This may need to be a tapered rate. For example, if 30 year lock in (to back against a run on HBD) and ur inflating at 35% per year for this lock in, where does the hive come from to back the HBD? Potentially (almost certainly here) u will not have the hive to back the HIVE at these inflation rates.
Let’s say 100M USD worth of hive was put into bonds with an average of 15% per year APR, by year 5 the HBD supply would have printed 100M HBD. The HBD is backed 1:1 with hive staked in the system. After this however, things start to get unstable in terms of how much backing there is in hive to support a run on HBD.
Interest rates such as 5% APR over 30 years seem more realistic. 35% APR would expand the HBD supply so much that there just would not be enough hive to back it with after year 8 or 9.
It’s a great idea, but we have to be careful tempting ppl with such high returns when i don’t see how we are backing the HBD after just a few years of such returns.
Maybe we need variable rates based on hive price or rates that taper off over time so that we can ensure there is enough usd value in hive plus a reasonable margin of safety to protect against a run conversion from HBD to hive that don’t exist
Answered in the next post.
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