Are you converting Hive to HBD?

in LeoFinancelast month (edited)

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The recent Hard Fork 25 added the ability to convert Hive to HBD. This feature gives the community to help push down HBD when it gets over $1, but it comes at a cost, 5% to be precise.

When you convert Hive to HBD there is a 5% fee charged by the blockchain. When there is a situation like there is right now, where HBD is trading over $1.30, the 5% fee is insignificant.

The conversion does take place over 3 days you receive the HBD immediately and the remaining Hive collateral at the end. The delay is to prevent market manipulation. The 5% fee is essentially burned in the process creating a potential upward pressure on Hive and downward pressure on HBD.

There is no guarantee HBD will stay at $1.310 throughout the conversion, in fact it is almost guaranteed it won't. It may go up resulting in a higher yield or go down reducing the yield. As long as the median stays above $1.05 it is a profitable operation and provides a direct benefit to all stake holders.

I am not your mom, so I cannot give you financial advice, but I do recommend learning about the new Hive->HBD conversion feature and how it may potentially benefit you.

If you do decide to use this feature, make sure you understand the risks involved.

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There is no guarantee HBD will stay at $1.310 throughout the conversion, in fact it is almost guaranteed it won't. It may go up resulting in a higher yield or go down reducing the yield. As long as the median stays above $1.05 it is a profitable operation and provides a direct benefit to all stake holders.

You don't get paid out HBD at the end of the conversion. You get paid back hive and the amount is calulated according to hive's median price and HBD at $1.05.

So it doesn't matter how the price of HBD varies.

You are correct, I updated it. Thanks for catching that.

Yes this is accurate. The risk comes in from the price of HIVE changing. Can go either way.

For now, I am powering up most of my HIVE. The liquid funds are for HPUD and the occasional tip.

I converted $48 HBD to $57 HBD in three days. But during the same amount of time, the price of
Hive went up by 20% and the price of HBD went from $1.27 USD/HBD to $1.108 USD/HBD.
I would have done better if I could efficiently exchange HBD to some other stablecoin and wait
for the price to get down to a U.S. dollar. I found most of the ways that involve getting into another
stablecoin is too inefficient.

I prefer to move my HBDs into the Wallet Savings, it does not involve Fees and get a 10% return :)

At the current price, I'm going to make 34% in 3 days.

Of course, it's a great chance if you have liquidity. In my case I am a bit limited alas: P

All this happens because HDB stabilizer at the moment is still off?

I believe it is on, it happens because the price is higher than $1.05 due to a pump.

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yes, I checked the post @smooth and the stabilizer is active.

Nice Pump!

Correct. The stabilizer is making a nice profit for the DHF, and anyone can take advantage of the price over $1.05 by converting from HIVE.

What I have not yet understood is if I launch the HIVE-HBD conversion, in addition to having the goal in HBD immediately, will the remainder that I receive in 3 days reflect the price of now or will it be calculated on the average of the price in the next 3 days?

Median of the next 3.5 days

How (where) can I use this option? When I convert HBD to HIVE I always do that in the market section of the wallet. This option is somewhere else? And what is the point of of 5% fee? Isn't market convertion better? Or those amounts are calculated somehow on post creation?
Where could I find the overall info about our monetary policy and structure?

PeakD has it under wallet on your Hive transfer button if you hit the down arrow.

5% fee means you are essentially paying $1.05 (US) for the HBD (though subject to price fluctuation of HIVE over the next 3.5 days). If you were to buy it from the market right now you would pay about $1.30 so clearly it is better to pay to lower price. Just make sure you understand how the conversion operation works, including the need to lock up extra collateral for 3.5 days.

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Hahahaha 😆🤣

I'm on it :D . Was doubting if I was doing the correct move, so this is relieving to read. Lmao.

Maybe a stupid question, but why not trade it for Hive right away?

Indeed, that is what most people are doing. Convert, buy Hive, convert, buy Hive (rinse repeat until all your money is in the collateral contracts or the price is no longer above $1.05)

Of course. It's the other way around. So it was a stupid question after all 😅

The problem is the conversion is too slow, it takes 3.5 days to convert Hive to HBD, this is an eternity for traders, in the meantime the price of both HIVE and HBD can change drastically. I think to improve the peg the conversion has to become faster via a hardfork.

The conversion is instant in the sense that you get the HBD instantly.

The only part that is slow is the return of collateral.

You get 50% instantly but you have to pay a 5% fee and wait 3.5 days for the other half. That is too slow for serious day trading.

Correct this operation is not intended for day trading. The purpose is to obtain HBD to sell because you think that HBD will ultimately return to $1. If you are day trading, you don't really care about that, you might even buy HBD at $1.30 because you think it may tick up to $1.35 within the next hour or two. So these are two completely different goals and methods of trading.

Great answer!!

so I guess it would make sense to continually do this process by selling the HBD received on the internal market for Hive and then restarting another converison to HBD etc.?

Yes, yes it does, as long as you are getting more than a 5% discount compared to buying with USD on internal market, it makes sense to buy Hive and repeat the process until you're all in on the collateral.

An alternative is to hedge your risk to Hive price over the 3.5 days by selling the HBD for fiat, with some strategy for buying back Hive during the 3.5 days.

thanks a bunch!

great reminder thanks man.
there is also the other strategy of holding hbd until its price spikes significantly. thought that was not gonna happen anymore after the stabilizer got introduced but since it still is it might be a valid strategy still.
too bad i traded hbd prematurely again this time ahahah, overestimating the power of the stabilizer ;)

So it would be a good idea to convert it to HBD instead of just saving it until the first to power up? I'm new to actually doing anything with the Hive ecosystem past writing.


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Is there a fee when we convert HBD to Hive ?

There's no fee on HBD->Hive (which is slow, takes 3.5 days). The fee is only on Hive->HBD (which gives HBD instantly, but you have to wait for collateral to be returned).

This is the second time I made that conversion, the first time was like 1 week ago in some similar situation and it was good, so I learned about the good situations to benefit from it and make HBD more stable

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This is accurately correct. But what about selling using the market feature?

Great information and I simply didn't know you can do such a conversion. For sure some good opportunities around it and also a great mechanism added to the mix between HIVE and HBD!

Trying out the conversion, but did not know that the conversion HIVE -> HBD is so complicated. You have to pay a 5% fee, get one half instantly, and have to still wait 3.5 days for the other half. Please make this function easier and faster, otherwise the HBD peg will be broken. The function is way too complicated.

There are good reasons for the way it works. The peg will ultimately be fine, but it could take a little while, and then take a little while longer for it to stabilize longer term.

I am. I considered not doing soo because doing arbitrage with an enforced 3+ days delay has risks.
I am only doing because I told myself to sell Hive if it went up, so the losses are mitigated a bit in exchange for the risk.

It is possible to hedge the risk. If you do it the simple way with no hedging then you do retain risk but the profit margin is so high at the moment you are unlikely to lose money. Of course it is still possible.

I converted some HIVE to HBD and the price of HBD went down LOL.

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If you sell the HBD on the market while it's up, you should do well.

I'm surprised this opportunity is still available. I would have assumed a couple wealthy people would have extracted all the value out of the opportunity in less than an hour. It's sort of easy money. What is it they're seeing that I'm not in this opportunity that they're not going for it?

From my personal perspective, I don't think it makes sense to kill the golden goose. So I show restraint and only make and don't take. This allows for more long term profits for the blockchain.

Yeah makes sense... i was wondering if that's what was happening. I did the same and even after a ton of trades the price of hbd went up not sure I have enough to make it go down much anyway.

Will the conversion option still be available if we reach the 10% debt?

Do you know the answer to that question, yet? :)

As far as I know once 10% is reached, no more comversions, unless witnesses change something

This isn’t the first wave previous waves I’ve seen a lot of conversions.

well i just helped peakd do several rounds of rinse and repeat and started conversions for about 150k hive. Sadly we can't do much more than that... and I don't have access to huobi so that's about what bittrex can handle.

I buy Hive... normally.

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Nice point,I support your update, more wisdom for you.


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Uhm... I am converting my HBD to HIVE... Oh I seem to be doing it wrong? 😅

 last month (edited) Reveal Comment

You are correct. Just be sure to understand the mechanism including the locked up collateral for 3.5 days.