get some of these spikes to it. But ultimately the goal would be to stabilize it in the future, taking advantage of the pump isn't so bad, it could help someone build an even bigger stake or stash, at the end of the day, everyone wants a functional stablecoin to depend on.
Exactly so bro! You've nailed it. It's definitely still a work in progress.
Not everyone will agree with how things go but HBD is an algo stablecoin and there just isn't enough liquidity to combat those pumps. At the same time, one of the HBD markets is closed off to most of us so it would be hard to completely keep HBD onto the peg.
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Exactly so @jfang003. It is hard to dispute the fact that HBD is an Algo stable coin, irrespective of it's level of stability. While we hope for more liquidity to make it more stable, I feel it has successfully nailed it's status as a stable coin by most often than none being approximately equal to a dollar. I appreciate that u checked back. Thanks mate!
that moment when my shenanigans are taken seriously :)))) I try to insert jokes into everything I say but that might not be obvious to everybody. Anyway, there is some truth to the "aspirational stable coin" thing but I said it more for the lols :P I like to meme on how unstable HBD is and the how into "pegging" people around here seem to be. But if you take what I say too seriously then the joke's on you :)
Lol. It's interesting you made such an intelligent comment as a joke. But truly, the joke is on me
as long as everybody is having fun I'm happy. Also thank you for the compliment
Welcome.
Is it better to convert HBD to Hive using the option in the wallet, or trade it for Hive on tribaldex?
!PIZZA
I think the safest thing to do is to convert to Hive through the normal process of 3.5 days averaging
But if you are trying to take advantage of the price hike in HBD, it's better to use the internal markets. That's if you've got liquid HBD (haven't locked your HBD in savings).
But proceed with extreme caution as HBD will always try to rebound to 1 USD
Thanks for the suggestion :)
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You're welcome.
I recently learned that there is a liquidity pool for HBD and BUSD that has been funded through liquidity. So if for some reason you can buy BUSD more easily than Hive or BTC or you already have BUSD and you want to get HBD, you can swap directly through this pool. Currently you should avoid large money changes with this pool. Thorchain supports BUSD, so it is something you could transit through in order to get to HBD without any centralized exchanges.
I am looking to make my own proposal but I'd like to see some large stakers vote on it before I go put down my own HBD on it to make it one.
Hive backed
Not stable coin
the more the better:)
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