great article, I didn't know Hive can be deflationary. Also it's not totally clear to me what happens when you convert Hive to HBD. Also with this high APR couldn't people just buy a lot of HBD from exchanges and destabilize the peg ?
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When HIVE is converted to HBD it is burned and new HBD is created.
People can buy a lot of HBD from exchanges and push the HBD price above the peg, but that is incentive for arbitradge becouse the blockchain always give you HBD at a 1$. Meaning people will convert HIVE to HBD and sell it on the exchange where the price is higher. This is exaclty what happened back in September.
didn't know Hive was burned I thought someone was buying it. That's great to finally understand how it works :)
Cool to know about the arbitrage thingy as well, unfortunately my secret dream of seeing HBD going to the moon like "in the good ol' days" sounds more improbable the more I understand how things work.
Thanks for the explanation
The HIVE to HBD conversion was not available beffore July 2021. Since that HF, HBD can be created from HIVE, and the possibility for HBD to moon is low :)
On the internal exchange it is bought. When converted, it disappears.
Of course, there is a HBD to HIVE conversion which will create more HIVE and burn HBD.
It works both ways depending upon what community members decide to do.
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ok, now it's 100% clear how things work, thanks for the explanation, I feel less ignorant :)
Sorry if some of your post went over my head, but if that's the case, that means the overall Hive supply should decrease, and if demand stays around the same as it is now (assuming not everyone apes into HBD), the price of Hive should go up? Obviously whether demand stays the same or not is a different issue, just curious to know if I got this right.
I've always been more interested in Hive and the proof of brain aspect of the chain, although I can see why having the best stablecoin out there is something we should aim for. We seriously need 100k active users to sustain a hive marketplace though, I feel like that will be a turning point for Hive, decreasing selling pressure. That or a campaign to get stores in Venezuela or Nigeria accepting Hive, where the incentive to sell in those countries is high since blogging can easily earn more than the average job.
Thats the theory :)
Need different pools to get arbitrage going.
That is one of the things we need to get going on.
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