We have a lot of discussion taking place surrounding the Hive Backed Dollar (HBD) especially since the interest rate was raised to 20%. This only makes sense that a lot of excitement would be generated since we saw a massive boost to UST and LUNA. The thinking is we will be able to do something similar on Hive.
This is, naturally, bringing up some questions of the sustainability, viability, and resiliency of the network. Many feel the rate is too high, something that cannot be maintained. Others believe it is not high enough for the challenge we face. No matter where people stand, how are we going to know? This is something that we will have to navigate.
For the moment, we know that, since the distribution of HBD is so low, we are safe. The question starts to become pertinent in the future.
With all the focus upon HBD, one line of thinking is why have all the emphasis there? If we want to truly make Hive resilient, why not concentrate efforts onto the HIVE side of the equation?
If we keep the focus upon the correlation between HIVE and HBD, we can see how this also could alleviate the problem. Basically, instead of worrying about if HBD got too high, how about we put forth a discussion of how to ensure that HIVE does not get too low?
The dynamic between the two means that the market cap, in USD terms, is crucial. If HIVE has a higher price, the threat from conversions of HBD is lessened.
With this in mind, the situation with Hive Power becomes crucial. It is the foundation of the ecosystem and something we should try to build up.
Powering up HIVE gives people utility as relating to the ecosystem. It enables:
- interaction with the chain since Hive Power equates into Resource Credits
- voting in governance issues such as Witnesses and proposals
- helping to direct the reward pool through one's voting power, earning curation rewards
Hence, we can see there are reasons to have Hive Power other than just a return. That said, a portion of inflation is directed there, providing roughly a 2.80 annual increase in Hive Power held.
The goal should obviously make holding Hive Power more attractive. If people are consistently taking liquid HIVE and powering it up, there is less floating on the market. When demand increases, this will only push prices higher if the supply is tight.
Here are a few ideas to enhance the return on Hive Power
Conversion Fee
We can charge a .25% or .5% fee on all HBD and HIVE conversions. The mechanism is a bit rough at the moment since it is acting as a security feature. Nevertheless, if we take a portion of each conversion and direct it to those holding HP, it will grow the value of those holdings. This helps to provide a greater defense.
At the same time, if someone plans on using the conversion feature to attack the network, a portion of what they are using will actually be directed to the other side.
Account Purchases
One of the challenges Hive has is with onboarding. A lack of free accounts is an issue. For this reason, there is a fee to get a Hive account. At present, it is 3 HIVE per account. This is sent to the null account, effectively burning it.
Here is another example of where the fees generated from account creation can be used to further enhance the appeal of Hive Power. We can direct that money to those holders.
Trading Fee On The Internal Exchange
Hive advertises itself as a fee-less blockchain. The reason this can be done is because the "cost" to interact with the blockchain is contained in the Resource Credit system. If one has enough Hive Power, he or she can operate as much as desired. There are no direct per transaction fees like on other blockchains.
This can remain in place. However, that does not mean the internal exchange has to be void of transaction fees. Most exchanges charge some type of fee. Here again, we could charge a minimal .25% or .5% on each transaction.
By now, you can all guess where these are sent to.
Decentralized Hive Fund (DHF)
Most of us are aware that Hive has its very own DAO. This is called the Decentralized Hive Fun (DHF). It was created during the fork using funds that original came from the ninja-mining. The main purpose is to provide ongoing funding for development.
Why not expand that to include ongoing defense of the ecosystem? Here we could take a portion of the daily payout (maybe 5%-10%) and direct it to Hive Power holders.
Early Termination Fees
Hive has the ability to create time locked assets. We see this with Hive Power and also, basically, with the Hive Savings program.
When people power up, they have to understand that the reserve is done over 13 weeks. This is a security feature for both the individual and the blockchain. It is the center of much discussion, outside the scope of this article.
One thing that some have tossed about it allowing people to get their funds quicker but only with paying a fee. So it one wants to reduce the power down time, perhaps there is a 10% or 15% "early termination fee".
We could do something similar with the Hive Savings (and any other time locked assets that are created). If one wants to get the funds immediately from Hive Savings, maybe there is a 5% charge.
At this point in time, I have no idea the technical feasibility of some of these ideas. However, it is good to start a discussion about this.
What are your thoughts? The goal should be to make HODLing HIVE more attractive. The epicenter is Hive Power. Thus, can we do a variety of things making it more appealing?
How do these ideas strike you? Do you think they are worthwhile to pursue? Are there others that you have which could help in this endeavor?
Let us know your thoughts (and ideas) in the comment section below.
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