Going to need to get a massive expansion of the HBD float to really tighten the peg. It seems the lack of liquidity is at least one factor in creating too wide a trading range. Having more HBD on the market might help to mitigate that especially since most of the HBD appears to be located on one exchange.
As long as there is protection against massive Hive printing through the conversion mechanism if the price of Hive collapse, then 30% might do the trick to reduce the volatility that still exists in HBD.
I think that increasing supply will likely lead to more trading activity and liquidity, especially on external markets. And that in turn should lead to a better peg to USD.
Even more importantly, whenever we get close to the haircut ratio, it creates a loss of confidence in HBD that actively detracts from the appeal of HBD as an investment vehicle.
As to the potential risks, even a 30% haircut rule puts a strong limit on just how much Hive can be created via the conversion mechanism, regardless of how far Hive price might fall in a severe crypto winter scenario. After giving it a lot of though, I think we could easily go to even a 50% ratio without significant risk to long term Hive pricing, but in the end I decided it would be best to demonstrate that a 30% haircut ratio poses no real threat instead of proposing an immediate move to a more aggressive ratio.
With an increased haircut ratio, I think we should also consider adding more leeway between when the print rate decreases and when the haircut ratio hits. Ending HBD printing further away from the haircut ratio should encourage confidence in the peg of HBD (because it decreases the chance of the haircut ratio being hit). And the dramatic reduction in HBD inflation at that point is a supply rate change that works in favor of a rise in HBD price, which can have virtuous effects on the price of Hive itself due to the Hive->HBD conversion mechanism.
For example, with a 30% haircut ratio, we could set the print rate to stop around 20%. In this way, we should only expect to see the haircut ratio hit under one of two circumstances: 1) hive price drops significantly on its own after the print rate hits 0 or 2) HBD price is above $1 and therefore encourages conversions of Hive to HBD.
And in this latter case, where large amounts of HBD are created by decreasing the supply of Hive, the rules of the conversion mechanism will make Hive more valuable and place upward pressure on the price of Hive (and therefore decrease the risk of ever hitting the haircut ratio despite the increased supply of HBD).
Interesting :)
I'm for increasing the debt ratio as well.
Might reduce the conversion time as well from 3 days to 1. Three days is a bit to much, thats why we see people dont wanna risk and convert when hbd is around 0.95. Faster conversions will work betternfor the peg.
I understand the risks of price manipulation, but 24h should is still a lot of time.
I'm not in favor of reducing the conversion time, as I don't think it particularly offers much benefit in exchange for the increased risk of price manipulation. I don't really agree that people who don't want to risk 3.5 days for a 5% return would suddenly want to risk 1 day for a 5% return. Sure it could move a few on the margin, but mostly not. Either of these returns is more than ample.
The main obstacle IMO is not the 3.5 days or the 1 day or even the 7 days it was before (IMO 3.5 days has worked about the same as 7 days; why?). It is just the small size of the market and limited overall market maturity (e.g. few if any derivatives) so there is limited capital people are willing to invest to get involved. Are any of the big crypto trading and market making firms involved? No. But the reason they are not is the size of the market, and not the conversion time.
I don't think anything really bad would happen with 1 day, but I think it is a pointless distraction to look there.
More use cases, bigger market, better stability yes ... the thing is HBD is still struguling to prove itself to Hivers as well, who are willing to use it and suport it even at bigger risk then some other options. The native community is still a decent market, and I bet if there is more confidence in hbd, we would see 20M to 50M in HBD in savings, unlike 1 to 2M now ....
Have you seen terra.... the concept is very similar to hive-hbd, just there luna-ust .... instant conversions, with some aditinal infrastructure etc...
I'd also consider that. The 3 days conversion time doesn't seem to deter pumps and dumps, but a shorter window might entice regular people to use the conversion mechanism more often and closer to the peg.
This makes sense to me and I would support increasing it to 30% since it is at least a further attempt at getting our HBD more stable (it will probably require more adjustments of course)
Any ideas on an AMM for the Hive internal market?
Changing the haircut rule and print rate should be simple, but creating an AMM is a more complicated and risky thing to do, so I don't think it should be considered for the upcoming hardfork.
please add @telosnetwork TLOS and add some hive engine tokens to blocktrades!!!!
if we increase haircut ratio im out btw. That would be too easy to game to print an infinite amount of hive.
If we want a stable HBD, simple add onchain mechanic worth 1$.
Wallet creation. Pay hive or HBD. HBD is cheaper than 1$. So you get a discount.
It would be an indirect peg even after haircut in place. With more mechanics like that, perfect.
Another thing could be an onchain pool that allows high liquidy trades, that has a micro burn fee. Like 0,1%. With high volume, it would decrease the HBD too and would allow to reward liquidity providers.
An additional lock-up mechanic to print HBD would be IMO better than increase the limit.
If the price fall under 1$, you can pay back the lock-ups cheaper. Would be also a mechanic that benefits HBD.