I tried to explain the reasons I see in the post. People lose incentive to participate (and add value to the ecosystem) because it pays off way less than simply putting money in Savings. Curation APR 9% + HP APR 3% cannot match the 20% of Savings, and you usually even have to do something to get the curation.
For somebody outside Hive, the APR may seem as a red flag. How can you give away 20% per year on staked (de facto) stablecoin, which is not used in any kind of luquidity pool or anything. I buy it, I vest it, and next February, I'll come back to withdraw 20% extra. I would not trust it, and even bother to try to find out how is that possible. Apparently, I am not the only one, otherwise we would have millions of people using it instead of common savings accounts.
Under current circumstances, Hive is capable of emitting tons of HBD. HBD Stabilizer can easily keep it peg. But I believe we all pay costs of that policy.
I still think there is no reason to panic. As for the red flag on the outside, the Hive blockchain already had one before this change and nothing has changed now.
According to @geekgirl's post saves are used by just over 3200 accounts, which is actually low when active Hive users are around ten thousand a day.
HBD is currently used in seven liquidity pools. The possibilities to use it are much higher (as you mentioned bonds) and I believe that will also change once the mechanisms (smart contracts) for this are in place.
I personally still do the same posting, curating, and voting as I did before, so I see this as just one more value add that will not change my attitude toward Hive.
I am not saying we shall panic, but that we shall discuss it. One of the reasonings of this interest rate was that it will be attractive for the outsiders. Two or three years later, we can say it did not work.
I haven't noticed arguments for keeping the current rate under this post (I believe there are some, and even the valid ones). An argument I am looking for would explain why is it beneficient for the network as a whole, for the ecosystem. I totally understand it is great for many people. So would be if I used my voting power, which grants me votes worth say $1 when fully charged, to self-vote my posts and comments. I could earn like 20 bucks per day for almost nothing. Wow, free $600 per month! It would definitely be beneficient for me, much more than trying to actually create something and have discussions like this one. However, it would be harming the network (and I would get downvoted once somebody would notice this milking). I don't blame people for using Savings, it actually is smarter and more profitable than curating and requires zero activity. I simply think we, as the community, should discuss it. Thank you for doing so! I really appreciate it.
I am not an expert on liquidity pools, but wouldn't way more people used HBD there if the interest rate was 3-5%? At the very first glance, I'd say Staking has way better risk/reward ratio than liquidity pools (I might be wrong on this one), so if I looked for an investing opportunity, I'd go for Savings.
Well, I would just like to say that the use of HBD is still being explored and that savings is one of the good options.
What you say about self-voting is true, but again we have a mechanism (downvote) that if anyone starts to take a shit, they will be penalized. That's why you don't do it.
What will happen in a year or two, nobody knows, I'm sure.
That's because the harm caused by self-voting abuse is quite obvious, easy to comprehend by anybody. The impact of the interest rate is not. Many people don't really think about it, many others don't know what is the mechanism behind - and I do not blame anyone for not knowing, since it is a responsibility of the community (which means all of us) to govern the network and keep people aware about its perks.
As I said, Savings is a great investment tool. You can hardly find a better one. However, that rate has been around for several years and we could be able to evaluate it now. There are many amazing projects to be launched or being launched, and having this issue solved may only help them to succeed.
At least, Hiveans shall be able to explain how it is sustainable to keep this rate when asked. I don't know any reputable stablecoin (yes, HBD is not a true stablecoin) that gives away 20% interest. Where does the profit come from? The simple answer is that part of the network value (added by active participants and projects) is paid out as a reward for those who stake HBD, which, from my point of view brings zero value. I might just not see the benefit of people staking HBD, I am not saying I'm right on that one.
There have been quite a few posts on this topic, I don't have time to look it up right now, but as @dalz explained, or as I understand it, these profits are generated by converting the inflation part of the Hive, which is also used for the DHF and reward pool. Here is the last post about it.
Also, this post is worth reading APR for HBD in Savings Dropped to 19% for a Short While. Want to know why?
I know the formula with 21 values from all the block confirmators/witnesses of the round and I know where does the emitted HBD come from, or what is it backed with.
The inflation of Hive is/should be linked to the increasing value of the network. More content, more interactions, more projects, more games, more whatever brings attention and value.
Reward Pool rewards those who add value by active participation - posting, comenting, curating. DHF funds those who add value through any project the community finds worth funding. Be it running a node, developing new tools or marketing and onboarding... It could be anything, including the HBD stabilizer.
From my point of view, HBD in Savings does not bring any value and the interest rate only consumes a portion of the Hive inflation. As I said, I don't claim to be right, maybe there's something I don't see. But from the information I have, I believe rewarding passive stakers more than active users does not help Hive to grow.
It does not even make Hive coin more scarce, as it can be converted anytime (true, with a 3.5-day delay).
That is, of course, your opinion. But everything you mentioned is happening, new games are coming, new projects are coming, and people are commenting and voting, no less than before, even more. The HBD APR is just the icing on the cake for those who want to use it. But when new use cases for HBD are introduced, it will probably decrease. Until then, I have nothing against it as it is.