Background:-
LUNA fiasco has arguably jeopardized the doctrine of Stablecoin. The doctrine of stablecoin which is largely used as a hedge against the bear cycle has already exposed ambivalence over its stability-- USDT market cap has dropped from $84 Billion to $72 Billion USD. This is too much considering it's a stablecoin. How unstable are the stablecoins!
The crypto market is contemplating the robust peg mechanism for stablecoins. But the larger problem is manipulation, and lack of transparency, and disproportionate minting of the coin. The latter is a bigger threat to the ecosystem than the former.
For the end-user-- Which one makes your list as a stablecoin- A stablecoin true to 1 USD with +/-0.001% tolerance or a Stablecoin with +/-3%. Or rather I should ask an Hiver, how would you take HBD as a stablecoin?
I have made a little research by taking the dataset of HBD prices over the last three months to ascertain the central tendency of the coin. By definition, HBD is a debt instrument that is supposed to maintain its peg value of 1 HBD=1 USD.
We all have experienced that HBD has a long history of producing the best of stablecoin and speculative coins both. In a risk-on market, it tends to sway with Hive and in a risk-off mood, it tends to hedge you against a bear cycle i.e. it performs as a stable coin.
But even when it performs as stablecoin it offers ample opportunity to the arbitrageurs to play upon the fluctuations around the peg value. But how much is the fluctuation as observed from the data? What is the central tendency of HBD?
Here is the data set of HBD's closing price for the last three months to calculate the central tendency of HBD-- Mean, Median Mode.
Source:- Coingecko
In a just stablecoin market, it is a well-established fact that stablecoin used to trade for around $1. So the central tendency of any stablecoin should be $1. And the distribution of the data set by default is going to be a symmetric distribution.
Unless there is an outlier MEAN is a reliable way to check the central tendency, if there are outliers we can rely upon other measures like MEDIAN and finally, with MODE we can ascertain the highest frequency.
But unless HBD trades wildly and disproportionately, you dont see much difference between the Mean and Medin. In a stablecoin, they will have a tendency to converge always because, by definition, a stablecoin is supposed to trade around $1. So even if it deviates, the arbitrageurs will bring it back to the pegged value.
Taking the data set of HBD for the last three months, i.e. from 1st March to 30th May, I have calculated the MEAN, MEDIAN, MODE, and the RANGE.
Evaluation:-
HBD is supposed to trade at $1 as that should be the central tendency of a stablecoin by definition.
The empirical data of HBD and its performance in the real open free market, it is evident that the central tendency is around $0.98. MEAN= $0.979, MEDIAN= $0.985. Not much difference between MEAN and MEDIAN. Although it is not close to $1 as it is short by around 1.5% to 2%. But that's the arbitrage opportunity. Just go back to the data set and check how many times it has traded at $1 again. So if you keep on buying at the MEAN o MEDIAN value, you can liquidate it as and when it trades at the theoretical pegged value, i.e. $1.
Check the MODE. It was $1.005. That's it. You are frequently in profit if you keep making entries at MEAN and MEDIAN value and liquidating it at the MODE value. (MODE= The value with the highest frequency). MODE value is 1.005, which otherwise means that most of the time in the real, open free market HBD is trading at the theoretical pegged value. Because out of the dataset with 90 entries, $1.005 is the price of HBD with maximum occurrence.
Conclusion:-
Now with this analysis, you have every single reason to love HBD, maybe more than Hive. In a bear market, you might lose and might have to wait for a longer time if your timing is bad(entry point), but with a stable coin like HBD, using these MEAN, MEDIAN, and MODE values you can keep making some money every single day (it may not be much, but perhaps the safest and risk-free income, even if the risk exists it's minimal and short-lived), should you have some liquid fund to trade HBD. And since it is a stablecoin, you can make money even in a bear market. If HBD dip below $1, it is always an opportunity.
Disclaimer:- This article is intended for educational and analytical purposes only. It should not be construed as financial advice. Thank you.