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RE: Data on the HBDStabilizer Performance | HBD Added in the DHF and Removed from Circulation | Jan 2025

in #hbd7 days ago

What you're seeing is the effect of an immature and small market. The stabilizer along with the natural incentives of the blockchain ensure that HBD will return to peg "soon" after these sorts of disruptions. In a more mature market there would be more traders competing to take advantage of the opportunity for a few percent return over a few days (realistically you shouldn't make more than a small fraction of a percent in a few days on a low risk trade), and this would keep these deviations small and short.

Fortunately the stabilizer has a dual purpose. It pushes the price back toward the peg but it also generates profit from DHF and in the course of doing so produces net buying pressure for HIVE. The more and bigger the deviations, the bigger the profit. So Hive stakeholders benefit either way.

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If the stabilizer had more funding would it be able to return to peg more quickly?

Probably, but trade offs:

  1. Discourages other participants, which is what we really want to develop a robust market
  2. Might reduce the profit generated by the stabilizer, though it's not at all clear what the profit-maximizing budget level might be
  3. More risk of the stabilizer account being hacked or misused.

Thanks for your replies.

Re. 3. Is the account multi-sig? And is that the only risk of it being hacked - by getting hold of the keys somehow?

There is a server running the bot code that needs constant access to the account to perform the trades and transfers so one way or another the keys have to be online.