Firstly, thanks for sharing these charts and numbers...
Secondly, debt is a debt, and sooner or later someone has to pay it... In our case, if it wasn't obvious to people, HBD is BACKED UP by HIVE! This means that HIVE pays the price of HBD debt...
I see nothing unexpected from what is happening... 20% APR on HBD is 20% additional inflation on the HBD+HIVE combo... there is a time when most of that goes to HBD, there is a time when it spills over to HIVE (like now)...
I think that we didn't have conversions in BOTH ways while we were on STEEM, probably on purpose... to protect the BASE token (STEEM), and not the stable token... Atm, we are doing it another way around...
So in some way, everything works as planned... For those who hold HBD...
Just my 2c.
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We added the conversion from HIVE to HBD to put a ceiling on the price of HBD. You mean not having the conversion would stop printing more HBD and have less debt? I assume this is what you mean.
We saw what happened when SBD went up in price to like $7 and that created way more inflation than what we have here.
Because the chain assumes HBD is $1, it rewards the authors based on that. So if HBD was $10 in real life, that would mean the debt is 10 times higher than what blockchain assumes it to be and it keeps printing more HBD and the debt goes way above the haircut rule and when the haircut rule finally gets activated or the price of HBD drops to $1, the chain has to pay 10 times more debt than it would have originally paid.
So in a nutshell the added conversion is a protection against this which we already saw happen years ago on steem and sbd.
Doesn't conversion always consider HBD to be worth precisely $1? If you buy HBD for less and convert it, you earn; if you buy it for more and convert it, you lose.
Converting 1 HBD worth 10$ would still give you like 5.5 Hive at current price, not 55 Hive. Or am I missing something?
If I am right, then the market price of HBD does not affect the emission of Hive much, it's the Hive price what matters.
Yes conversion always uses a value of $1 (except in the haircut condition when it uses a lower value).
Thanks :)
I guess I was wrong. Or at least my reasoning was wrong.
Me having an assumption and being wrong is acceptable, but blockchain having an assumption of the value of something could be an issue...
So, reading what you said, it looks like the main issue was that "the chain assumes HBD is $1", and if it wasn't set up like that, we wouldn't have the problem with high inflation. HBD wouldn't be pegged to $1, but we wouldn't have high additional inflation?
and another question, as you are one of the OG on the chain, and much more informed than many others... How we could solve this problem and what is the main cause of it, in your opinion?
Btw, thanks for the explanation... Appreciated!
I think I was wrong to why it was bad and about the reasoning around it. As I think now and it doesn't seem right.
I don't think there is a problem really. We have the haircut rule just because of this. To prevent debt from going too high. Although we did increase it from 10% to 30%.
All the problems we have right now are linked to us not having enough users. Almost everything gets better when we get more users. We have no use case for our tokens and the only use case that we have which is social media and blogging, we don't invest on it.
20% is now 15%