Sorry for late reply, but it's not easy to spot such topics in vast ocean of blog posts. I want to ensure everyone interested gets this update, so I'm tagging all who commented here: @wittywheat @yeouido.park @mehmetfix @vimukthi @leveragetrading @hafiz34 @manniman @genrigp @wlffreitas @joycebuzz @stefano.massari oh, and also @jza :-P
So the APR for HBD is also known as hbd_interest_rate and is the interest rate for HBD funds stored in your HBD Savings balance (i.e. it doesn't apply to funds on regular HBD balance). It is set by witnesses, but the effective value is determined by median value from witnesses scheduled for next round of block production (20 top witnesses + runner-up witness).
The role of the runner-up witness, who is chosen from spots 21 and beyond, varies each round. The selection heavily depends on the votes they receive; the more votes a witness has, the higher their chances of being chosen for block production.
This can lead to variability in the median interest rate, especially when there's a strong disagreement among the top witnesses. The inclusion of the runner-up witness's rate can tip the median value one way or another.
Easier to see with example:
When top witnesses signal: [20, 20, 19, 10]
Then if runner up witness signal 20, then it's [20, 20, 20, 19, 10] and the median (middle value) is 20.
Then if runner up witness signal 5, then it's [20, 20, 19, 10, 5] and the median (middle value) is 19.
That being said, I, as a witness, started signaling a 20% APR in April 2020. Then, in August 2023, I decided to start gradually reducing the APR. I know everyone loves to see the highest possible interest rates, and making such a decision wasn't easy. However, we all, in essence, pay those interest rates, and in the end, it's vital for the well-being of Hive to care for our common good.
I hope this clarification helps. If you have any more questions or need further information, feel free to ask, either tagging me here or coming to a #witness channel on OpenHive.Chat.
Is there any reason why reduce the APR? I didnt see any logic in signaling less than 20. Most of the debt is reducing and the market is going up, is actually time to INCREASE the return. In a time where most of DeFI and LPs are absorbing liquidity and their APY is going up. It makes sense to increase the return on HBD to compete.
Thank you very much for this long explanation. I think a lower HBD interest rate is better. 😀
All he said is 'I decided'. is that enough of a reason?
I've upvoted it be at the top of this comment section.
Thanks for explaining.
Posted via D.Buzz