I am happy to see people finally discussing the interest rate and hope that the witnesses significantly lower it.
I suspect that whales were behind the 20% rate. I noticed that the witnesses who voted for 20% went up in the ranks and those that resisted fell.
I don't really blame the witnesses as they must do what the whales desire.
BTW: I pulled my upvotes from every witness that voted 20%. I don't think it mattered.
I really hope that HIVE lowers (or even removes) the interest rate. Since the system guarantees HBD with HIVE, the interest becomes a heavy weight on HIVE.
What I've seen happen is that users accumulate HBD when the price of HIVE is rising. They then convert large amounts of HBD to HIVE during market dips. We have had three major dips since Christmas. In each of the major dips, users converted over a million HBD to HIVE at low HIVE prices.
This last dip saw about $250,000 HBD converted to HIVE.
Since HBD holders are timing the market, the impact of the conversions is magnified.
Timing is Everything
Your first post speculated that many HBD holders will convert HBD to HIVE. The worst thing that HIVE could do is to reduce the interest while the price is falling. If the witnesses decide to lower the rate, I hope they coordinate the event so that it happens when the market is rising as that might reduce the ill effects of a massive HBD to HIVE conversion.
Thank you for discussing this issue.
!WINE