DeFi on Hive: It's Time

in #hive3 years ago (edited)

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DeFi Before It Was Cool

Hive (formerly Steem), the blockchain creation from the mind of Dan Larimer (@dan), was ahead of its was Bitshares before it. The usefulness and the need of a decentralized social platform was likely foreseen as inevitable and has lately become a hot topic, as social media users attempt to seek refuge on censorship-resistant platforms.

Although this creation required a considerable amount of foresight and can certainly provide a solution for today's censorship and cancel-culture, the social structure isn't even the best part of Hive.

Hive has the built-in ability of native decentralized finance (DeFi) on its blockchain.

DeFi has always been there. It has always been waiting for recognition and expansion. And now people are finally waking up to its usefulness and potential.

Hive's Native Stablecoin

Hive has its own native stablecoin that's intended to be the transactional currency for its ecosystem. The "Hive Blockchain Dollar," or HBD, is a soft-pegged digital currency that can offer benefits such as price stability, interest, and conversions to HIVE - the blockchain's staking and governance token.

HBDs provide a mechanism for everyday benefits such as commercial pricing, personal savings, and even locking in HIVE profits. These tokens are an integral part of the Hive blockchain, as they allow users to transact and make purchases without needing to use the more volatile staking token. HBDs can be earned through the social reward pool native to Hive, through the Decentralized Hive Fund (or DHF - an on-chain fund for proposals like development and marketing projects), or from purchasing on exchanges.

One of the places you can purchase HBDs is on Hive's internal decentralized exchange. The HIVE-HBD pair on the internal exchange currently operates with no fees. There are no middlemen. The tokens traded never leave your wallet until they're sold. You place your bid, another user fills the order, and the tokens are sent from and received into your wallet with one signed transaction.

With the unique features of Hive's internal economic system, HBDs offer several useful benefits to Hive users.

1 - Interest rates.

HBDs can pay out a variable interest rate that's set by Hive's block validators called "witnesses." These interest rates are a witness parameter that can be adjusted for the current economic environment or in conjunction with long-term price, supply, and rate targets. Hive users simply need to hold HBD in their wallet in order to collect the interest when it's distributed. Current interest rates can be found at

2 - Conversions to HIVE

In addition to being bought and sold on the internal exchange, HBDs can be converted to HIVE tokens at any time. Each HBD can be redeemed for one dollar's worth of HIVE tokens based on a 3.5-day average price, starting at the time of the initial conversion transaction. After 3.5 days have passed, the HBD is destroyed and the user that converted the token will receive the equivalent HIVE in their wallet.

3 - Realized Gains

For Hive users who want to keep their tokens in their own wallet at all times, or for anyone who wants to lock in HIVE profits, selling your HIVE for HBD can protect against volatility of the former asset. If a Hive user recently earned 100 HIVE tokens from social rewards and has concerns about losing some of those profits due to depreciation of their HIVE, then they can sell their HIVE on the internal exchange for HBDs and effectively lock in those gains. It's a conservative approach to accumulating wealth while remaining entirely within the Hive ecosystem and on the blockchain.

HBDs are a mostly stable yet versatile asset for the Hive blockchain that can serve as the foundation for DeFi on Hive...or..."HiveFi."

The Trifecta

There are three main components needed for effective decentralized finance: A stablecoin, collateral markets, and an exchange with liquidity providers. These components should allow for the stacking and interoperability of additional systems and blockchains in order to build out the financial ecosystem.

With a stable currency that can be collateralized for lending and borrowing, and an exchange that offers adequate liquidity and that creates bridges between multiple currencies/blockchains and their ecosystems, the stage can be set for a flourishing DeFi environment.

The Hive blockchain already has or is currently in the process of acquiring all of these components.

As already mentioned, HBDs serve as Hive's native stablecoin. There are current efforts underway to help further stabilize HBD prices, to gain more exposure for HBDs, and to shore up demand and liquidity for the token. When this can be accomplished, HBDs will be set to thrive as Hive's foundation for DeFi.

One of the potential changes for HBD would be a relatively high rate of interest being paid out - upwards of 10% APY. This would impact HBD and Hive in a variety of ways, such as additional exposure to the Hive tokens on new exchanges, more HBD pairs on exchanges where Hive/HBD are currently listed, additional supply and consequent liquidity to the HBD market, and effectively placing HBD and the Hive blockchain squarely into the DeFi space via custodial HBD staking through exchanges.

Unlocking the potential of HBD could quickly place Hive in the thick of the digital currency DeFi scene. Combined with other Hive projects set to be launched, Hive could have its own full-fledged financial ecosystem with none of the massive costs and few of the risks associated with other DeFi products currently on the market.

Collateral markets development is currently being funded by Hive's DHF. While this service is made for an account's HIVE Power as collateral for loans instead of HBD, it is a big step in the DeFi direction. With Hive's native escrow function and a working collateral model that will be open-source and can be robustly tested, new innovations and improvements can be quickly developed.

A decentralized exchange with liquidity providing and bridges between other blockchains and assets is also being developed and is set for launch this spring. DLUX was originally developed as a second-layer virtual reality interface but has morphed into a full swap exchange with its own set of validators and liquidity providers. DLUX will use escrow and multi-sig functions to execute collateralized smart contracts between multiple parties and has its own token for governance and staking.

With token creation offered by other second-layer platforms built on Hive, a full tokenized and swapping ecosystem will exist alongside collateralization and Hive's native stablecoin.

But wait! There's more!

Hive has the ability to be a wholly self-contained ecosystem. There aren't many platforms out there that offer both a censorship-resistant social system and a decentralized economic and financial system. In a world with increasing censorship of communications and increasing pressure from regulatory bodies on peer-to-peer asset platforms, Hive can stand on its own as a refuge for all.

What can Hive offer?

  1. Social media - including blogging, microblogging, and video platforms.
  2. Community ownership and moderation.
  3. Commerce and the ability to communicate with and advertise to users and communities.
  4. A variety of rewards as income, such as social rewards, development/marketing funding, or block validating.
  5. Stake in the system to be used for governance as well as increased earnings.
  6. Savings accounts that can accrue interest.
  7. Collateralized loans for borrowers/lenders.
  8. Decentralized exchanges and bridges to other blockchains, tokens, and ecosystems.
  9. Additional, unlimited layer-two applications such as games and art galleries.
  10. Anything you can think of, as long as it can be coded and implemented.

The important aspect is having both social and economic freedom. These are indispensable and both can be found in one place on Hive, in a maturing system with unlimited potential.

The censorship-resistant social system has been operating and refining for years. The censorship-resistant economic and finance system now has a chance to catch up and demonstrate its value to the network, which may far exceed its social counterpart.

Hive is about to become a lot more interesting.


As a creator of videogame art, music, etc.

HIVE is the bomb. I barely know what DeFi is. The dApps are pretty fantastic on this platform, like a new toolbox of digital innovative ideas that I can really use to play with this crazy web3.0 digital landscape.

Any devs out there do more stuff like that, allowing the creatives to come in on a site like this and easily bridge the gap between creatives creating -> dapps -> web3 -> defi -> creatives getting fairly paid for creating. I think the order is something like that?

Thanks for your feedback

One of my recent works I brought this guy back into Hive! Good to have you here.

That's all exciting stuff and I didn't realise you could earn interest on HBD? I thought that was always 0% and you could only convert or trade in the internal market to HIVE. I checked the hiveblocks site and it said 0 next to the HBD interest 😔 or are there changes coming?

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"I thought that was always 0%..."

Most of the time, it is. Since Hive began last March, HBDs spent most days between $0.90 and $1.00. I would argue that interest should have been paying out a couple of percentage points for most of that period. But since it's a witness parameter, you'd need to convince witnesses that there should be interest. However, that has never been an easy thing to do, as most of them just have a hands-off approach, no matter the price of HBDs.

Hopefully, this will not be the case going forward and they'll get on board with a new strategy and better overall management of HBDs.

"I checked the hiveblocks site and it said 0 next to the HBD interest..."

Yes, the interest rate is currently 0.

"are there changes coming?"

Yes. There should be a multifaceted approach that involves the DHF and active market trading of the tokens, coordinated setting of interest rates, and likely a minor code change.

Thanks for getting back to me, I'll keep an eye on the HBD discussion!

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I can't wait for all these to be working in their full glory.

I barely understood a word of what you just said but, damn, is it exciting! :-)

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OMG! Superb write-up! A kind of content to share when my colleagues wanted to start writing contents as their side-jobs! Thank you for this!

It's easier to use the hive platform to shill other projects and complain about low rewards ad low token price.

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Man I love his voice so much.

I'd love to see DeFi on Hive! I have been wanting to take the dive for quite some time now, but I just haven't had the funds necessary to cover the crazy gas fees over on ETH. Being able to do something similar on Hive where it is relatively feeless would be amazing.

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After all these years of SBD/HBD demonstrating its failure to be pegged, people still insist on calling it a stablecoin.

After all of these years of it mostly trading around $1...a witness that never does anything with his witness parameters for HBD and otherwise makes zero effort to assist the soft peg still wants to just get rid of HBD because he thinks it's a failure.


When SBD was spiralling out of control a couple years ago, I was among the few who actually tweaked their parameters in order to control the peg. But I wasn't top 20 and certainly didn't have any impact. So why bother if none of the top witnesses weren't willing to take any collective action, except wait several months to let it do its thing and magically re-peg itself.

"So why bother if none of the top witnesses weren't willing to take any collective action..."

The easy answer is: Don't be like them.

I was in the same boat and set my parameters accordingly, as did a couple of others. Run your witness how YOU think it ought to be run, not just based on what everyone else is doing.

If you think the thing ought to be done, then do the thing!

Be the example of excellence and integrity. If you don't believe other witnesses are operating in that manner, then why would you simply want to do what they're doing or not doing?

Well said - glad to read your post - like it :-)

Shared on Twitter.

We have amazing so many tools on this platform. Shoutout to the hive community...



Forget 99% of cryptos. In time, we'll only need $hive

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Indeed, the more tools Hive has the more valuable will be. Also, we can attract new users to this ecosystem.

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True, I totally agree that #hive will become even more interesting. Not just for current users but also for those coming.

Hey @ats-david, here is a little bit of BEER from @olivia08 for you. Enjoy it!

Learn how to earn FREE BEER each day by staking your BEER.

Excelent article! I wasn't aware that HBD could have an interest rate, although I checked and it is set to zero. Hive is such a wonderful ecosystem that I don't understand how it isn't more main stream. BTW, do you know where can I find a guide to become a Hive Witness?

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Use the Savings wallet as a staking point, to have additional security.