The experiment with 20% interest rates with the Hive Backed Dollar seems to have come to an end with now only 8 of the top 20 witnesses signalling 20% interest rates.
The rates are calculated based on the median interest rate value signaled by the top 20 +1 witness. Even with this drop, it is still one of the highest rates for stable coins on the market. While at 20%, the rates did not attract the expected capital as desired and instead caused huge damage to the Hive eco-system and this is an attempt to divert course before a forced de-pegging would occur.
It will be interesting to see the balance of HBD over the coming months to see if there are any changes to holders or if the rates drop further as 15% is still way higher than other stable coin returns that are available elsewhere.
We don't seem to have had a cycle like last time yet and although quite some time into a bull market, Hive has suffered like other older tokens, but doesn't rebound so well when the market goes up, instead making lower highs. Is this the market or mostly the tokenomics to blame?
Changing the rates from 20%, to 15% might not have too much effect on any potential inflation or sell pressure, plus combined with the impact of the DHF daily selling pressure, there is still quite abit of inflation and sell pressure created. Are more drastic actions needed? Some on Twitter seem to think so.
The high rates have caused many dis-incentives for people to hold Hive Power as the expected NGU didn't materalise and supporting the $7.6m of HBD debt plus a DAO with spending on trivial things hasn't helped.
It has taken a long time for the Hive witnesses to change course and the question will be is if this will be enough to win back the trust of users to power up Hive again? As HBD was promoted as the key component of the ecosystem instead of Hive and yet HBD has been a flop in the crypto space for quite some time.
Thanks for reading.
Credits:
Title image created with Hive logo. Screenshot from HBDStats.com.
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