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RE: 4 Reasons for Lowering the HBD Savings Interest Rate

in LeoFinance • 11 months ago

Thanks for stopping by and commenting with basically a stand-alone post :)

Yes, the 20% interest rate may seem shabby, and I tried to express that in my post. It sort of soaks up funds from the Rewards Pool as @phortun suggests (he or I could elaborate it a bit if you wish). That may not be wrong - the RP is huge (HUGE) considering the number of users. There should have been tens of millions of creators sharing it by now, and there are thousands.

HBD would be great as a commonly used currency, just like you say. Our gradmas could easily comprehend one dollar worth of token that is worth a dollar today and will be worth a dollar in June. That's why I would like to see it as day-to-day payment token.

However, I'd discourage my grandma from anything offering 20% APR. And you should do so too. Even though it's Hive, which I have a lot of confidence in.

11 months ago in LeoFinance by
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     11 months ago  

    Okay, I feel like I'm starting to understand some of the subtleties. I don't have a lot of data at hand so I'll let you validate my thoughts or not.

    So in the end, the 20% HBD is a kind of experiment whose objective was to see if it would attract users and encourage people to publish? I'm sure it goes further than that, but that was the primary objective, wasn't it?

    On that basis, the conditions for keeping the HBD at 20% could be as follows:

    • A significant increase in the number of active users and their commitment to the platform (whether this is in fact attributable to HBD's attractive interest rate remains to be seen). But for this point, I think, if I've understood correctly, you've said it hasn't changed too much.
    • The ability to maintain the stability of the HBD's value despite the high interest rate, reinforcing users' confidence in this stablecoin. This seems to be working well if we look at the total HBD in savings over time.
    • An analysis showing that the high interest rate has not harmed the quality and quantity of content generated on the platform. I don't know how to calculate this effectively, but I feel like I'm almost exclusively coming across good to very good quality content.
    • And one last thing, there would need to be evidence that the 20% interest rate contributes positively to Hive's economy as a whole, without excessive levies on the rewards fund that could compromise other aspects of the ecosystem. Is that right?

    And if all this data shows that the 20% rate is unfavorable, then it should be lowered. But shouldn't it first be lowered to 10 or 15% instead of directly to 3%?

    Shouldn't it be lowered cautiously, assessing the potential impact on the whole ecosystem? Then, I imagine, there could be an observation period to assess the effects of this modification on the platform's dynamics.

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       11 months ago  

      Yes, if I am not mistaken, the idea behind that interest rate was to make the ecosystem more attractive for outsiders and then convert them in regular users. I don't think it was a success, though.

      In my opinion, anything should be more profitable that curating. As you cannot get over say 10% APR on your curration, the HBD APR should not surpass this treshold. Otherwise it is an incetive to quit curating and use Savings instead.

      The rate is quite flexible, it can be changed anytime to almost any value, it is just up to witnesses.

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