HBD Interest Payments For August 2023 | $125K

Hello September!

Another month has gone by. It is always great to start out the month with talking about the HBD interest payments. Hive blockchain is still paying 20% APR for all HBD in Savings. There has been some changes in witness parameters for the APR. A couple of top witnesses changed their APR parameter to 19%. 11 top witnesses still singling 20% APR. Some are also few witnesses who prefer 12% and 15%. The lowest APR is 7% by Abit.

It has been more than 2 years since Hive started paying interest for HBD. While the feature was always there, it wasn't until Hive witnesses decided it would be beneficial for the chain and the community to start paying interests for HBD. HBD interest payments started out with 3% in March 2021. That time payments were for HBD both in liquid and savings wallets. That structure benefited exchanges, who started earning HBD interest for their customers' HBDs in their exchanges. Hive core devs came up with a better solution and implemented changes to HBD, and HBD interest payments in the planned hardfork in the summer of 2021. This hardfork limited intrest payments to HBD held only in Savings. After this hardfork witnesses were motivated to increase the APR even more, as HBD was getting better and better. In June 2021 APR increased to 7%, July 21 to 10%, and December 2021 to 12%. Things were looking great for HBD.

On Hive changes are made gradually with discussions, experimentation, testing, and considering all the risks. Since all the improvements done with HBD were going well, and 12% HBD payments didn't create any issues for the chain, in April 2022 witnesses decided to go for 20% APR. That was a big step in making HBD more attractive for stablecoin enthusiasts. There was a lot of work done prior to this to make HBD behave as intended. Now, in September 2023 Hive blockchain is still paying 20% APR.

Because APR is not hardcoded into the blockchain, and it is a parameter witnesses can change, 20% APR was never guaranteed to last for a long time. It may. APR may even increase more if consensus decides so. However, the likelihood of APR decreasing in the near future was always high. There could be many reasons, or none why APR would change. It is completely upto the individual witnesses to decide what APR should be. It is also one of the positive features that can be utilized as a protective measure if something went wrong and paying HBD interest had negative impact on the blockchain and its economics.

Since 20% APR has been activated we haven't really seen any negative side effects of this actions. I would argue the opposite. More HBD is now held in Savings instead of exchanges, Hive community members benefiting from another way of passive income, it also created a hedge mechanism for Hive investments. 20% APR has made HBD a better stablecoin overall. We haven't seen massive adoption of HBD as some of us expected. At least not yet. But still the interest for HBD has slowly been increasing. Two years ago, HBD interest payments were total of $5,646 to about thousand accounts. Today the total payment amount on monthly basis is over 100k and still going up. More accounts receiving HBD payments every month.

There has recently been discussion that perhaps it is better to lower that 20% APR. It may or many not happen in the near future. Even if it does, it seems would drop to 15% or 12%. Still will remain above 10% and would offer better investment option compared to many other financial instruments. I personally think we should increase the APR to 25%, and continue testing.

Let's look at the numbers...

Looks like these numbers keep going up. $125k HBD were paid out to HBD hodlers in August, and a little bit more wallets received these payments compared to the last few months. I hope to see these numbers to keep going up, and I also hope eventually this will also make Hive's price to climb upwards as well. If not, we can always buy more Hive at cheaper prices.