It's insane how fast the FOMO spreads among Defi projects. It feels like we're slowly generating hype and preparing the ground for another defi summer. If the concept proves to be sustainable, it will become irresponsible not to invest in crypto.
The industry started with 10-12-20-30% returns all the way up to 100% yields. This is a massive signal for everyone to increase yields even more. However, the risk of destabilizing the economy is proportional to inflation. The higher the yields, the higher the chance things go south. On the other hand, it's hard to stay competitive if everyone else promise x2 yields.
Nonetheless, the market has obviously chosen what's the next big thing and we better be ready to catch the train prior to hype. A unique opportunity for a massive capital injection that would tremendously change the shape and accelerate the growth of Hive.
We only need one competitive product for the market to utilize and everything else will come naturally. Once there's an established trust among the investors things tend to go exponential.
USDB
USDB is a truly decentralised stablecoin backed by FHM. It uses a method known as proof of burn to cement its value at $1. Proof of burn is a concept in which a coin is destroyed at a specific point in time and value. At that moment it is recorded in a blockchain transaction. USDB is valued and maintained at $1 through its relationship with FHM, a decentralised reserve asset and an arbitrage mechanism that anyone can participate in.
It's basically a bond locked in for either 3 or 6 months. Something we've been discussing lately.
Three months lock-up period gives 5% ROI and 21,55% APY, whilst 6 months lock-up generates 15%ROI and 32.25% APY.
In case the investors want to withdraw prior to the contract expiration, a 5% fine is charged. Yet again something we considered.
Demand for high yields seems to be growing like crazy, and it's already easy to predict
How to stay competitive is the real question.
Playing with interest rates is not
Given how small the market cap of HBD is, increasing the interest rates shouldn't have any significant impact on the overall economy.
It's worth diving deep and theorizing all the possible outcomes.
Stay Vigilant, I'm expecting to see a growing number of projects promising higher returns just to dump on people. Don't be one of them.