I am sure many of you have already noticed that today in author rewards those who are set on the 50/50 split there is no HBD payment. The rewards are 50% HIVE for staking and 50% HIVE liquid. I actually cannot recall the last time this happened and do think this is the first time on the HIVE blockchain. The old chain I can recall a couple of times this occurring and this is only a safety mechanism controlling the debt and not a crisis to worry about. The HIVE pricing being so low has got us here and this is just how it is. If HIVE was at $0.10c which may or may not happen over the next few days or weeks then HBD would be back to normal with regards to author payouts.
New users or those that only know HIVE may have been stressing not sure what is going on and why I have tried to explain this in layman's terms so everyone can understand this. A developer may use different terms that passes over our heads and why I thought it best to have a crack at understanding this scenario.
Safety Mechanism For HIVE Debt
You may be wondering what debt and from my understanding which is fairly basic so bear with me. Bank notes used to be known as a promissory note with the words I promise to pay the bearer x amount in gold. The actual promise stopped in the UK back in 1931 and now that bank note can be swapped or exchanged for that notes value. The Hive Backed Dollar (HBD) is exactly the same as it has a value of $1 and you will receive $1 worth of HIVE which is about 12 HIVE today. Each HBD is owed 12 HIVE today and from my understanding the amount of HIVE tied up in HBD has reached the 30% threshold and why no more HBD is being printed. This is a safety mechanism designed to protect HIVE and as I mentioned before is quite normal and does happen.
I was trying to calculate where we currently are looking at the HIVE blockchain market information with current supply showing 514,877,274.500 HIVE and 34,080,489.923 HBD (roughly 408 965 879 HIVE) which gives us around 923 million HIVE. Virtual HIVE supply is at 930 million so I am not sure if the debt ratio of 30% was changed with the last Hard Fork plus it also excludes the DHF fund. The debt ratio currently shows a rate of 44.666 % which if we add the DHF fund we will probably be closer to the 30%. Again I am assuming here and trying to help myself and others understand this as we should know this being on HIVE for many years now. Maybe I am assuming too much, but this is my understanding and if wrong would love to be corrected in the comments so we can understand this once and for all.
Whilst HIVE is now being printed along with no HBD this means in theory the debt ratio will reduce slowly over time and at some point in the future HBD will print again when it is below the 30% ratio rate. If by some miracle HIVE goes back to $0.10c or higher then this will all return to normal because then each HBD owes less HIVE.
Normally we do get some type of warning when the safety measure kicks in by receiving HIVE (50%) and HBD + HIVE as the 50% liquid. This time we did not experience this and went straight into HIVE for all author reward pay puts. Maybe this did happen earlier today and I missed this event as it is slightly different due to it happening so rarely. Nothing really changes and we just continue like normal.
Last night I did notice the APR for those with staked HP rise and is sitting at 3.92% which is high considering the bench mark was always around 3% being just under or just over. The APR is literally 30% higher as a percentage over the normal with 0.92 representing the extras.