I like me some complicated game-theory but gah imagine trying to pitch something like this to newbies along with everything else. Or maybe that doesn't matter because we can simplify the frontend and hide most of the mechanics in the background.
It's nice to see that the discussion is continuing and everyone is taking this very seriously.
I feel like I'll need to look at this tomorrow with fresh eyes.
It's a lot to digest.
Already the thing with the 4 different pair of keys is putting people off. Let alone such a complicated scheme. People always forget, for mass adoption interfaces need to be accordingly stupid. I prefer a dumbed down version which is truly user friendly (but brings Hive to 2$) vs. a high-end version for nerds only.
I support adding stuff like this both for investors and to draw more investors to Hive, but yeah, working on the dumbing down part to draw the general public seems like it should take the priority.
A simple UI would allow anyone with $HBD in their wallet to bid on and/or purchase $HBD Bonds. Similarly, a secondary market for trading those bonds would not require any expertise beyond a general understanding of bond markets.
Investors familiar with bond markets would have no issues, with the primary or secondary markets.
The purpose here is not to get existing Hivers to invest in $HBD. The intention is to add an investment use case that is very familiar to a wide range of investors, and to do it in a way that allows the witnesses to focus on managing a metric (TVL) that is more straight forward and much more likely to ensure long-term stability, compared to managing APY.
Hive's multiple private keys is probably one of its greatest strengths.
Even so, onboarding is certainly a big challenge, and will remain so for the foreseeable future.
This added use case ($HBD Bonds) is not geared toward average users, though. This would be meant to appeal to accredited investors and investors who are used to paying advisors and consultants to handle the day-to-day details associated with their investment portfolios.
One thing is potential target of such system, the other is potential influence on other users. If it won't be possible to explain easily, it's going to be seen as old fashioned shady financial shenanigans. It's about perception here. Explaining Hive tokenomics to an avarage person right now is borderline possible.
Let's weight costs and benefits here.
Although, I need to add, personally I find proposed solution appealing.
If you listen to @taskmaster4450 much at all, you will hear him frequently commenting about use cases, and the need to expand the use cases for $HIVE and $HBD.
The way we expand the use cases for $HIVE is through the development of new dApps, which includes making it easy for new Devs to enter the ecosystem and start building cool stuff on Hive. This expands the 'use cases' for $HIVE because dApps need Resource Credits and RCs require staked $HIVE.
The ways we expand the use cases for $HBD are through circular economies and expanded financial instruments (like $HBD Bonds).
One thing is potential target of such system, the other is potential influence on other users.
I'm not sure I understand your concern here.
Are you saying existing users are going to leave if there's a new financial instrument they don't understand?
Or are you saying would-be investors in $HIVE will be turned away because of the existence of $HBD Bonds?
In short, what negative behavior are you fearing here?
At present, we do not have a good investment vehicle for accredited investors. That's because investing in $HIVE as an outsider is a losing proposition, due to the tokenomics, unless that outsider either commits to manual curation, joins a curation pool, or uses an autovoting bot -- these are actions that an accredited investor is not likely to understand or be enamored by. And, to invest in $HIVE without doing one of those means to have your principal consistently devalued by the inflation.
The nice feature of $HBD Bonds is that they will be easy for accredited investors to understand, secondary markets can provide those investors with instant liquidity (if they get skittish or capricious), yet the long-term nature of each $HBD Bond will help reduce overall volatility (both for $HBD and for $HIVE).
The problem with the current $HBD Savings system is that we could see millions and millions of $HBD pour into savings accounts, then have a sudden massive withdrawal causing massive movements in both $HBD and $HIVE prices. With long-term $HBD Bonds, those investments are locked up until each bond matures. If a major investor gets spooked and decides to get out, they liquidate the bond (by selling it on the secondary market), which could cause the $HBD Bond market (i.e. secondary market) to tank, but the underlying $HBD cannot be liquidated until the bond matures. And even those holding $HBD Bonds are not 'at risk' when the $HBD Bond secondary market tanks, because they are guaranteed their $HBD (plus interest) when the bond matures. In fact, a precipitous drop in the $HBD Bond secondary market would simply be an opportunity for those who have faith in the Hive ecosystem to purchase $HBD Bonds at a steep discount.
This represents major benefits to the stability of the underlying assets (i.e. $HBD and $HIVE).
Personally, I think we are probably fortunate that we have not seen a massive investment into the current $HBD Savings system, at the current 20% APY. Although I disagree with those who claim a 20% APY is inherently unsustainable (follow @edicted for some good explanations about APY sustainability), I wholeheartedly agree with @starkerz's notion that big-time investments need to be 'locked in' either via staked $HIVE or via long-term $HBD Bonds.
I listen and read Taskmaster regularly, and even though I don't always agreee with his point of view, I can see value in bonds.
I'll try to rephrase what I mean. It takes certain trust level to start using financial system, I don't mean here experienced Hive user-owners, but new people coming in. Part of building this trust is transparency and lowest necessary level of complexity. Building more complex sollution we might even have some higher level of security, but big crowd of financially non-educated people might be spooked-out.
Another issue is, why would be afraid that group of people could dump massive ammounts of HBD? Why do we need to (nomen-omen) bind them to Hive? It doesn't speak confidence, and at some point it might lower demand for HBD by people who are not willing to bind themselves. This is double-edge sword in my perception.
And my final comment would be more of a question. Would accredited investors be even interest in such beast as Hive, no matter the investment vehicle? With no central entity possible to held accountable and sue? With no board or corporate structure? Maybe it is a case. I honestly don't know. What I feel though is that Hive is a different animal, more of a people blockchain, and without community it means nothing.
And once again, it's not standing in opposition on my side, I just signal the need for balancing these factors while designing solutions as such.
Another issue is, why would be afraid that group of people could dump massive ammounts of HBD? Why do we need to (nomen-omen) bind them to Hive? It doesn't speak confidence, and at some point it might lower demand for HBD by people who are not willing to bind themselves.
For a pegged token like $HBD, volatility is anathema. We must do everything we can to minimize volatility.
The best way to do that is to garner lots of investment that ain’t going anywhere, such that daily trading is tiny relative to total supply, so no single trade moves the price, even a little.
We would be far better off with fewer investment $$$ total, that are locked in for a couple years, than more $$$ but with no long term locks.
Would accredited investors be even interest in such beast as Hive, no matter the investment vehicle?
When I use the term “accredited investor” I am basically saying anyone with significant wealth to invest (e.g. in excess of $1 million). There is no stereotypical profile. They have money to invest. Some will avoid crypto like the plague. That’s not our target market. Some like day trading. That’s not our target market either. Some will be attracted to bonds with fixed returns but knowledgeable enough about crypto to not turn tail and run. That’s an important target market. How big? Idk. But that’s a target market worth pursuing, imho (and @taskmaster4450’s too, I believe).
For a pegged token like $HBD, volatility is anathema. We must do everything we can to minimize volatility.
The best way to do that is to garner lots of investment that ain’t going anywhere, such that daily trading is tiny relative to total supply, so no single trade moves the price, even a little.
Maybe I have it wrong, but isn't market liquidity what matters in that case? Thin liquiditiy creates conditions for volatile moves. If big chunk of supply is frozen in bonds/saving, then still we have environment of thin liquidity on the market. Unless the thinking here is, the bigger general supply of HBD, the more market liquid HBD, even if it's still tiny part of general supply.
There is another delicate balance to be taken into consideration. Real value brought by infrastructure, network effect, community and perceived future value express in the price of $HIVE versus debt based, artificialy inflated value of financialized side of HBD. We can observe how current global financial markets depegged from real economy and asset value of derivatives is many times greater than economy. The tail wags the dog. This dynamics is destined to be doomed, and smaller ecosystems are more fragile here. Once again, I don't say it's a case right now. I think idea of HBD trampoline for HIVE price is within reason, but toying with layer 1 needs to be considered very carefully. Changing it often and rolling back developments in case of toxic dynamics lower credibility of the chain.
It's something to watch and take into account while considering financial developments.
Maybe I have it wrong, but isn't market liquidity what matters in that case? Thin liquiditiy creates conditions for volatile moves.
Yes, that is generally true.
The mechanics of $HBD require purchasing $HIVE to create new $HBD. That means any significant increase in $HBD supply will only come via a modest rise in the $HIVE price.
The mechanics also ensure adequate near instantaneous $HBD liquidity, via conversion from/to $HIVE. And, the $HBD stabilizer facilitates that, at relatively stable prices.
When I refer to “volatility” I’m really referring to volatility in the $HBD / $HIVE debt ratio. The $HBD mechanics and stabilizer will be able to keep the $HBD price itself stable. What we want to avoid are volatile swings in the debt ratio.
If the debt ratio remains stable, then $HBD remains a stable and attractive asset.
Allowing high APY on $HBD with no lockup could precipitate volatility of the debt ratio. With $HBD investment locked up for a year or more, changes to the price of $HIVE due to $HBD conversions will be significantly tempered on the downside, creating a ceiling, of sorts, for the debt ratio.
What we want to avoid, at all costs imho, is a precipitous rise in the debt ratio due to a massive sell off of $HBD bonds.
Hi. I gave some thinking to HBD bonds and got some idea for actual use of this in business. Your opinion would be for me of a great value, @trostparadox and @taskmaster4450
Regular people would go to a bank in a heartbeat instead.
But, of course! We would not be doing this for 'regular people'.
My guess is that less than a handful of existing Hivers have ever invested directly in a bond instrument like the ones @taskmaster4450 and I and others have been discussing recently.
This is not for the 'average person'. This is for accredited investors (i.e. investors who are accustomed to investing hundreds of thousands of dollars at a time).
I want to say that I agree with a time lock mechanism for a higher APR (basically, like the CDs that banks offer), and bonds that give access to the locked liquidity before maturity, but the way you parametrized the TVL, while I like the idea, is not easy to grasp. And if it's built for a couple of people, is it worth building it?
This would not be built for a couple of people. It would be built to attract many millions of dollars in investment capital, perhaps hundreds of millions.
Ah so I'm not the only one?
I like me some complicated game-theory but gah imagine trying to pitch something like this to newbies along with everything else. Or maybe that doesn't matter because we can simplify the frontend and hide most of the mechanics in the background.
It's nice to see that the discussion is continuing and everyone is taking this very seriously.
I feel like I'll need to look at this tomorrow with fresh eyes.
It's a lot to digest.
Already the thing with the 4 different pair of keys is putting people off. Let alone such a complicated scheme. People always forget, for mass adoption interfaces need to be accordingly stupid. I prefer a dumbed down version which is truly user friendly (but brings Hive to 2$) vs. a high-end version for nerds only.
I support adding stuff like this both for investors and to draw more investors to Hive, but yeah, working on the dumbing down part to draw the general public seems like it should take the priority.
100% of the complexity would be back-end only.
A simple UI would allow anyone with $HBD in their wallet to bid on and/or purchase $HBD Bonds. Similarly, a secondary market for trading those bonds would not require any expertise beyond a general understanding of bond markets.
Investors familiar with bond markets would have no issues, with the primary or secondary markets.
The purpose here is not to get existing Hivers to invest in $HBD. The intention is to add an investment use case that is very familiar to a wide range of investors, and to do it in a way that allows the witnesses to focus on managing a metric (TVL) that is more straight forward and much more likely to ensure long-term stability, compared to managing APY.
Hive's multiple private keys is probably one of its greatest strengths.
Even so, onboarding is certainly a big challenge, and will remain so for the foreseeable future.
This added use case ($HBD Bonds) is not geared toward average users, though. This would be meant to appeal to accredited investors and investors who are used to paying advisors and consultants to handle the day-to-day details associated with their investment portfolios.
One thing is potential target of such system, the other is potential influence on other users. If it won't be possible to explain easily, it's going to be seen as old fashioned shady financial shenanigans. It's about perception here. Explaining Hive tokenomics to an avarage person right now is borderline possible.
Let's weight costs and benefits here.
Although, I need to add, personally I find proposed solution appealing.
If you listen to @taskmaster4450 much at all, you will hear him frequently commenting about use cases, and the need to expand the use cases for $HIVE and $HBD.
The way we expand the use cases for $HIVE is through the development of new dApps, which includes making it easy for new Devs to enter the ecosystem and start building cool stuff on Hive. This expands the 'use cases' for $HIVE because dApps need Resource Credits and RCs require staked $HIVE.
The ways we expand the use cases for $HBD are through circular economies and expanded financial instruments (like $HBD Bonds).
I'm not sure I understand your concern here.
Are you saying existing users are going to leave if there's a new financial instrument they don't understand?
Or are you saying would-be investors in $HIVE will be turned away because of the existence of $HBD Bonds?
In short, what negative behavior are you fearing here?
At present, we do not have a good investment vehicle for accredited investors. That's because investing in $HIVE as an outsider is a losing proposition, due to the tokenomics, unless that outsider either commits to manual curation, joins a curation pool, or uses an autovoting bot -- these are actions that an accredited investor is not likely to understand or be enamored by. And, to invest in $HIVE without doing one of those means to have your principal consistently devalued by the inflation.
The nice feature of $HBD Bonds is that they will be easy for accredited investors to understand, secondary markets can provide those investors with instant liquidity (if they get skittish or capricious), yet the long-term nature of each $HBD Bond will help reduce overall volatility (both for $HBD and for $HIVE).
The problem with the current $HBD Savings system is that we could see millions and millions of $HBD pour into savings accounts, then have a sudden massive withdrawal causing massive movements in both $HBD and $HIVE prices. With long-term $HBD Bonds, those investments are locked up until each bond matures. If a major investor gets spooked and decides to get out, they liquidate the bond (by selling it on the secondary market), which could cause the $HBD Bond market (i.e. secondary market) to tank, but the underlying $HBD cannot be liquidated until the bond matures. And even those holding $HBD Bonds are not 'at risk' when the $HBD Bond secondary market tanks, because they are guaranteed their $HBD (plus interest) when the bond matures. In fact, a precipitous drop in the $HBD Bond secondary market would simply be an opportunity for those who have faith in the Hive ecosystem to purchase $HBD Bonds at a steep discount.
This represents major benefits to the stability of the underlying assets (i.e. $HBD and $HIVE).
Personally, I think we are probably fortunate that we have not seen a massive investment into the current $HBD Savings system, at the current 20% APY. Although I disagree with those who claim a 20% APY is inherently unsustainable (follow @edicted for some good explanations about APY sustainability), I wholeheartedly agree with @starkerz's notion that big-time investments need to be 'locked in' either via staked $HIVE or via long-term $HBD Bonds.
I listen and read Taskmaster regularly, and even though I don't always agreee with his point of view, I can see value in bonds.
I'll try to rephrase what I mean. It takes certain trust level to start using financial system, I don't mean here experienced Hive user-owners, but new people coming in. Part of building this trust is transparency and lowest necessary level of complexity. Building more complex sollution we might even have some higher level of security, but big crowd of financially non-educated people might be spooked-out.
Another issue is, why would be afraid that group of people could dump massive ammounts of HBD? Why do we need to (nomen-omen) bind them to Hive? It doesn't speak confidence, and at some point it might lower demand for HBD by people who are not willing to bind themselves. This is double-edge sword in my perception.
And my final comment would be more of a question. Would accredited investors be even interest in such beast as Hive, no matter the investment vehicle? With no central entity possible to held accountable and sue? With no board or corporate structure? Maybe it is a case. I honestly don't know. What I feel though is that Hive is a different animal, more of a people blockchain, and without community it means nothing.
And once again, it's not standing in opposition on my side, I just signal the need for balancing these factors while designing solutions as such.
For a pegged token like $HBD, volatility is anathema. We must do everything we can to minimize volatility.
The best way to do that is to garner lots of investment that ain’t going anywhere, such that daily trading is tiny relative to total supply, so no single trade moves the price, even a little.
We would be far better off with fewer investment $$$ total, that are locked in for a couple years, than more $$$ but with no long term locks.
When I use the term “accredited investor” I am basically saying anyone with significant wealth to invest (e.g. in excess of $1 million). There is no stereotypical profile. They have money to invest. Some will avoid crypto like the plague. That’s not our target market. Some like day trading. That’s not our target market either. Some will be attracted to bonds with fixed returns but knowledgeable enough about crypto to not turn tail and run. That’s an important target market. How big? Idk. But that’s a target market worth pursuing, imho (and @taskmaster4450’s too, I believe).
The best way to do that is to garner lots of investment that ain’t going anywhere, such that daily trading is tiny relative to total supply, so no single trade moves the price, even a little.
Maybe I have it wrong, but isn't market liquidity what matters in that case? Thin liquiditiy creates conditions for volatile moves. If big chunk of supply is frozen in bonds/saving, then still we have environment of thin liquidity on the market. Unless the thinking here is, the bigger general supply of HBD, the more market liquid HBD, even if it's still tiny part of general supply.
There is another delicate balance to be taken into consideration. Real value brought by infrastructure, network effect, community and perceived future value express in the price of $HIVE versus debt based, artificialy inflated value of financialized side of HBD. We can observe how current global financial markets depegged from real economy and asset value of derivatives is many times greater than economy. The tail wags the dog. This dynamics is destined to be doomed, and smaller ecosystems are more fragile here. Once again, I don't say it's a case right now. I think idea of HBD trampoline for HIVE price is within reason, but toying with layer 1 needs to be considered very carefully. Changing it often and rolling back developments in case of toxic dynamics lower credibility of the chain.
It's something to watch and take into account while considering financial developments.
Yes, that is generally true.
The mechanics of $HBD require purchasing $HIVE to create new $HBD. That means any significant increase in $HBD supply will only come via a modest rise in the $HIVE price.
The mechanics also ensure adequate near instantaneous $HBD liquidity, via conversion from/to $HIVE. And, the $HBD stabilizer facilitates that, at relatively stable prices.
When I refer to “volatility” I’m really referring to volatility in the $HBD / $HIVE debt ratio. The $HBD mechanics and stabilizer will be able to keep the $HBD price itself stable. What we want to avoid are volatile swings in the debt ratio.
If the debt ratio remains stable, then $HBD remains a stable and attractive asset.
Allowing high APY on $HBD with no lockup could precipitate volatility of the debt ratio. With $HBD investment locked up for a year or more, changes to the price of $HIVE due to $HBD conversions will be significantly tempered on the downside, creating a ceiling, of sorts, for the debt ratio.
What we want to avoid, at all costs imho, is a precipitous rise in the debt ratio due to a massive sell off of $HBD bonds.
Hi. I gave some thinking to HBD bonds and got some idea for actual use of this in business. Your opinion would be for me of a great value, @trostparadox and @taskmaster4450
https://peakd.com/hive/@deepresearch/obligacje-hbd-hbd-bonds-unlocking-entirely-new-business-paradigm-on-hive-poleng
I think your HBD Daily-Coffee Bond idea is great. I left a comment on your original post.
Agreed! I was about to make the same comment. Regular people would go to a bank in a heartbeat instead.
But, of course! We would not be doing this for 'regular people'.
My guess is that less than a handful of existing Hivers have ever invested directly in a bond instrument like the ones @taskmaster4450 and I and others have been discussing recently.
This is not for the 'average person'. This is for accredited investors (i.e. investors who are accustomed to investing hundreds of thousands of dollars at a time).
I want to say that I agree with a time lock mechanism for a higher APR (basically, like the CDs that banks offer), and bonds that give access to the locked liquidity before maturity, but the way you parametrized the TVL, while I like the idea, is not easy to grasp. And if it's built for a couple of people, is it worth building it?
This would not be built for a couple of people. It would be built to attract many millions of dollars in investment capital, perhaps hundreds of millions.
Definitely
Hmmm