The question for me is, let’s say u get a one or two standard deviation move up in hive over the next year (a reasonable assumption), what % of the market cap would the current HBD float make up? Like 0.5% or 1%.
Let’s assume 30% of that can be dumped in one day if something crazy happens (converted to hive).
That’s a one day expansion in hive supply of 0.3% or one million tokens that could come to market. How much would the price be affected by that type of one day selling. Maybe it happens consistently over several days. One million per day for 4 or five days. How badly will this affect the hive price?
On the flip side let’s say hive has dropped 50% (also reasonable assumption). And now the HBD market cap represents say 4% of the market cap of hive. Conversions of say 30% of this would represent additional selling of about 4.5 million tokens per day for a few days.
In this second scenario, I’m not sure liquidity is there to absorb selling.
This is the question that would stop an increase in the inflation of HBD from the current levels until longer term lock-ins are built into layer one.
So for now, we need to find a way to encourage existing HBD that is locked into the chain in illiquid accounts to come into the places where it can earn more by providing liquidity to the market.
The liquidity providers needs to be rewarded more by the chain some how so that there is more benefit in providing liquidity than keeping the HBD locked away in illiquid states.
LEO finance are setting a great example of how this might be done.
I have to say tho, as a die hard hiver, my powered up hive is staying powered up as the likelihood of a sixty %move higher in hive over the next year is high even if we have to go through a 50% draw down.
(I will look at options to get into HBD with other liquidity, but buying it in large quantities is super hard.
The key is to finding ways to incentivise existing locked up hbd to come out into the liquidity pools.
(And an increase in the hive price would be nice - but that can only be done by building, which the community is doing).
There is another angle to this which we will bring up on Tuesday. It is along the same lines in terms of thought process with similar results.
The game theory here really gets interesting.
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