The LEO FINANCE team recently released a new pHBD: USDC stable coin pool on PolyCub Finance....
This pool has an initial (current early) yield of 60% APR, currently with around $250K in liquidity, but this yield is likely to drop much lower as more liquidity is added - I expect it to come down to 30% and maybe lower within a couple of weeks given that $5 million of liquidity is being targeted.
Furthermore, rewards to the pHBD:USDC pool are paid in PolyCub and you only get the full return displayed if you keep your PolyCub rewards locked up for 3 months. If you harvest and claim them early than that you pay a 50% penalty, thus reducing your effective APR by half (so 60% becomes 30%).
pHBD:USDC
You probably already know what USDC is - it's the centralised, very large market cap stable coin backed by real money in the bank.
You may not know what pHBD is - it's a polygon wrapped version of Hive Backed Dollars (HBDs) - an algorithmic stable coin 'minted' by the Hive blockchain kept pegged (typically just to the underside) of the dollar through various mechanisms on Hive - such as selling Hive to buy HBD if the price drops below $1, and selling HBD to buy Hive if the price goes above $1.
The reason why the PolyCub team released the pHBD pool is because the Hive Witnesses recently raised the interest rate on HBDs to 20% (from a previous 12% practically overnight) - which is paid out to anyone who locks their HBDs in 'savings' on Hive for a relatively small period of three days.
This means demand for HBDs has increased, but there is something of a liquidity problem with HBDs - very few exchanges list HBDs (and one of the main ones, Bittrex, has had the HBD wallets closed for months so you can't get HDBs out as HBDs) and one $1000 buy order on Hive's internal market will raise the price of HBD by around 2-3%...
In short, the only way to buy HBD is slowly, in max-chunks of a few hundred dollars while we wait for the Hive blockchain to catch up.
Hence the pHBD:USDC pool - its purpose is to provide greater HBD liquidity so that people can buy HBD in $1000 (or more) chunks rather than $100 chunks, while provided a nice return to people who provide that liquidity and, of course, PolyCub holders who have that PCUB staked, as they're the ones who benefit from the swap fees and anyone who takes that 50% harvest penalty mentioned above.
Why (and how) I am stacking pHBD:USDC
I think this pHBD:USDC pool is one of the the best place for me personally to stack my stables, on a par with the pure HBD savings which yield you 20%
As a Hive, HBD and XPCUB holder already I feel it makes sense for me to stack at least some of my HBDs into the pHBD:USDC pool, even if the yield goes down to 20% in the long term.... I just think this pool benefits the price of Hive by giving the blockchain more exposure, it helps further stabilise an algorithmic stable coin which pays out 20% just for holding it in savings, AND I benefit because I'm a PCUB/XPCUB holder...
NB for a more technical analysis of the 'GLOBAL' benefits of this pool and staking to it then read this recent post by @edicted, I basically agree with all of it!
HOWEVER I AM NOT BUYING THAT MUCH HBD....
The reason is the low liquidity problem - remember it's supposed to be pegged to $1, but I decided to NOT swap this morning.....
Now it might be the case that when you try to swap, there is liquidity, but ATM, it's way too thin to bother.
So I will keep an eye open and buy when I can on Polygon with stables I've already got, and I will also be transferring my HBD earnings from Hive over as I earn them every couple of days or so, using this excellent HBD to pHBD bridge...
(NB there is a 0.25% fee to wrap!)
Buying pHBD.... Slow and Steady is Probably Best!
The problem this new pool has ATM is that there isn't very much initial liquidity in it - in fact ATW you can't even buy $20 worth of pHBD without losing a fair chunk of cash, so it's not working right now.
If you were to buy several $1000 HBDs you'd be $100s of dollars out of pocket.
This isn't meant as a criticism, it's more of a fact, it just is what it is - we started off with low HBD liquidity - the only place to buy HBD besides this still relatively illiquid pool is the Hive-HBD internal market which has.... low liquidity!
HOWEVER things could change fairly rapidly over the next few weeks as there is $3 million worth of HBD in savings accounts on Hive, some of which will be being released to make its way to the pHBD:USDC pool AND there are several thousands of HBDs being earned every day on Hive and some of that will also make its way to said pool.
Of course more liquidity being added to the pool means the percentage return falls, and it's likely to fall so fast from its current 50 odd% that is MOST DEFINITELY ISN'T WORTH paying a premium on HBD now just to get in now for the high yield, you'd be better off waiting and earning or buying that pHBD gradually, IMO.
Unless somebody wants to 'take one for the team' and buy HBD or pHBD at $1.05 to $1.10...?
Final things to consider before entering the pHBD:USDC pool:
This is likely to remain a decent yielding pool on an innovative, expanding multi-chain DEFI platform, so it's a FANTASTIC place to park your stable coins, but you need to factor in....
- What price are you paying for your HBDs...? ATM be careful NOT to pay over $1 for them, you'll be amazed how little you can buy before the price starts creeping up.
- Keep in mind that 0.25% HBD to pHBD wrapping fee if yer sending from Hive - if the APY drops to 20% (really 10% if you're taking the early harvest penalty) you'll need to keep them pooled for around 10 days (rather than 3 in HBD savings) just to make those fees back.
- It might just be simpler to keep yer HBDs saved on Hive for 20%? Especially once you factor in the 50% early harvest penalty.....
NB Despite these important qualifications, which I contain here for full disclosure so you can make an informed decision, personally I think this is an excellent pool for me to be in, because I am already fairly heavily invested in Hive, HBDs and Cub/ PCUB....
So as a final final word, I'd say you might want to think about (DYR NOT FINANCIAL ADVICE) adding to this pool and investing in the wider Hive, LEO and Cub ecosystems....
FIND OUT MORE....
- How to wrap HBD to pHBD and add to the pHBD:USDC pool - NOTE this is a useful guide but it doesn't give disclosure about the 0.25% wrap fee or the 50% penalty I mention above.
- pHBD:USDC now Live
- PolyCub site