Please note: if you want to burn some HIVE as part of this initiative to reduce Hive inflation (symbolically at least), please do vote this post as much as you can, since its rewards burn to
Inflation has been running hot on Hive for a long time, and our view is that it has severely damaged the Market Cap ranking and price of the $HIVE token.
Everyone says "We are in a crypto bear market", but they can never explain the Coin Market Cap rankings drop. We put it that the reason for the CMC ranking drop is the amount of Hive the community has printed (60 Million - see chart 1 below "HIVE Created from conversions (mostly from the DHF)"), on top of the programmatic inflation, with little to show for it.
Hive has a programmatic inflation schedule that defines how new tokens are issued, author rewards, curation rewards, witness rewards, etc.
This type of new token issuance is predictable, priced in, and programmatically ever-reducing. But the inflation that is hurting Hive isn't the predictable, programmed kind — it's the extra, discretionary money printing happening outside the normal, programmatically decreasing inflation schedule.
Through high HBD APR and excessive DHF outflows, Hive has introduced millions of additional tokens into circulation, far beyond what the economy can absorb.
This non-programmatic inflation is unpredictable, unbounded, and directly affects circulating supply, price stability, and ultimately Hive's global market ranking.
TL;DR
Hive is experiencing severe non-programmatic inflation caused mainly by excessive money printing in the form of:
High HBD APR (15%), which prints ~1.2M HBD/year → ~2.3% inflation.
- Our witness is lowering HBD APR to 6% in an attempt to bring this back to ~1% inflation per year.
Excessive DHF outflows, currently ~2.3M HBD/year → 4.4% inflation per year, which is 3× above sustainable levels (Maximum sustainable level is assumed to be 1.5% Market Cap) at current Hive prices.
To fix this:
- Witnesses should consider temporarily reducing HBD APR to ~6% (while we do not believe that HBD APR will get to 6% any time soon, we would like to see if we can start a move slightly lower to counter act inflationary HBD APR should the Hive price goes much lower).
- Stakeholders should consider adopting strict DHF proposal criteria to curb overspending and DHF outflows into general circulation.
- Existing projects should consider shifting into maintenance mode and reduce budgets as soon as possible.
- DHF Proposals should be small, short-term (≤ 3 months), measurable, and show their inflation impact.
- Value Plan should immediately reduce spending drastically (250K → 39K per quarter) and adopt a transparent S.O.P. All spends should have blogs published before spend event, Spends above 5K are voted on by 3 elected reviewers in the comments of the blog, spends above 20K should be outside the perview of Value Plan and should go into the DHF to be voted on by the community
Our team outlines below a new, much stricter DHF voting policy. Teams issuing proposals that fall outside of these criteria shall not be considered by our team for voting. Intention is to cut outflows from the DHF into the general circulation by:
- Time Limits - 3 months max,
- Expectation of regular, quarterly reporting,
- Includes KPI and reporting metrics presented as part of the proposal,
- Annual inflation impact calculation so that the project demonstrates it understands the impact of inflation on its proposal,
- How value is returned to the DHF
If we don't self-regulate now, Hive risks developing a reputation for unchecked money printing.
If we do act, we can restore economic credibility and protect Hive's long-term value, but we must act now - if the money printing continues, this risks a split in the community.
Chart 1 - 60 Million HIVE Created from conversions (mostly from the DHF) credit:
The Technology Was Supposed to Protect Us From Inflationary Money Printing - What Happened?
Blockchain technology was created to take money-printing out of human hands and secure sound economies through programmatic consensus.
Unfortunately, Hive as a community has failed to uphold this principle. We have managed to introduce large amounts of non-programmatic, unpredictable money creation — far beyond what the chain itself issues.
The two problem areas are:
- HBD APR, manually set by witnesses.
- DHF proposal outflows, manually set by users requesting funding and by voters approving them.
Because these are not programmatic systems, humans have done what humans tend to do: vote for extraordinary amounts of new money printing.
These concerns were shared in the HiveFest Round Table. Minutes are available here:
See below, thanks to 
Below are our proposed actions following that meeting.
Lowering HBD APR
The current HBD APR is 15%.
But 15% of what?
There are ~8 million HBD in savings.
15% of that = 1.2 million HBD per year printed out of thin air from the HBD APR and added to the Hive supply.
With Hive's current Market Cap at 52M USD, this represents:
2.3% annual inflation; value transferred from all Hive Power Holders's accounts (who are staked for 13 weeks and have lost 97% of their value since the top 5 years ago) to passive HBD holders whi are staked for 3.5 days and have held their value for the last 5 years.
We do not support taxing the entire community at this level.
A responsible economy should devote no more than 1% of annual inflation to passive HBD yield.
Therefore, for this period of low HIVE prices, our witness will set HBD APR to 6%, in an aim to encourage others to help reduce HBD-APR-driven inflation to ~1% of market cap instead of over 2.3%.
The 6% APR is derrived from this: 6% of 8 Million HBD = 480,000 HBD. As a % of supply this is 480,000 x 100 / 52 Million USD Hive Market Cap = 1% of Market cap per year
This protects Hive from excessive money printing should prices go much lower. (Please note that we are aware that this may cause conversions to happen, however, we think a) many of these conversions are coming regardless of what the HBD APR is due to haircut rule looming, and it being an opportune time to convert due to prolonged bear market and b) we do not think that the APR will suddenly go to 6%, but want to see if we can start a slow move lower as we go through the bear, in the hope that as we come out of the bear we are already lowering into a bull (as is the ideal scenario).
Hive's Debit via HBD dominance is looking incredibly bullish (which is a bad thing):
Credit
Urgent Call to Action for Other Witnesses
We kindly ask fellow witnesses who also care about limiting money printing to temporarily reduce their HBD APR in line with a 1-2% annual inflation target, which corresponds to roughly 6-12% HBD APR at current conditions. This should reduce inflation by HBD APR should the Hive price go much lower from here.
DHF Outflows Are Significantly Driving Inflation
The DHF is another major source of new, non-programmatic inflation.
Money inside the DHF is not yet issued into the economy, is not included in the market cap calculation of Hive and thus can be considered "dead" or locked. It is not priced into the price of Hive and once issued into circulation, it becomes a new source of liquid HBD supply. It is the equivalent of uncapped, money printing, like the bankers do to the US dollar, that is added, almost at random to the Hive supply. This has a double negative affect on the price. It is 1) normally converted into liquid Hive which increases the circulating supply and 2) is normally then sold into the market both of these depress price, and harm Hive's market cap rankings, especially if funded projects don't generate equal or greater economic value, which was always of course NOT the intention - the intention was to create more value than the HBD issued via the DHF. This unfortunately does not seem to have worked and it is our view that a period of austerity is now needed for Hive in order that it does not print itself to zero.
We saved oursleves from Justin Sun controlling the Ninja Mine on Steem, but instead have unfortunately become its victim anyway by unintentional, excessive issuance of this money into the economy via our DHF votes.
Since there is no built-in cap on DHF outflows, the only practical solutions in our understanding are as follows:
1) Stricter DHF voting criteria enforced by voters to obtain better reporting and lower budget requirements from projects.
2) Lower APR on HBD.
3) Stricter regulation of Value Plan and a lowered VP budget.
Without these, we, as a community, every single one of us, risk becoming known for exactly what we criticize in the traditional finance system: unchecked money printers.
This would badly damage Hive's credibility among communities that value sound economic policy (Austrian economists, Bitcoin maximalists, etc.) and it would be impossible to regain it.
DHF Outflows: The Actual Numbers
All numbers below are on top of programmatic inflation.
We are currently spending 15,558 HBD/day from the DHF.
If we assume the stabilizer is self-sufficient (subtract 12,000/day):
- 3,558 HBD/day = 35K HIVE/day being issued into the economy.
Add the Value Plan's annual 1M HBD:
- Total annual DHF outflow = 2.3 million HBD
- Equivalent to 22.3 million new HIVE printed, on top of programmatic inflation.
Compared to the 52M USD market cap:
2.3M / 52M = 4.4% inflation added every year from DHF spending alone.
DHF inflows are only ~0.9% of market cap.
We are spending almost 5× more than the DHF receives from programmed inflation.
This is not sustainable at low HIVE prices.
At current prices, a healthy ecosystem would spend ~1.5% MAX of market cap annually:
1.5% x 52M = 780,000 HBD/year sustainable spending
We are spending 2.3M — 3× above sustainable levels.
Spending must come down by ~3× to return to credibility.
Inflation impact on current DHF-funded projects
Top Active Proposals Producing Highest Inflation via Non-Programmatic Monet Printing via DHF Outflows
Time to Reduce DHF Budgets & Enter "Maintenance Mode"
Below are our new DHF voting criteria. Many existing funded projects exceed these criteria, and we will adjust our votes accordingly in about two weeks from now, so we can digest the community reaction to this blog and allow time for existing projects to adjust.
We implore funded teams to lower their budgets, enter maintenance mode, and reduce inflationary pressure until Hive prices recover.
We have enough features on our eco-system apps now to go to market, we request that as a community we focus our limited remaining funds on marketing these apps for the time being instead of building new features into them.
Furthermore, in future proposals we would like to suggest that two funding amounts are entered: 1) normal scope completion and 2) budget required only for maintenance mode, in case of sudden price drops prior to completion of the funding period.
Suggest Funded Project Burn Remaining Funding
Another way for existing projects to support the reduction of outflows from the DHF into the general circulation is would be for them to partially burn funding coming from the DHF apart from that needed for maintenance. This would reduce inflation massively, preventing new Hive being added to the supply, and preventing that supply being sold onto the market and putting further pressure on the price.
Our New DHF Voting Criteria
Projects that do not meet these criteria will not receive our vote.
We also encourage other large stakeholders to issue similar criteria.
1) What We Will Consider for Voting (to reduce inflation)
We will prioritize:
- Small, low-value proposals
- Short sprint cycles
- Clear scopes of work
- Explicit success metrics
- Ideally: a plan for returning value (HBD) to the DHF
2) Proposal Time Limits
We will not consider any proposal longer than 3 months.
3) Quarterly Reporting (Mandatory)
Projects must publish a public report at the end of each funding period.
A proposal cannot be considered for renewal unless a report is published.
Reports must include:
- Goals of the previous funding period
- Methods of measurement
- Results / KPIs
- What Hive gained from the work
- Any funds returned to the DHF
- Clear goals for the next round
If a report is not published within 10 days of term end, no extension will be considered.
4) Examples of Deliverables & KPIs We Want to See
__NOTE: These are only examples, but are the types of measurable KPIs we should be looking to make sure projects report against:
- +10% QoQ active users (unique sign-ins)
- 5 new dApp integrations; 2 production launches
- 2,000 net new wallets; 500 retained after 30 days
- Marketing ROI ≥ 1.2x; CAC ≤ $8
- Monthly public updates on Hive blogging platforms
- 1 public audit log or ledger export
- 15% of project revenue returned to DHF
- 2 new business partners onboarded to Hive
- Clear sprint milestones
5) Annual Inflation Impact Must Be Calculated by Each Proposal
Every proposal must show:
Inflationary effect (%) = (100 × Total Amount Requested $) / Current Market Cap $
Given that sustainable DHF outflows should remain between 0.5% and 1.5% of market cap:
52,000,000 × 0.015 = 780,000 HBD/year
We will not consider proposals exceeding:
20% of 780,000 per quarter = 39,000 HBD/quarter
⇢ ≈ 430 HBD/day
Additionally, if a proposal stays below these limits but pushes global DHF outflows above the annual 1.5% target, we will not vote for it.
6) Return of Value to the DHF
Projects should commit to contributing a portion of their revenue or profits back to the DHF.
A 10% return is a reasonable starting point.
Projects unwilling to return value will not be considered.
7) Review of Criteria
We will update these criteria as Hive's economic conditions change.
7) Minimum Viable Product / Proof of Concept in Operation
We will only consider projects that already have a minimum viable product or Proof of Concept already running. This proves that the project has already put skin in the game and the path to success is of much lower risk for the community. If an MVP or POC is not possible, then we expect to see strong evidence of the project team having sufficient experience to execute the scope of their proposed project
A New Proposed Value Plan S.O.P. to Reduce Spending
Value Plan currently accounts for:
1,000,000 / 52,000,000 = 1.9% inflation per year
One person directing 1.9% of annual inflation is not acceptable at current price levels.
This must change.
We propose a new S.O.P. using no new code and no multisig requirements:
Public Transparency Requirement
All expenditures must be announced via a blog from 
- What is being funded
- Why does it benefit Hive
- How results will be measured
This gives the community time to comment and express approval or objections.
Spending Categories
1) Spends < 5,000 HBD
Allowed for travel, accommodation, food, small events, and miscellaneous expenses.
2) Spends 5,000–20,000 HBD
Require approval from 3 elected reviewers.
Process:
- Each reviewer comments with approval
- All 3 must approve for funds to be released
- Reviewers are elected via community voting
- Terms last 6–12 months
If only 2 of 3 approve, the spend is rejected.
3) Spends > 20,000 HBD
Must be moved out of Value Plan and into the DHF as normal proposals.
This includes large existing projects such as:
- Rally car
- SWC
- Ghana water wells
- Venezuela pipeline
All can be migrated today, with zero code changes.
Value Plan Budget Adjustment
If marketing should account for ~20% of spending, then:
780,000 annual sustainable outflow × 20% / 4 quarters
= 39,000 HBD per quarter
This means Value Plan should reduce its quarterly budget from 250,000 HBD to 39,000 HBD.
WIP - Working on a DHF Proposal Platform
We are working with 
This site will also become a place where DHF projects can more easily write standardised proposals so as to help them see their affect on inflation and help them issue more professional proposals with proper consideration for the economy, reporting and progress measurement requirements amongst other things.
The most important thing here is that the site will alert the proposer if they are asking for a quantity of money that will hurt the Hive price via such inflation as we have seen over the past few years due to DHF outflows.
Conclusion
Note we are not pointing blame and not saying any of this is intentional. It is the Madness of the Crowd phenomenon. But now that it has been highlighted, we hope to see some action from at least some of the top whales on Hive to correct the current inflation and money printing problems on Hive.
We deeply believe in the Hive community, and believe we can come out of this much more anti-fragile; this should be seen as an opportunity to become better and fix our weaknesses.
If we follow the steps outlined above, Hive can:
- Reduce inflation drastically
- Bring spending and excessive money printing under control
- Regain credibility as a sound, responsibly managed blockchain economy
- Demonstrate that decentralized communities can self-regulate
If we fail to act, however, Hive will likely earn a reputation for reckless money printing — one that could have been prevented and that will be very hard, if not impossible, to repair.
Hive has survived many challenges. This may be our toughest yet…
But we can get through it if we act together, and we can come out much leaner, meaner, and adept at making economic adjustments under pressure.