So many people have asked this, 'WHY IS HIVE PUMPING?'. Is it splinterlands? Well, I'm sure that is helping. Is it @lordbutterfly's marketing? Again, probably helping. Could it be we are getting confused with that other Hive-named project again? It can't hurt!
But the real reason is.... Hive to HBD conversions!.
I did a whole guide, linked above, on how you can get in on this amazing arbitrage opportunity, so check that out to learn all about the button-clicking technicals. Here is a testimonial from someone who followed my advice:
Remember there is some risk here, but what is happening behind the scenes? HIVE is being burned like crazy to create this HBD.
$1.05 dollars worth of hive is being burned for each HBD being created. You would think all this arbitrage would drive the HBD price back to its peg....
And it is indeed trying to. But somehow there is still interest in HBD, and we are funnelling it right in the HIVE price and burning hive and sucking it off the exchanges in the mean time.
Personally, I think this is far superior that letting HBD shoot to the moon like SBD has done and is doing right now, although there is some risk on the back end.
Yes, there is a potential for 'infinite inflation', if that HBD is converted back to HIVE when HIVE is really low price. Think about it, if we are burning 1.5 HIVE per HBD, and HIVE were to drop to 10 cents and people started converting HBD back to HIVE then, it would give them 10 HIVE, way more than was burned.
This is a risk for the platform, but I think I agree with @smooth here that the 'infinite risks' are a bit over stated, and that this is bringing much needed value to the platform as well as stabilizing the HBD token price.
This is the main mechanic that is driving up the HIVE price.
Of course Splinterlands is helping, they are out of account creation tokens and are burning 3 hive with nearly every new account they create, thousands per day. But HBD conversions are burning nearly 100k hive per hour!
I'm serious, check the circulating supply of HIVE and compare it to STEEM:
There are 28 million more STEEM than HIVE, and HIVE has become deflationary, for the short term at least. We will keep our eyes on the market conditions, but know that if HBD is above 1.10 - you know whats pumping HIVE -
'The Koreans!'
Them folks at Upbit still haven't figured it out. Still trying super hard to pump up that HBD.
Can't 100% say they are wrong. What would happen if we hit the 10% supply cap is conversions would be blocked and ability to grow the supply of HBD would stop, meaning it could pump a lot higher. This hasn't happened yet, and won't happen as long as the price of HIVE keeps going up, but there is no guarantee.
However, even in that case, the HBD stabilizer would continue to work, and the higher the pump takes HBD, the more HIVE the stabilizer is able to buy and send back to the DAO, so this isn't all bad. It would be a speed bump in establishing HBD as stable, but still likely good for Hive stakeholders in the short term.
I guess the consensus witnesses will cross that bridge when we hit that cap. I mean, it can't be too hard to raise that ceiling, can it?
Takes a hard fork which needs to be scheduled along with getting exchanges to update. There's usually a lead time on that.
IF we would know it happens, we could decide to use/save funds on HBD stabilizer and buy hive on some levels.
The DAO fund could benefit massive from that. Like 50% now and 50% on 2$ for example. if 2$ never happen, do we really care?
We can easy send it back to the dao fund or support the 1$.
100M HBD should be a goal to print. With that we can build an high liquidity onchain pool with the 10%APR. This should stabilize and add value by nature to hive :)
Our onchain defi. Exchanges could use that liquidity. It would be like a centralized stablecoin with the benefits of decentralization.
Alone this would add massive value to hive. Think about L2 exchanges that can build on top of that and have enough liquidity in Hive/hbd in the back.
With smart contracts and other tokens on that L2 exchanges, it could end up massive.
And the demand would be huge by nature, because of trading.
If the pool includes a little fee like 0,01% burn each transaction would also add value by nature and refinance the efforts.
Low fees, no transaction costs are IMO huge.
IMO it would need on L1 onchain to make it really secure and trustworthy.
Oh so basically HIVE is being burned through the conversions but doesn't this also mean we will hit the ceiling on HBD sooner? I guess the lower the supply of HIVE, the better it is for price but I guess it will also make it more volatile.
Posted Using LeoFinance Beta
Ceiling has to do with USD prices, so potentially no, if HIVE price keeps going up.
This is indeed mighty fine.
Still could be the Koreans.
It's always the Koreans :)😃
Thanks for this great information I keep wondering as well why the pumping up of hive and what is actually making it to pump up
Great article as usual, I leared something new once again.
I really should inform myself a bit more about HBD, it seems I'm missing some interesting mechanisms there !
Posted Using LeoFinance Beta
Yeah maybe the Koreans are behind it. LOL
Good information about hive coin
Maybe several factors coming together at once!
Posted Using LeoFinance Beta
Very nice, keep it up and keep pumping!
$1.1 HBD price is not fair and the question obviously comes But who will buy at that price because it is just about $1.
Answer is Korian. Ha ha.
Posted Using LeoFinance Beta
If you compare the opportunity cost, if you can manage to sell a pump and buy back lower, that can be a lot more profitabe and a lot quicker.
Hive has been spiking up with green wicks lately, so its probably smart to list some sell orders 👍