Some speculation on HBD price movements and how it impacts proposals

in #hive17 days ago

Why am I writing this post?

I recently unvoted all the proposals that I was voting for (unvoted on a temporary basis only) so that the @hbdstabilizer would receive more funds to fight the price spike in HBD. While I’ve explained my reasons for that action in various places on the blockchain and elsewhere, it seems like it’ll be more efficient to make a post that describes everything in one place, hence this post.

Or, that was my original plan for this post.

But this post has grown so long, I’ve decided to separate the discussion about proposal funding into a separate post, to keep the resulting comments from readers segregated better, and keep this post focused on the root reason for my voting action, which is the price action in HBD.

Why did HBD price increase recently?

I want to address this issue first, because it’s the reason for everything else that will be discussed in this post and the next one, and I think this is one of the most confusing things for many people, from the comments I’ve read here and elsewhere.

First, I can’t say for certain why HBD price is going up.

But, in my opinion, there are only two reasonable possibilities: 1) a completely random increase by really bad speculators (relatively unlikely I think) or 2) an attempt to pump the price by someone who has previously acquired a fair amount of HBD (this is most probably the reason, in my opinion).

I think these are the only two reasonable possibilities, because HBD lacks most of the characteristics that might conventionally cause a cryptocoin to increase in price (for example, I’ve seen very little promotion of the coin as something to HODL, at least on the sites I frequent (aka Hive-related sites).

For the rest of this post, I’ll be writing with the assumption that the increase in HBD is due to an active attempt to pump the price of HBD, but everything would mostly apply in the case of a random price increase as well (well, except for the next two sections, which you could skip, if you don’t think there’s a price pump going on).

How a pump is engineered

Since I believe a price pump is the most likely reason for the increase in HBD price, I’ll go into a little detail on how such a pump can be engineered. The basic idea for a pump is simple: the pumper acquires a coin for a low price (because it’s not worth a lot inherently), then makes some public trades with themselves to raise the quoted price for the coin.

This technique for increasing the price on an exchange is only really feasible when the pumper does the trades with themself on an exchange without much active trading by other people. If there’s many other people trading there, those people will start selling the pumper a lot of the coins at the new higher price, and also make it difficult for the pumper to raise the price.

So the pumper will generally try to find a coin that isn’t traded a lot and has a limited number of existing holders that might trade it. When possible, they will also look for an exchange where the number of potential trading partners is limited (for example, a low volume exchange that is not easy to join). This allows them to raise the price easily.

As it happens, in normal times, there isn’t a lot of HBD being traded. There’s various reasons for that, and we’re planning changes to increase it’s pegging that will likely cause it to be traded more in the future.

But for most of its history, it normally trades at low volumes, which makes it a potential target for a pumper. We saw this happen many times in the past for SBD, for example.

While I can’t be sure of the mechanism by which the pumper then promotes the coin at its new, higher price, I wouldn’t be surprised if they don’t really need to do anything at all: there’s many “price/volume” watching metrics on exchanges and third party sites that bring attention to any coin that is moving rapidly in price and volume. These very metrics can act as a promotion method for the pumper to inexperienced technical speculators who don’t bother to do a proper investigation into the fundamentals of the coins that they buy.

So, just to complete the circle on how this works:

  • pumper buys a lot of the coin at the “reasonable” price from other people
  • pumper raises the price (and trading volume) by trading with themselves to create an unreasonably high quoted price that may fool the unwary
  • pumper profits by selling the coins they bought at the reasonable price to unwary speculators at the unreasonable high price

Now, this tactic can go wrong for the pumper. For one thing, this kind of activity is illegal in many jurisdictions. And even that aside, the pumper will wind up paying unreasonable prices for some amount of coin as they pump up the price (how much depends on how often they are forced to buy some coins from other people due to the trading volume). So if they can’t later unload enough coins at the high price, they can lose money. This is why it’s so important that they choose a coin with a low initial trading volume.

Is pumping immoral?

Yes. It’s a deliberate attempt to fool people and extract value from them without delivering anything real in return. It’s basically a form of fraud. I realize a lot of people who are new to trading don’t realize this (and there’s a lot of inexperienced traders in crypto and in regulated markets for that matter), so I think it’s important to highlight this.

There are “pump groups” out there who actively try to attract other people to help in their pumping efforts. Please don’t participate in such activities: you’re likely to be cheated, and even if you’re not and they are “honestly” including you in the pump rewards so that you make a profit, you’re still cheating someone else.

Why do we want HBD to be relatively stable in price?

When you want to contract for any kind of long term work, it’s important for your contract to be formed with a relative stable payment value. This is because an unstable payment value leaves either the buyer or the seller unhappy because an originally fair agreement (fair from the perspective of the buyer and the seller), becomes unfair. And if either party is unhappy, it causes ill will, and discourages further contracts.

This principle is well understood in economics, and it is easy to look at places in the world where the currency is devaluing rapidly and see the problems that result. No one wants to take the devaluing currency as payment, and most trading ends up being done in some other, more stable currency. For example, it’s quite normal in countries with a rapidly devaluing currency for people to request payments in US dollars instead, which are readily available in many places, and relatively stable in value.

Having a stable currency on Hive will be extremely beneficial, in my opinion.

The proposal system itself already benefits from the quasi-stability of HBD, versus the much more volatile price of Hive. There was a similar proposal system on BitShares that paid out in the native currency (BTS) and the erratic values paid to proposals caused so much controversy that ultimately most of the proposals ended up being paid to a central entity that acted as an escrow agent, accepting the bitshares paid by the proposal system, then paying out a fixed USD value to the individuals doing the work. To mitigate this issue, Hive’s proposal system was designed to payout in HBD instead of Hive, and for the most part, this has worked out well and has obviated the need for a trusted middleman to act as an escrow in most cases.

Methods for increasing the stability of HBD value

hdbstabilizer bot

Currently @smooth is running the @hdbstabilizer bot to help stabilize the value of HBD. It’s a stopgap measure, until we can implement a more powerful method with the next hardfork (a Hive→HBD conversion operation). I won’t go into detail here about how the stabilizer works, because there’s already been several posts by others that describe the mechanism in depth.

But while it’s only a stopgap measure, from my point of view, it’s already had perceptible impact on the price stability of HBD. At the height of the pump attempt for HBD so far, HBD only reached around $3, whereas in the past, we’d seen SBD go to much higher values during a pump (and last time I checked, SBD, which has no corresponding stabilizer running, was quite high due to the pump going on there). And that $3 price didn’t last long. As of this writing, HBD is just a little above $2.

The more funding received by the stabilizer, the more effective it is at fighting efforts to pump the price of HBD. Due to the mechanics of the Decentralized Hive Fund (DHF) that is funding the stabilizer, plus the profits to the DHF itself from the stabilizer’s trading, the amount of HBD funding available to fight the price pump is slowly increasing.

Hive → HBD conversion operation

This new operation will have more power to pin the price of HBD than the current stabilizer bot, mainly because it will enable faster creation of more HBD. As mentioned previously in the section on the stabilizer, this is the main limitation on its ability to fight a pump in HBD (the budgetary limits imposed on the DHF when it comes to distributing HBD to the stabilizer).

An interesting potential side effect of adding this operation is that it should offer some reasons for buyers to hold liquid Hive as well, because liquid Hive holders can use it do profitable arbitrages whenever HBD rises above $1. Of course, the fewer times that HBD rises above $1, the less profitable this becomes, so it’s hard to predict how much this effect will occur, if it keeps HBD as stable as expected.

Price transference from HBD to Hive

One final important point: both of these stabilizing mechanisms essentially work towards moving any price appreciation of HBD into a price appreciation of Hive to some extent (although the stabilizer probably does this more efficiently because an arbitrager using the conversion mechanism may just elect to keep their arbitraging profits in some coin other than Hive). This is because both mechanisms create a demand for Hive that can be converted to “reasonable price” HBD, where the resulting HBD can then be profitably sold on the open market, whenever HBD exceeds the reasonable price of $1.

This price transference also has another beneficial effect: due to the mechanisms by which HBD is created, an increasing market value for Hive also allows for a larger supply of HBD to be created when needed to meet increasing demand for HBD as a stable payment method.

Upcoming post (tomorrow): weighing the merits of current proposals

Generally speaking, I think I’m one of the biggest proponents of using the DHF to fund development. But at this particular moment, I believe the merits of the stabilizer outweigh any other active proposal.

I’ll go into my reasoning for that in my next post, so please confine responses on this post to a discussion about HBD itself, just to keep things logically organized and avoid asking questions that will probably be answered in my next post anyways.

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Thank you for writing this. You did explain to me over chat, but having it as a post helps me to point this post to others, because there are several people asking me off chain as well.

The way I see it, is exptremely simple. We need a stable coin, as we run our DHF operation with it. We need to peg it at $1, otherwise very quickly all approved DHF projects will get huge amounts of additional money for no reason. The mechanism you described, buys Hive by selling HBD. That alone should increase buying pressure on hive and selling pressure on HBD, which is what we want.

We want a higher hive price and a $1 pegged HBD. It is as simple as that.

I’ve never understood people who want a high HBD (or SBD) price. Hive should rise in price because it holds all the utility! Resource credits, governance voting, etc. HBD’s only utility is that it can be converted to $1 of Hive... So obviously if we see HBD trading at multiples of $1 it is pump & dump trading activity and completely divorced from any underlying fundamentals. Anyone paying $8 for a token thats only utility is to be converted into $1 is a scammer or a fool.

We should never cater Hive economic principals to these types of traders and I’m happy the stabilizer proposals are skimming their profits & reinvesting into Hive instead. The growth of the DHF treasury through Hive’s increased market cap and the HBD stabilizer are very heartening.

That being said I do hope that development and marketing proposals currently pushed out of funding were able to capitalize on the pumped price to make up for lost days on their proposals and will be restored to paying status as soon as the economics make sense. I noticed the shake up in rankings yesterday but was unaware of just what votes had switched around so thanks for this post & your thoughts.

The unvoting is definitely a temporary measure. I will be revoting all the proposals I unvoted as soon as it makes sense.

Good to know and I do trust your judgement & strategy here, I'll be looking forward to tomorrow's post.

The only proposal I have any concern about in the short term was @lordbutterfly's marketing proposal. I'm intrigued to see how it plays out. I hope he can perhaps update on how much funding was secured to date given the HBD price pump and if there are any current concerns with making contracted payment dates if the proposal remains out of funding for long.

I was pleased with @peakd acknowledging the surplus of funding they've managed to achieve recently and donating some back. That’s evidence that most proposals can weather a drought in funding if they’ve capitalized on the windfall of higher HBD values themselves.

Currently there is aprox 68000 USD secured (16k already payed out) + 4500 HBD that should be sold soon.

Thanks for the update. After the initial outlay there are monthly payments for the duration correct? Would it be accurate that this disruption to funding isn't immediately critical to your proposal?

I would say it is not. Blocktrades is aware of the timeline and payments required.

Anyone paying $8 for a token thats only utility is to be converted into $1 is a scammer or a fool.

Some people paid (and are paying) even more for it. Steem Dollars (SBD) was above $10 USD multiple times in the previous 90 days.

Its current all time high was $22.34 USD on 2017.05.17.

The real reason for the much more value than $1 USD in the long term could be the fact that many people do not understand or they simply do not know the function of it.

Just like @geekgirl said:

SBD has been above $3 for four months now and above $5 for couple of month.

Well, if I could know who and why if they are interested in the fact that the HBD goes up in price, I am Venezuelan and apparently this of the bomb (pump) and the pumpers has come supervened. Venezuelan content creators sell our HBDs to foreign markets, they pay us at the price at which the dollar is in Bolivares (VES), we benefited from this increase. I have my theory that it could be going through what I invite you to read my comments below. (I might make a post about this on Leofinance, it all depends on how accurate it is, or if I think that what I say is really interesting)

I’ve never understood people who want a high HBD (or SBD) price

They own HBD or have a method by which they are earning HBD and want it to be worth more. Simple as that.

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Good stuff! This is what I like seeing communication on why things are being done. It might seem common sense to devs and such on the higher up but to many users it can be either be confusing, taken the wrong way etc.

Look forward to the next posts explaining more.
How often do hard forks happen once a year thing or as needed?

Suggest adding some type of news or dev section that keeps people more up to date on what's going on if they care to know within Hive.

For the near term, we're hoping to have a hardfork every 6 months, unless devs decide to tackle something big.

You should probably check out these communities:

Although maybe you're suggesting frontends should highlight them, not sure. If so, that's mostly up to each frontend to decide.

While I don't disregard the possibility of intentional pumps, my theory is slightly different and has to do with SBD.

We have seen in the past that how SBD is kinda treated in market without any regard to its original purpose to be a peg to USD. We have seen the same recently.

sbd.png

When I look at SBD chart, it seems to me it started moving up significantly right around the same time BTC started its bull run. What I take from that is that some traders are just treating it just like another crypto coin that may keep increasing in price. That may also be due to its low market cap.

SBD has been above $3 for four months now and above $5 for couple of month.

So, what I think is some traders maybe speculating that HBD may follow the same path due to the similar characteristics it has with SBD.

In other words, some people may not want to buy BTC because it may seem too high in price, and buy other alternatives like LTC, ETH, BCH, etc instead.

The trouble is geekgirl, we use HBD for something. We use it to fund our proposals. If a proposal was funded for 100 HBD/day. It is supposed to get $100/day.... not $200 or $700.

That's the problem. Steem or SBD doesn't have that problem. They can run amok.

Yes, I agree. It's just market doesn't seem to understand that. :)

That's ok, we're going to try to teach it better. And the DHF is getting paid to do the tutoring.

I was asking themarkymark the following on his post. If I may ask you as well since I also have a follow up question.


Could you help me understand this?

These HIVE transactions are immediately converted to HBD by the DHF.

For simplicity purposes let’s say market price for hive is $1, and hbd $2.

  1. dhf issues 1000 hhd to stabilizer.
  2. stabilizer buys 2000 hive with it and sends it back to dhf.
  3. dhf converts that to 2000 hbd by destroying 2000 hive and creating new 2000 hbd
  4. dhf made profit of 1000 hdb

Is this how it works?


If this is how it works, why not make this part of the blockchain code when dhf or designated internal account does what hbdstabilizer is doing but with larger amounts based on market conditions. Sort of an internal AI. It seems like this process works and it is only matter of amounts used for it to be successful in establishing upwards peg for HBD.

Assuming HBD is above $1, this would work.

However, since it isn't always, and you need to know the actual price of HBD at the time to decide whether to trade it for HIVE or just send it back. There isn't any easy way to do that within the blockchain. A mechanism to do so could be built, but it doesn't exist and isn't trivial.

I think this DHF fix is just the temporary cludge which can be done without hard forking and the only real answer is the internal market for HBD that means all of us can attack a pump if we want to.

We can defund all, simple.

Like they return the overvalue or defund. Lordbutterfly for example does all super transparent. Like the price, he sells HBD for the marketing proposal.

Sure defund is not a master solution, but nothing is with HBD :D

That's what @blocktrades did (and some other stakeholders may have adjusted votes by now as well, I'm not sure). He said he was going to make another post more directly about that aspect of it soon.

@geekgirl Well I think it is something of both, between your assumption and that of @blocktrades, because as you say they do not have deep knowledge and not really because they are fools (at least they are losing money due to the rapid loss of hbd) Well the capitalist principles of supply and demand obviously "coordinated", call this malicious, because if making money is malicious, let's say yes. I'm not as drenched in information as you are, but I know this was neither random nor coincidental. But I'm also pretty sure it didn't turn out the way hdb buyers expected.

That's basically what I was suggesting with the other possibility, although you've explained it more depth: "a completely random increase by really bad speculators (relatively unlikely I think)"

It is certainly a possibility, but it usually takes coordination action to get real price movement to happen in such a case. That still doesn't mean they are pumpers, they just might be a group of bad investors acting together, but the selection of HBD as the coin to invest in, which receives no real advertising and has very small volume, makes me believe it's an intentional pump attempt.

It is certainly a possibility, but it usually takes coordination action to get real price movement to happen in such a case.

Spontaneous action can drive further spontaneous action in a positive feedback loop. I don't think it is unlikely, I think it is the norm in markets that are highly disconnected from a real world source of value, and information about what they are purchasing (huge numbers of crypto speculators choose cryptos based purely on the shape of the trading chart).

One large buyer can do that, but otherwise it takes a bunch of small buyers. I'm fairly familiar with what it takes to move markets of varying liquidity, because we have to operate trading bots as part of our business for inventory purposes. I've found that small trades even in illiquid markets like HBD don't tend to move the price in a way that can trigger a big price change.

Ok the man has spoken, I will follow your lead and upvote all of the HBD stabilizer posts.

We recently introduced interest. HBD price may be driven by this.

I trust your judgement 99.9% of the time man, but can't help but thinking the focus on trying to wrangle the price of HBD, a token that's peg has really never properly worked, at the cost of paying the guys developing our network out is extremely ill thought out. This comes as a one of the developers who because of this now unexpectedly has to figure out where their rent is going to come from but also as a long time community member who has watched HBD basically do whatever the fuck it wants price wise due to the market driving it and it's whole system being flawed for pegging right from the get go.

Anyways, I've said my peace, I really hope this HBD stabilizer shit actually works because if it doesn't the effect on the developer community here on HIVE has been quite massive.

I think the idea that 3% interest would drive the price of HBD to $3 is completely nonsensical. It's not even been advertised much, except to a small extent on Hive sites themselves, so even if 3% was somehow a super attractive rate (it's not), I think you will find that many current buyers don't even know it pays interest.

I'm also very tired of the argument that HBD can't be pegged. It's also a ridiculous argument, in my opinion. There's been no strong effort to make the peg work since it was created. The only attempt I can even think of was the hbdpotato effort, and it never looked like it would be strong enough to do too much.

Also, I know for a fact that you can create a peg just by market activity alone. That's basically how USDT works now.

But we're trying for something a little more interesting: a trustless stablecoin. While it's not yet proven, I think we can setup all the mechanics to make it work.

For the rest, I felt smooth gave a fairly straightforward answer, so let's leave it there.

I think that interest being offered would certainly drive demand upwards a bit would it not? (assuming anyone outside our community even realizes it's yielding interest, as you stated)

Sure HBD can be pegged.. And has somewhat been pegged in the past, but the built in mechanisms within HIVE to perform this pegging leave much to be desired for lack of a better term. Not sure USDT is a great example as they print and burn tokens at a rate reminiscent of central banks (the printing part anyway).

The whole concept of HBD stabilizer is neat. I'm totally down with the idea..! But I'm not sure it should be at the expense of developers trying to make a living populating our network with use cases. Seems a touch counterproductive and may infer to potential developers in the future that happen to yield successful proposals that their funding is secondary to attempting to wrangle a pegged token price against a volatile market.

Partially playing devils advocate, partially expressing my observations. Either way I'm quite interested in the outcome of this and seeing if the attempt to stabilize HBD is going to play out as intended. Hope it does honestly else this was all fruitless. :/

I think that interest being offered would certainly drive demand upwards a bit would it not?

Yes, a little. It's just that buying at $3 risks $2. If you hold a whole year (with no price change), you earn an extra $0.09. It would take 20 years for the potential upside of interest to match the potential downside of price drop to the peg). I don't think anyone cares about this much (assuming they even know about it, which is often questionable as @blocktrades stated).

Ah. Yeah when you put it that way it certainly seems like a -EV move.

Does one only get interest on HBD on Hive? Are we seeing inflows from the relatively few external places it trades?

I don't think so, but I don't know. Absent that I'm pretty sure nobody is buying $2 HBD looking for 3% in a year while there is so much talk of how to drag it back to $1.

You get interest on Hive Power as well. Not sure what is driving the market to be honest.

You may be right. sounds silly when you put it tthat way but I don't thinnk it's someone in the community buying up the price.

The exchanges earn the interest if the HBD is held on an exchange. In theory they can pay it to the users (or only do so if users put it into a staking pool or such) as they do for other coins, but no exchange currently pays interest to the users for HBD. The users would only earn interest if they withdraw from the exchange, which doesn't seem to happen a whole lot if one looks at the balances on exchanges (high and stable if not growing).

So this is another reason why hardly anyone if anyone is buying and pushing the price up due to interest.

This comes as a one of the developers who because of this now unexpectedly has to figure out where their rent is going to come from

How about from the 30-50% extra pay received over the past month as a result of HBD being overvalued (or if you didn't sell it yet, you can still sell it for $1.75 now, meaning you got paid 75% extra)?

This is sort of a mute point I keep hearing over and over. It wasn't my fault our pegged currency doesn't work and it was what the proposal was paying me in. If being paid in HIVE was an options for proposals I'd use that in a heart beat.

It's not about the 50% extra pay value or whatever you're alluding to here man. It's about the developers on the network (unless dubbed "essential") that have been "thrown under the bus" in an attempt to wrangle a peg that's never really been proper. That is what I'm saying. It is an interesting experiment (hbdstabilizer) I admit, but I'm not entirely sure it warrants defunding HIVE developers on a hunch that it might help fixed an flawed from the start peg. :/

Nobody is assessing fault here. You asked where your rent was going to come from, and I'm pointing out that you've lost a few days pay from proposals being unfunded, but gotten 10-15 extra days pay from HDB being overvalued over the past month. In other words, you are still well ahead of the proposed pay rate. In another couple of weeks if funding hasn't been restored, then you will have a different case to make, but not yet.

The decision about funding isn't only about the peg. It is also about the stabilizer proposals having an enormous financial return for the DHF and for Hive stakeholders, and this applies even if the peg effort is totally unsuccessful. Stakeholders are well within their rights to support funding proposals for say, $100 per day, but then deciding that giving up an additional $100/day or $200/day in potential profits on top of the cost of the proposal makes those proposals worth suspending under these particular conditions.

Ah. Ok, sorry I misinterpreted that point.

In another couple weeks the Hive.Loans proposal will be over sadly so any income I'd budgeted in coming from that essentially sounds like it's going to be a write off I guess.

The extra pay was neat, of course impossible to complain about! The problem I've run into with all of this is I'd budgeted expecting x amount of income from the proposal and now will have to take on some extra work elsewhere to make up the deficit.

End of the day it's not something I'm going to ragequit over nor stop developing my stuff for HIVE, simply going to have to spend more time on stuff other that HIVE projects to make up for it..! But it certainly took me by surprise and has left me in a situation where I'm a bit demoralized and stressed. Ah well, my problems and issues to solve. It is what it is.

I hear you. Not trying to minimize the frustration, just explaining why this is so compelling to stakeholder voters, and some of the logic behind it. It isn't a common or typical situation.

Aye, thanks man. No worries. Will get it all figured out here in time.

After having read the post and the comments, I could do a kind of SWOT analysis, and say that all this has its strengths and weaknesses, opportunities and threats.
As strengths I can see the commitment and effort because this does not happen and that it is being worked for, but if this pump happened is because it can happen, as an opportunity I can emphasize that it has already happened and there is still the opportunity to know the phenomenon and be able to counter it, learn this.

as a threat, as it is latent as long as the appropriate measures are not taken or that those that are implemented are not enough and even counterproductive, so it has to be studied in depth before taking hasty measures, the implementation of AI as someone mentioned I think is a very good idea.
Weaknesses, I believe that fear, misinformation and disinvestment could be the weaknesses, not taking action on the matter quickly could make it repeat itself.

I also want to make a proposal I do not know how viable it is, maybe it is silly due to my little knowledge, so I would like @geekgirl @smooth @klye and of course @blocktrades to give me their point of view on implementing a reward system where the 50% is for curators and the other 50% are divided into 3 parts 16.66 on Hive, 16.66 on HBD and 16.66 on HP. I know that this is not a definitive solution, it does not even have a technical or economic basis, but it could help from my humble point of view. I'd like to read your comments on this. Excuse me for my translation, I have used a translator specifically from google.

The 50% method you mention is actually quite similar to how steem originally paid things out actually. Except HIVE was only paid out on post provided the debt ratio of HBD was over a certain percentage. (if I remember correctly)

Some machine learning trained properly could enhance a bunch of shit around here. Neat idea!

I'm not the most knowledgeable person in regards to reward curve algorithm so blocktrades or smooth could likely give you a better technical explanation than I could. Cheers!

Hello Klye, thanks for responding, I honestly did not understand the debt index that you mention.
Now that you mention the debt ratio, I think the PE Ratio (price-to-earnings ratio) Earnings per share (EPS) and PEG (Price / Earnings To Growth) were the ones that encouraged us to make these purchases, that's why when I read them yesterday I considered they all had a partial reason and perhaps by uniting the different realities we can find something that is closest to the truth. When @geekgirl said that investors considered the hive as a currency they were for these ratios that I just mentioned, an AI taught to move between bands could be a solution (speculatively speaking) but this would no longer be a free market and would be subject to a certain sanity and go that all or the great majority we hate censorship. But it is that the creation of token to be annulled is also something in a certain way illogical in my ignorant opinion.

Good to learn about reasons why the rise in HBD might actually be a pump.

According to your post it’s more of a pump than a normal occurrence.

Would love to see your other post tomorrow. Am sure will shed more light on HBD stabilizer.

Have a good day ahead.

You have already wrote about a work to try to fix HBD to 1$ in the last post.

HIVE-Engine has SWAP.HBD that is a HBD synthetic this work to stabilize HBD will have impact also on SWAP.HBD?

I am questioning this because they are on different markets.

SWAP.HBD is comparable to a wrapped token. The fact that it's on a layer-2 is basically no different than looking at HBD priced across multiple exchanges (Bittrex, Huobi, etc.) Sure prices can vary but due to arbitrage opportunities they should broadly fall in line. So stabilizing HBD absolutely should stabilize SWAP.HBD to the same degree.

I'm not aware of how SWAP.HBD is being used to stabilize HBD, but in practice I don't see how it could be done by that alone, because the only effective way to fight an HBD pump is to create more HBD supply, and only the blockchain code mechanisms can do that.

Oh, sorry, I misread your question the first time I think. To answer your question, yes, the work to stabilize the value of HBD will also help stabilize the value of SWAP.HBD.

Thanks for your feedback.

You dont need to apologize when I read the previous post about this I got this question but I did not put it.

I took advantage now to clarify my doubt.

Thanks once more for clarifying my doubt.

thanks for explaining this with simple words. to tell you the truth up until now i haven't read understood how this pump thing works so now everything is clear and not only that but i can explain it to others as well!

Nicely written, thanks for sharing your thoughts on it and getting it out there public.

excellent post. thanks.

I liked the funny parts best, plus I learned something.

lol, I'm just glad i understood it. :)

it could use some pictures though

I'm afraid I'm known for not investing enough time to create pictures. But jarvie's post which I linked to in the comments has a good one.

NoNamesLeftToUse - Carry On.jpg
Hold on.

Thanks for clarifying this shift . Watching to see how long the pump lasts .

It's been going down pretty steadily since we kicked up the stabilizer funding. That doesn't mean that's the root cause, but it looks very promising so far.

Yep it's a good sign. Now for Hive to move in the other direction ;-)

So who can actually do this HBD stabilization proposal, and how much - and where's the funding?

I agree with it as an impermanent measure. I know the collateral loan alternative talked about by @edicted was more appealing but more costly.

Even if I lose all 50% of my HIVE value from correction, it's better this thing get under control. I am wondering why HBD isn't just gotten rid of completely, to be honest.

Anyone can run a stabilizer proposal, in principle. But the idea originated with @smooth and he's the one that's done all the work to set up the bots, campaigned for the idea, etc. He's done a great job of setting it up in a way that's very transparent and mostly trustless, in my opinion.

I didn't mean as in the actual proposal, but the coding. Do we have people scoped out to fund coding the hard fork if it is accepted? I'll keep my eye out for when you give instructions on pulling the trigger in a post.

Posted via D.Buzz

It's being coded now and is planned for the upcoming hardfork (in the next few months).

As for funding, I haven't created a proposal yet for any of the work done by the blocktrades team on the core code for the past year. Eventually I'll get around to it, but lately I've been thinking I'll just redirect the proceeds from that proposal to a charity I'm setting up to fund the development of the open-source information rating system I want to create.

For details on the funding/proposals for the stabilizer, see my links in another comment here.

Will delisting HBD from external markets and having it only in internal market help a little bit? At least to control the false pump from the outside world.

It's worth noting that most of the crypto trading volumes are in stable coins.

It'd be an indirect way to get people involved with Hive if the effort succeed.

It might, since there would arguably be fewer uninformed buyers that could be fooled by a price pump. But in the long run, there can be a lot of utility in having HBD on external exchanges, once we get it fully stabilized. One of the biggest uses in crypto for stable coins is for trading on exchanges.

Well, I think that we cannot talk about stability when we talk about cryptocurrencies or tokens, unless they are like USDT, I also think that certain instability and fluctuation is necessary, to call investors because these trades are made looking for benefits, that is, gains.

USDT is only stable because of trading activity that keeps it that way. Which is the function of the hdbstabilizer as well. With more funding, the stabilizer could make HBD just as price stable as USDT (although that's not the way we're looking at tackling this issue in the long run as we're aiming for trustless stability).

Exactly, I also think so, I think a more organic way of doing it should be considered, one in which the same market can achieve it, I talked about a band managed by IA, I don't know if you already read that, I wrote it a few minutes ago. The capital injection can be taken from a kind of recovery funds for surpluses, I do not know I am digressing, , but I hope that my humble opinions may perhaps shed light on a definitive solution, I would be very happy to collaborate. ty for answering.

Can we have HBD listed on more exchanges and markets ... this will improve the market efficency and help the price.

Getting HBD listed on more exchanges is not easy right now, because it does trade at a low volume, so the fees from it aren't that interesting to most big exchanges. To change that, we need to increase the utility I think, and for that, we need to tighten the peg (which is what we're working on now, of course). With a better peg, a larger supply, and the creation of more services that accept HBD as a payment mechanism, we will have more reasons to convince exchanges to list HBD.

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Check out the last post from @hivebuzz:

Hive Power Up Day - April 1st 2021 - Hive Power Delegation

Can't we have a reward mechanism to have all the rewards given in liquid hive ? And even default to that ?

How about introducing a slider or some auto-convetsion mechanism taking into consideration current HBD price? Current HBD stabilizer seems like a temporary thing and isn't really effective enough.

As mentioned in the post, there is a plan for a more powerful solution for the peg (the Hive -> HBD conversion operator). But any such solution requires a hardfork, so we're still around 2 months away from being able to deploy it in production.

Yes, I read your post, but is there actually any other downside of HBD above the peg except of proposal system? There might be much simplier sollution.

If HBD is completely unstable, there's no reason for it to exist at all. We're trying very simple solutions to fix the peg.

ha! I didn't know there was a witness cap. I tried to vote you as a witness and it wont let me "account has been voted for too many witnesses".

I was sure that I already voted blocktrade LONG time ago. strange things.

Yes, there's a cap of 30 witnesses. As for thinking you voted in the past, it could be a case where you were voting a bunch of witnesses at once, and one of the votes didn't go through due to the speed at which you were casting the votes. That can happen on post voting too (happened to me last night).

I could do what so many on here do and blow smoke up your arse and tell you how amazingly insightful and clever you are for doing this, but I'd be lying to myself and you.

True peg coins are backed by fiat currency and use a computerised weighting system to keep the peg where it should be, hence the reason USDT never fluctuates more than about half a cent. HBD is not like that it is a peg coin in name only and no matter how many of these little schemes you do, the price will be driven by speculation.

You talk about why it's good to have a good stable trading coin, that very well may be true, however if I had millions of dollars to invest in crypto and I wanted to use a stable coin then I sure is shit wouldn't use HBD because there is no proper mechanism in place to protect the price.

Ultimately I don't understand this obsession with keeping HBD at a $1 price, let it find its level and let's call that the "peg". HBD is rising because Hive is rising, speculators are buying it in hope of making more money in the future. Simple.

For anyone who's interested, here's a link to how a true stable coin is created.
https://www.investopedia.com/terms/t/tether-usdt.asp

Cg

I'm quite familiar with how USDT works. But you seem to believe there is only one way to create a stable coin. I'm quite sure you're wrong. But I don't see the point in endless debates on the subject, when it's not that difficult to test pegging mechanisms, which is what we're going to do.

Debate is always important especially in an environment like this, whereby people are trying to gain favour of high HP holders.

when it's not that difficult to test pegging mechanisms, which is what we're going to do.

Perhaps I am being unobservant, because I did not realise that is the case. Which seems fair enough to me.

Cg

The biggest attack vector on HBD is the peg.

Sounds crazy. But it is a risk-free buy at 1$ (in the longterm).

If someone buys as much he can at 1$ and purge out the market, there is nothing much needed to bring it to higher levels and sell it over time ( or buy the supply to the point of the natural demand increase price).

In the worst case, if there no buyer, it's still worth the peg. Is hard to lose money with this ( om the longterm).

Is the same with 0,5$ HBD. Long-term easy buy.

I think with changes and auto exchange pools that offer an ROI we will become a 1$ HBD.

But I was thinking about it last time more. And I think this opens also the door for big money attacks to manipulate the price and make exchange rates crazy.

And then the peg can become again an attack vector. Not 100% sure, because it can be complex, and I'm not sure about the mechanic with dip conversation ( because of haircut, like pre-haircut level conversations), to generate more and more coins with enough money into the game ( or extract as much as possible).

At $1, yes it is a riskless bet in some sense.

As things stand now, HBD should usually trade at just above $1. That makes buying it not quite riskless. I'm not saying that's what happens, but that's the behavior that would be economically sensible if pegging were working.

I would like to adjust the fee part of blocktrades proposal for HIVE->HBD conversions to apply to both sides. That is, X/2 percent conversion fee on each side, instead of just the X% (proposed by blocktrades to be 5%) on the HIVE->HBD side and no fee on the other side. In effect, this would make HBD convertable into slightly less ($1 less fee). In that case, HBD would be more likely to trade around $1 where the risk of gain and loss is more balanced, instead of slightly above $1 which is what I think would happen now (if the upper end were successfully pegged). Since this isn't a priority it will likely wait until some future hard fork and for the time being HBD will likely tend to trade a bit above $1 instead of around $1.

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Thank you for the explanation, we'd always wondered how a pump happened, we knew what it did but not how it was achieved. It's good to see people have Hive and its utilities in their best interests.

Nice writ up. It has taken me a while lot of time trying to understand this. But you nailed it

For me as with not so much technical knowledge, at the beggining (still in Steemit) i doubted HBD proposals and such would work, but after a bit it was working and in hive also, but the volumes were low.
SBD and HBD are "from code" scarcer than Steem or Hive (much scarcer), so i unknowingly think that only forking for more inflation or something would level it.
But i started supporting the proposals, still curious to see if it might work if we keep going higher, if it's not justifiable i'm sure the devs would remove it.
It does do a good job but i guess mostly on the internal market. The problem here is that these solutions are probably not working in the centralized (or not) where there is more volume, and if people start trading hbd on outside exchangers, there is always some (or alot of) scarcity.
User toughths..

Good post.

Out of curiosity, what if the savings wallet was used for this also, where a holder of Hive could put non-governance potential Hive into the savings wallet to attract a percentage return as if it was active stake, but instead of paying out curation in Hive it paid out the "relative HIVE curation" in Hive converted to HBD.

It would make sense that this Hive wouldn't attract the same percentage as active stake, but perhaps 50-70% of the average return on "full curation". This would generate more HBD to trade, while reducing the inflation on Hive. If HBD drops significantly below 1, it can pay out in HIVE instead, which it would have earned as active stake anyway in curation. It would also give a reason to semi-stake HIVE on-chain instead of on-exchange and still have a 3 day (or shorter) unlocking period, keeping it within reach for trading if they choose .

Wouldn't this make HBD more "HIVE-backed" than the current mechanism and take away the need for the proposal and posts if enough people staked there for passive daily return to increase the flow of HBD? It could also be that the additional "lost curation" percentage for this automatically goes into a HBD-stabilizer mechanism to empower it further - or just remains in the pool for content distribution.

This would also mean that this kind of passive ROI seeking stake won't affect content curation activities, while still having influence on the rewards pool.

HIVE savings wallet earning a portion of inflationary staking rewards seems plausible to me. It would have to be a lot less given that it is staking for only 3 days vs 13 weeks (or 7 if you average), but some reward makes sense.

Implementation could be somewhat challenging.

Even at a lot less, it would be interesting to have it sit their earning something, rather than on exchange. since staked, it owuld be able to get something like 15-20% a year through voting, I think that without governance power and still leaving the reward half of the activity in the reward pool, it could still return a decent percentage. Paying out in liquid HBD daily would also be attractive for many people.

rough I know:

current vote on 10M HIVE

image.png

5000 dollars a day, ~2500 curation.
If the savings locked stake got 80% of that "curation" portion in HBD to increase supply of HBD and 20% went to the stabilizer to be converted (whichever way needed) - wouldn't this be an effective way to attract stake. If it attracted 50M of the exchange HIVE to rest in the savings wallet, 20000 HBD could be paid out with 5000 HBD to the stabilizer. This doesn't factor in the other half that would normally be pushed out to content, which can either stay in the pool for rewards or, be used for stabilization as well.

I am not sure if i have explained this well :)

Thanks so much @blocktrades for great explanation there! Hope there's archive to keep all these great posts! This should be a feature included in peakd!

Looking forward to another brilliant post tomorrow, Thanks for voicing this out

Another method of pumping is buying HBD (or Hive) with TRON (TRX) or another coin not being traded often. Jus t look at the spike in SBD. That said most of the peopek with hive and HBD in Venezuela (for example) but also those with an investment view cheer when this is happening as on paper their wallet value goes up and a lot.

All in all I see no reason to be worried about SBD going up and up further. Why was a "pegged" coin set up anyway ?

A stable coin was built-in to Hive to allow for easy commerce, as described in more depth in my post. It actually is used for this purpose, and not only by the proposal system. For example, @hivefest tickets are paid for with HBD.

Many things have become clear to me that I did not really understand before, but when I made a comparison with the situation in my country (Venezuela) I understood better. I want a stable and reliable HBD

I like your Hive- HBD Conversion idea.
I too would like to be able to trade both directions quickly.

HBDhivespin1.gif

Is that pump you were thinking about was the thing that somewhat happened to Steem blockchain before? Before I entered the steem blockchain before, the exchange value was higher. But over the months, it slowly started detoriating until it droped from a dollar. - if I remember that correctly.

... were you kind of speaking the same situation?

There have been a number of likely pumps of Steem dollars (SBD) in the past, because the coin has low liquidity and the conversion mechanism to Steem set a floor value on its price. So, yes, I think something similar was attempted with Hive dollars (HBD), likely by the same people (price action for HBD originated from the same place as prior pumps of SBD).

Where can i go to talk to you about lease? Discord?

very well writing and thanks for shear your plan.

Hi Blocktrades, i just tried to send HIVE or HBD to my Wallet and got: Oops, something went wrong. Here is the error message: "now=2021-04-07T19:00:00 trx.exp=2021-04-07T18:59:09"

Please help. Thank You

Yeah HBD caused me ill will, we'll just Balme it on the pumper for making a shallow illiquid market trap for me to sell in!!!!!!!!!!!