But what if, when we lower this percentage, people cash out their HBD on Hive and withdraw their money from the ecosystem? Would this benefit us or harm us?
It would be harmful on the short-term, and neutral/slightly positive on the long-term. Because in the end, HBD interest does print extra inflation. But the times to reduce it is when times are good and when to increase it is when times are bad. We've been doing the opposite, we made Hive interest rate 20% when times were good, and started cutting it as times get bad.
We want to get people to buy Hive off exchanges and lock it up as debt at the moment. But we should also reign in the other spending like DHF for this to succeed.
And when the price recovers some-what we can gradually decrease the interest, and not this current let's cut the interest rate by 5% shenanigans.
Also as a large HBD holder, all this talk about HBD interest made me stop bringing in new cash to save in HBD.
It will definitely be beneficial in the long run, but I'm not sure. In cryptocurrencies, a small snowball can grow into an avalanche. You're right about what you said; it would have been better to do this when things were going well. Although, at that time, it could have been seen as the reason for the upward momentum to stall.
Probably, we would still had a runway to cut it and bounce back. Now, we don't have that runway. And conversions from HBD to Hive would not caused ton of inflation. Because in essence, inflation from HBD is based on Hive price. When Hive was 1 USD then all the HBD would have amount to 11M Hive. Now it amounts to 110M Hive.
We want people to convert to HBD at these times and remove ton of Hive from circulation, and when times are good we want them to convert from HBD to Hive and reduce our debt.