Is the HBD interest rate cannibalising Hive?

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Cannibalism

There are two native tokens on the Hive blockchain, both with their own purpose. Hive is there to create your stake and your voting power. Hive Backed Dollar is a stable coin pegged to one US Dollar worth of Hive. Which you can put into savings for an APR of 20 %, paid out monthly.

HBD has gained a lot of traction the last 6 months because of this interest rate. The latest report said that over 5 million in HBD is put in savings these days. That is 18 million Hive at current prices. And there is my concern.

Does a downtrend in Hive price create even more downturn on Hive’s price, because people exchange their Hive for HBD in chance of certainty?
Of course, in case of a bull run on Hive the same could be true, and the trend could be enhanced by people exchanging HBD for Hive because of the Fear Of Missing Out on Hive’s run…

No economy 101

This not just a simple economic equation, I am aware of that. But this effect could be a real thing. So I am asking the true whizzkids about this, like @taskmaster4450le and @arcange. What do you guys think about this theory?

Sincerely,

Pele23

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15 comments
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Personally I don't think it does as all the markets are down anyway and not just Hive. Hive is actually looking strong considering and think it is holding up remarkably well.

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Maybe you are right, and I am overreacting. It just sucks to see the value decimated…

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I also have long been saving HBD thanks to the %20 interest rate. However, I don't think that HBD has something to do with the current downtrend of the price of HIVE. Rather, people might have converted some HBD to HIVE.

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Interesting question! Personally I traded HBD (and put it in savings) when Hive price was high, because I could get more HBD for my Hive then. Reason not to do the opposite now is the high interest rate indeed, so that might at least prevent a (big) price increase for Hive. Whether it even reduces it, I'm not sure.
I wouldn't sell my Hive for HBD nowadays for sure. The only way I would buy HBD now is with fiat (that otherwise would get an astonishing 0.01% interest at the bank).

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Nice reasoning, I think that is close to reality

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@pele23 bro I don't try HBD savings yet, because i do not have complete information about this

Does it mean if we have 100 HBD in savings for one month it will be 120 HBD at the end of the month

I mean 20% is fixed or veriable?

Also going to mention @videoaddiction here as he said he is using hbd savings for last few months

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Fixed for months.

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Are you receiving 20% every month

Does it mean if I have 100 HBD in savings I will get 20 HBD after one month?

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You'll get 20 HBD after one year if you have 100 HBD in savings. APR means Annual Percentage Rate. 1.67 HBD is what you'll approximately receive every month.

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When HIVE price falls, it's not a good idea to buy HBD with HIVE. I think people will buy more HIVE with HBD when HIVE price falls further.

Posted Using LeoFinance Beta

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I don't think it is. As it is right now, I don't think the amount of HBD out there affects the inflation of Hive by much. Maybe in the future that will change and the witnesses can always modify the APR when they want.

Posted Using LeoFinance Beta

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The reason to place my post link is not upvotes or spam. I am already happy with what I already got on my post. Feel free to downvote if u think link placement is for $.

Here you can observe I am saving all dividend generating assets that are dependent on hive price. So I am a practical example with a plan and implementing it. I strongly disagree with your above statement. It's the opposite of what you said.

Planning in Bear for the BULL! https://peakd.com/hive-153850/@dlmmqb/bear-shaking-us

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There could be some impact in the near term. As you said there are many factors that we have to account for. The key is to get use cases going with HBD which will help to add value to that coin. The basic premise is we are in a bear market and people focus upon the drop in price while looking towards something to blame.

What is the difference if people dump $HIVE for USDC or BTC? If people want out they will get out.

Posted via Veews

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Sorry for being late in replying. I have been quite busy the last few days.
I see that taskmaster already replied and I pretty much agree with his comment.

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