Savings for the Bear

There are many ways to prepare for the bear and I suggest that people should consider using a few different ones, to diversify and mitigate some risk.

If you don't know, putting HBD into the savings section of the wallet will attract a 12% APR, which is defined by the witnesses. About a month ago I put 1000 HBD in to see what would happen and then 19 days ago (as you can see in the screenshot), I added another 1000 HBD.

So far, this amount has generated just over 16 HBD, which is because it 1% a month (12% a year) - so 10 from the first 1000 and 6 from the second 1000, based on the time it has been in there. This means that 11 months from now, this 2000 will have generated 240 HBD at whatever value it will be.

I think the value of HBD is interesting to look at too, as it is "meant to be" a stable coin of sorts. There are a few initiatives ongoing through @smooth's proposals and the hbd.stabilizer comments process looking to not only stabilize HBD, but also supplement the Hive Development Fund (HDF) that is distributed through the Proposals DAO.

This is HBD over the last year

And over the last 6 months

While not exactly "stable", it is far less volatile than what it was and as such, grows in usecase as a reference token. If you look at HIVE which obviously has a connection to the dynamics and print-rate of HBD, we can see in the same 6 months, there has been a lot more volatility.

That relationship means that during those highs of late November, a lot more HBD was printed in the form of rewards, yet stability remained. That is a pretty decent effort in my opinion and while the major reason is likely the stabilizer itself, I think that part of the reason for this is that more people are willing to put some HBD into the savings account to earn that 12% - as after all, if it does remain stable it is far better than any bank and is actually on par with a the ROI on a traditional investment portfolio.

For those who are not trading directly on exchanges, this is not a bad way to secure some of the gains at the highs and wait for lows to buy back on the platform. For example, if you sold 100 HIVE at 3 dollars near the high into HBD, you would have 300 HBD that you put into savings until the lows (let's assume we saved it 2 months ago and will buyback HIVE today). That 300 on the internal market gets us ~252 HIVE, but the 300+6 in interest earned gets us 257 HIVE.

5 HIVE? Big deal, who cares?!

Well again, that depends on how you are looking at these things, as that extra 5 HIVE amounts to an addition 2% of the total of the buyback and 5% of the starting 100 HIVE, which is still far higher than a bank is offering. Doing this same transaction on an exchange wouldn't have gained that 2% at all, as the HBD held in for example Bittrex, doesn't attract interest and - there are no transaction fees on the internal market.

If we pushed this out to a year, that 2% will of course be an additional 12% buying power and if we look at it from the perspective of a 3 year cycle to the depth of the bear after 2 years, that will be an additional 24% and of course, that could be compounded further by rolling what is earned, back into the savings account. This can be very significant if for example the HBD was bought with 3 dollar HIVE and is now buying back 30 cent HIVE.

Using the scenario above, the 100 HIVE turns into 300 HBD (1:3) and after 2 years will be at least 372 (without rolling back in and compounding) and is then buying back at 30c will be around 1240 HIVE. That is a 1200% gain from the starting amount and if after the bear it went back to 3 dollars from there, that 300 worth of Hive would be 3600 worth, a 2000% gain - without really having to do much, all with on platform Hive security.

This is an interesting little mechanism and I think that I am going to take some advantage of it and "if" there are more highs on HIVE, I will use the opportunity to convert some more into HBD so that when the depth of the bear does come, I will be able to buy some back. Of course, this is affected by the volatility of HBD, but that is part of the risk.

Yes, this same amount could earn more elsewhere, but there are still many people who only use Hive internal markets and Hive-Engine for their trading. Also, a lot of people like to keep their Hive assets on platform and secure, rather than on exchanges. This is a bit of a "hedge" in some ways and I suspect that in the coming years, the utility of HBD is going to increase and perhaps, this wallet becomes more of a liquidity pool mechanism.

Having said this, it isn't going to be my main storage point for crypto value, but it is becoming more attractive for sure and could very well be one of the value propositions for Hive in the future. What I like about Hive is there are many, many options in which parts we use, how we utilize them and for which purposes. Some people like to focus on details and are constantly adjusting, while someone like me likes to simplify where I can. This might be one of those places.

As a key takeaway from this though, what is interesting to note other than the potential to earn 12% on HBD is, that HBD has been relatively stable for the last four months, which indicates that the activities going on in the background of most people's awareness, are actually working to some degree, at least as far as affecting the behavior of HBD speculators - which is interesting in and of itself.

See you at the bottom of the bear!!

Who am I kidding, I am going to be here daily regardless :)

Taraz
[ Gen1: Hive ]