so the market sets the rate
When the market is setting the rate of bonds it means that Hive can not issue bonds because the market is already selling them at a discounted rate. I'm not buying a 10% bond from Hive when a user is selling one that matures sooner for 11%. At that point Hive has to undercut the market and get an even worse deal than the previous round.
insanely good liquidity provision tool
Okay then show me how this works for a 3rd-world country.
If the theory is sound then it works for everyone.
It is the world reserve currency that dominates this market.
DXY going up chokes out the entire debt market.
The need for liquidity comes AFTER the need for the loan.
First the institution needs the loan.
Then the people that buy the bonds need liquidity.
Hive does not need the loan in the first place.
You are putting the cart before the horse.
Hive itself will do nothing with the loan; it just sits there doing nothing.
Users collateralizing their asset has nothing to do with Hive using the underlying.
This also removes any risk off of the base layer
It removes zero risk. It adds risk. It just increases the time delay... which I addressed in the OP is bad and makes it so if we fall on hard times the rates are locked in and we can't change them and must pay them back in full. This increases the risk and lowers the network's maneuverability within the market cycle.
The money is broken.
It's not going to get fixed by creating derivatives on top of derivatives and pretending like that's a sustainable solution.
Honestly I'm not even sure if this is worth arguing about because a bonding system like the one we are discussing can't even be built on the base layer (or rather won't because it's way too much work). It is still my understanding that it would start off as a multi-tiered bank account; longer timelocks more yield... which is basically what Hex has been doing since inception and they haven't really gotten anywhere with it. Porting this stuff to the second layer is not an option considering it fully depends on Hive inflation... meaning a port to the second layer going to be fully centralized... and then decentralized with multisig... total clusterfuck solution that. I'm not a fan.