Request for comments: HBD stabilization DHF proposal

in#hbd•

I intend to make a proposal with the DHF to assist with stabilization of HBD to the peg. Over the past several months, we have seen the HBD peg restored and the price relatively stable at about $1.

However, I believe we can do even better going forward.

The most recent hard fork added the ability to send HIVE to the DHF fund (previously it was only possible to donate HBD). Using this new functionality, we can create an automated process that works to stabilize the price of HBD. The process works as follows:

On each (hourly) HBD payment from the DHF, examine the price of HBD
If the price is between LOW and HIGH (0.99 and 1.01 may be reasonable values for LOW and HIGH, or perhaps somewhat wider initially and narrowing over time), send the HBD immediately back to the DHF
If the price is above HIGH, use the HBD to buy HIVE, and send the HIVE back to the DHF
If the price is below LOW, use the HBD to convert into HIVE (takes 3.5 days). Upon completion of the conversion, use the HIVE to buy HBD and send that back to the DHF

Notice that in all cases, the HBD or HIVE is sent back to the DHF, either immediately or after a 3.5 day conversion cycle. There will not be any HBD or HIVE accumulating with the payee as a result of the proposal. Trust is minimized because in the event that the payouts are not being returned as intended, stakeholders can vote out the proposal and stop funding. (Reasonable allowance should be made for short interruptions due to technical difficulties.)

As a consequence of this process, any excess demand for HBD (per step 3) is translated into demand for HIVE. All else being equal that would likely increase the price of HIVE. I am optimistic that we can make HBD attractive enough that this may ultimately result in a large amount of demand for HBD (which is then transferred into demand for HIVE), but of course no one can predict or promise actual prices or future price movements. However, for this to happen we first need to stabilize the price and firmly establish the linkage between excess HBD demand and the HIVE price.

In addition, any profits which result from deviations in the price of HBD away from the peg would accrue to the DHF in the form of larger expected amounts of HIVE or HBD being returned (via either step 3 or step 4).

The amount of the proposal funding is TBD. It would likely start smaller and potentially ramp up over time. My initial thought would be to start with 2400 HBD per day, or 100 HBD per hour. Again, this does not represent an actual expenditure because all of the payouts will be either returned to DHF or used to stabilize the peg and then returned to DHF along with what would normally expected to be a profit.

I welcome any comments, feedback or suggestions.

Beneficiary is 100% hive.fund

·in#hbd·by

$85.84

119

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HBD needs some form of upward price peg, and this is a well thought out solution. And I trust who it's coming from. I'll vote for it.

$1.63

6 votes

loan would work.

Price over 1$ user can lock up hive (500% to 1000%) to create HDB. Sell it on market and bring it back to 1$.

Under 1$ user can pay back the loan.

What if the user doesn't pay back the loan? 500% - 1000% of the loan hive worth is locked forever.

Would also work for a pool version user can earn some Interest with the liquid hive.

more use cases for Hive + lockups.
People can earn interest with a liquid hive ( and help the system)
can be also used for powered up hive ( lockup period no vote rights with lockup stake for the loan)

and I think many smarter things would be possible with this.

$0.09

1 vote

What you're arguing for may be better, it is hard to say. But what is for certain is it's much more work.

$0.04

2 votes

@blocktrades I agree 100%, more work.

But imagine you have 1 social media wallet in the future ( Hive). You collect there your tokens. At some point, you need the money and don't want to sell your valuable Tokens, because you love the chain, and like social media is, it's a part of your life.

So what you can do? A loan you can lock up 10x more worth Hive from to HDB. You don't pay the loan back? Doesn't matter because the hive is in this case gone.

With larger pools, people can together invest to make the "Hive stable coin"real stable and can also earn some % with their liquid Hive.

Print sell, Burn buy.

$0.00

appreciate the productive ideas

$0.00

Nope I think smart would it be to take loan out of Hive.

If the price of HDB is higher as 1$ (lockup 500% to 1000% to be abuse save):

I take a loan on Hive.

Is it below, I can buyback.

So it's a useful mechanic + the user could make a pooled fund.

Makes 1000x more sense.

Also, HDB is at the moment the most shitty stable coin. It will be never used to buy something with a haircut and all this bullshit.

If I want to buy something with HDB and there is only a limit available, which sense has the coin? No sense.

Btw, a Loan would give the users/community the tool to fix the price. So if Koreans go crazy and want to buy HDB for 20$ they can, More HDB printed and more hive locked up. EZ

$0.98

3 votes

Everything you're describing requires serious changes that may just fail completely. I've already seen mechanisms of this type pretty much destroy a chain because of one missed flaw in the design, so that first statement isn't hyperbole.

For that reason, I think a 2nd layer solution is probably best for testing such ideas, before making 1st layer changes. In the meantime, before even that's done, this could be done now with little risk and we could learn a little from it.

$0.00

4 votes

serious changes

Sure but HDB doesn't work well. Worst case it has the same effect like you describe here:

I've already seen mechanisms of this type pretty much destroy a chain

a longer Bullrun that prints a lot of HDB can Inflation ruin any worth of Hive or Hive power.

And the funniest point is, they don't buy Hive, if it's cheap with money and we have a supply and demand situation, they are simply creating new Hive with their HDB and make the cycle even worse.

For that reason, I think a 2nd layer solution is probably best for testing such ideas,

I agree with the testing point, but a lock-up/loan mechanic can work there too. And if it would in a way like DAI, why we should have HDB?

HDB would be the ugly little brother that can burn Hive, but doesn't bring any value to it.

IMO, and I think I'm alone with that, we should try more new things out and copy things from others that work and already good. I know, Hive devs want always to reinvent the wheel.

Edit: We already can learn from DAI. It's not like we need to learn every lesson on Hive. And I would love a loan feature, would make so much more sense to Hold larger amounts of Hive.

Edit 2: To secure loans it can be also a 100 Day ( +- Timeframe) Average price for loans. IMO it would be super abuse save.

$0.00

Not with the proposal I posted here, because supplying HBD from the DHF and then using it to buy HIVE, which is then returned to the DHF takes that HIVE out of circulation. That's what will happen if there is a bull run with high demand for HBD. Negative inflation.

$0.00

Replying to @smooth

depends on the Bullrun size and how fast can it adopt.

If the MC is 2B we can have 200M HDB. And it's not impossible it will drop under 1$ again.

If 20% convert around 1$ it will be 25% inflation on top ( and there are 150M left).

HDB is the most shitty stable coin because this coin makes crypto winter even more worse and terrible.

With a real stable coin, people can BUY hive with it. Not generate hive.

Current HDB is also not scalable. Why always people think we can not delete that shitcoin and make a better version out of it.

There will be close to no difference today if we delete it. Only we lose exchange listings for it.

That would favor an update ( a smart one).

A coin that needs HDB potatoes and burn post, sorry that's the description of a shitcoin.

BTW, it's nothing against you, I respect you, and it's my opinion about HDB.

$0.00

Creating loan features is a great way to bring valuable entire HIVE Network

$0.00

I'm going to revisit the original premise and put forward the most basic (and essentially important) of questions: why should HBD exist in the first place?

I can think of reasons why it shouldn't exist, in fact, between us all, I think we could make a long list. But why even bother with that until we first have an argument for why it should exist? What needs does HBD satisfy (that already aren't met by dozens of others already - only a couple of which are really successful - and by fiat itself!)? What value added does HBD give us?

$0.87

1 vote

The advantage is a local stable coin that doesn't require going offchain and thru exchanges, etc., with all the issues that entails.

$0.11

4 votes

fully agree. Would be great to see a more stable HBD, for someone like myself who has their entire net worth in crypt0, stablecoins are a very valuable and useful tool. I believe as crypt0 continues to mature the demand for stablecoins will increase as people want to stay "out of the system" and still have the ability to use local stable currency... Right now because HBD is not as stable as I would like, my current go to is DAI.

$0.09

2 votes

It's still a taxable event in most places, going from HBD to HIVE, or vice versus, that is, regardless of whether it's done onchain or not. As @blocktrades says, the only advantage is internal, otherwise it's the equivalent of having fiat on the blockchain (to each his or her own I guess, but that kind of defeats the purpose of being in crypto to begin with, I would think). Was much more interesting pre-2018, but now it's only an "easy way" to calculate DAO funding (which could always be done on a theoretical basis and ultimately paid out in HIVE).

$0.00

Replying to @cryptographic

The problem I see with paying only in Hive, is that there will only be more liquid Hive and there will be more inflation which would make the price of Hive lose even more value.

$0.00

you get it @encrypt3dbr0k3r 100%! DAI is better and it works because of the loan mechanic. For that reason, it is stable and works well. It can also better scale as HDB, that's the reason I think we need a loan mechanic on Hive to lock up Hive and create HDB.

$0.00

That's a pretty limited "advantage", but I imagine you guys have thoroughly gone over the cost-benefits. Kind of seems like a dead-weight to me, but, again, like I always say, I'm not here to convince anyone of anything, just to share my thoughts and opinions. There must be other advantages that you haven't mentioned . . .

$0.00

Hi blocktrades, Thanks for this reply

$0.00

Honestly I consider this as off topic and a distraction. HBD exists and there is no consensus among stakeholders to get rid of it. It is unlikely there will be such a consensus any time soon.

I'm aware that in the past, like maybe four years ago, there was some musing by high level people involved with Steem that perhaps it should be gotten rid of, for reasons that were never persuasive broadly, which is why it didn't happen. The idea may linger on, but it is a zombie that is hard to kill, not anything that is seriously going to happen.

Since it exists, I'm proposing how to make it work better and add more value (by channeling demand to HIVE).

$0.09

1 vote

I highly suspected that to be the real reason. Thanks for the answer.

EDIT: On related note, great to see that you're still as committed to this project as always - I've always really respected you, all the way back to the early bitcointalk days! Good luck with this current proposal and everything else you set out to do. Cheers

$0.00

Thank you for the words of support.

$0.00

Hbd precludes 30m usd pizzas. It is worth 1usd in hive, regardless of if hive is a dime, or a dollar.

As long as you only use hbd to purchase things, you don't have to worry about a price spike in hive causing you to transfer those opportunity costs with the purchase.

It also allows free conversions back and forth depending on your assessment of future price rise, or fall. No need to trust exchanges, nor tether.

$0.00

I would like to see this being handled by a (layer 2) DAO. While there appears to be only $8400 of exposure there is no good reason to use a non-multi-signature mechanism if one does exist. After all getting people to change their votes on a proposal could take weeks to months depending on where the support is at the time of a misstep. Not only that, technical difficulty, as it's put here, would be mitigated from a system of peers where no one party has to perform actions.

$0.31

4 votes

I agree, that would be a better solution in multiple ways at some point, but we can start with this, essentially as a pilot.

$0.00

I have a DAO written and functioning handling the DLUX token at dlux.io. It provided atomic swaps for DLUX to Hive/HBD by locking open orders in Escrow Transactions between collateralized nodes. This paradigm is being extended to handle partial fills by setting up a multi-sig account between the peers holding the highest amounts of collateral. This DAO paradigm which forms a consensus off the Hive blockstream could also query account parameters that are altered by virtual ops(not on the blockstream, not easily ordered currently) and then autonomously perform these actions.

I would appreciate your support for these developments that not only extend the usefulness of Hive, but the trust required to maintain operations like this that you proposed. A DAO with a multi-sig wallet would even be capable of building a market for the non-transferable Account Creation Tokens held between it's operators or maintaining a pool of cross chain assets for swaps.

Proposal 148 Proposal 152

I expect this would be functioning sometime this month, this being a perfect use for testing, and tested and ready for others to use and build on by April for the community at large.

$0.06

1 vote

I will consider supporting your proposals and also supporting other uses cases, but I don't want to tie the HBD stabilization proposal directly to it at this time. I believe the degree of trust necessary here (unlike other cases) is minimal and tying it to a second level dependency prior to such dependency being firmly established and stable would be a negative.

$0.00

Replying to @smooth

Thanks! I agree this proposal is needed regardless of the tools that could make it trustless.

$0.05

1 vote

I gave this a little more thought after my initial response last night.

4 - If the price is below LOW, use the HBD to convert into HIVE (takes 3.5 days). Upon completion of the conversion, use the HIVE to buy HBD and send that back to the DHF

One of the reasons I would support this would be to limit the printing of HIVE, particularly through HBD conversions. After the conversion is run, instead of sending all HIVE back to the DAO, could a portion be nulled? This could push some value into HIVE rather than creating more inflationary pressure.

If this system is then combined with an HBD "DeFi" solution that's paying out yields for holding HBD (maybe only to those who hold HBD in their savings account), then both HBD and HIVE would gain tremendous value over where they are today. Yields earned from holding HBD would also help keep at least some downward pressure on HBD prices as holders sell off those returns, so there's a little less risk of runaway prices.

The interest on HBDs, if only paid to that amount held in savings, would also limit how much would be going to exchanges that hold the tokens. On the other hand, some exchanges may want to list HBD as a "DeFi" option where customers can essentially stake HBD on their exchanges for a share of the interest payments. This brings more visibility to Hive and additional listings/pairings would help with exposure to and liquidity for HBD, which is sorely needed.

$0.17

3 votes

I think sending back to the DAO is fine. If stakeholders want coins from the DAO burned, they can vote a burn proposal. As you say, it is essentially de-printed and out of circulation in any case.

Sending coins back to the DAO is not inflationary pressure. It is that PLUS payouts from the DAO getting voted which could be inflationary.

The reason I'm not a huge fan of automatically burning the rewards here is that it makes a vote for this proposal into a vote to stabilize HBD and also a vote to burn funds from the DAO. To me those ought to be separate.

If the DAO contractor doesn't do the converting, someone else will, and they won't burn the resulting HIVE either. At least the DAO contractor will send them back to the DAO, getting them out of direct circulation.

Finally, your suggestion as written wouldn't actually help the peg significantly. If the price of HDB is too low, you need to buy HBD on the market and/or remove HBD from public circulation, but your suggestion does neither. It takes HBD from the DAO and effectively burns that, which doesn't affect the circulation or market price in any direct way.

I actually agree with only paying interest on savings. It makes interest into a form of staking rewards (though the stake period is short, 3 days, it is not zero). And if that encouraged exchanges to put their HBD in savings (maybe paying out to customers as "staked" returns, maybe not) that would be a positive in terms of being protective against exchange hacks.

$0.00

Instead of burning HBD from the DAO, wouldn't it be better to sort of recycle it into the daily reward pool thereby decreasing the amount of new Hive/HBD created by the blockchain.

Please note that I'm a bit rusty here. I've not really read in details the proposal so my suggestion could be a bit off but I will hope you are able to get the idea.

$0.09

1 vote

There isn't any mechanism to access the reward pool.

$0.00

Bro, ever since you gave me that great tip on Cardano and then it went m00n, I'll believe whatever you say!

$0.00

What value do you think HBD has at this point? Even with interest, I doubt we will be able to hold the peg well. Maybe doing a bulk of the time (like we do now with little to no tooling), but in the end has HBD lost it's way?

It's suppose to provide a stable currency for commerce and activities that need it, but it does that very poorly. Even a small 5-10% fluctuation which is a daily occurrence is huge to business.

It is suppose to help buffer the price of Hive, but when most people are selling does it really?

I'm kind of jaded at this point over HBD and I think it overcomplicates a over complicated system with little advantage left. I was always heavily supportive of a pegged asset and what value it could potentially provide, but is it really worth trying to put a round peg in a square hole?

Maybe I'm losing my mind at this point.

$0.14

4 votes

I think there's plenty of uses of a stable coin (it doesn't seem like you're arguing against that). This is an attempt to make it more stable, and it requires no change to core protocol to do it. Seems like an easy/reasonable thing to try.

$0.45

1 vote

Can we just use existing stable coins that actually hold their pegs instead?

$0.00

No one is forcing you to use HBD.

$0.02

1 vote

They don't, not all the time nor perfectly. It's all a work in progress.

$0.00

I think stable HBD has value if Hive coin itself is striving. Since that hasn't been the case, HBD hasn't really served its purpose.

I would suggest either removing HBD completely, or removing haircut on HBD.

Ultimately, best case for Hive and HBD would be moving the rewards for content to a different coin like Layer 2 or SMT/HMTs. That would perhaps remove the sell pressure.

$0.00

Agree with you.

Add features to HDB and make it Cool and scaleable ( like loans or whatever)
remove and add some things on it to make it better
or delete it and fuck the stable coin and there will be one second layer at some time.

I think that are the paths we can go.

Ah and wait, the

" Try to fix the system with the proven broken mechanic".

$0.00

@smooth, what are your thoughts on this?

$0.00

I don't buy the argument that it is "complicated" and I never did.

I think we really could do well to leave the "let's get rid of SBD and have one token" trope back in 2016 like all of Ned's other "great" ideas.

The code for it is extremely simple (adds basically no cost to operating the blockchain or maintaining the blockchain code), and it serves a clear and obvious purpose.

It just wasn't that well designed from the start, but subsequent developments to the blockchain overall (mostly involving DHF) have changed the situation such that we can make it work a lot better with very little effort.

$0.00

I don't buy the argument that it is "complicated" and I never did.

There is no question Hive is complicated, new users are overwhelmed with RC, voting power, powering up, curation, and all the nuances of Hive. I know people who have been here for 2+ years and still don't understand it.

You don't just buy the token for speculation and wait for a good time to sell. You have to be an author, curator, downvote abuse, to maintain your relative stake or you investment dilutes against those who are doing the same. I don't know of any other chain that has these many rules and actions required to "protect your investment".

While HBD isn't complicated, everything on Hive is as a whole. That is what I was saying. We are not exactly signing up people in droves and when we do we generally lose them fairly quickly due to it being complicated, drama, or they feel like they are not getting their fair share. We can certainly work on complicated, and it is really something we should address.

I think we really could do well to leave the "let's get rid of SBD and have one token" trope back in 2016 like all of Ned's other "great" ideas.

I'm personally on the fence, like I said earlier I was a big supporter of SBD/HBD and saw value in it, but now I don't know, we just can't seem to keep it stable, Hive is more of a stable coin than HBD has been. I understand this proposal would potentially help stabilize it more, but I also think having only one token could be much simpler for getting people interested. I'm not really 100% for either one at this point and why I was curious how you felt. I feel if we can't keep it stable, it just gets in the way. If we can, it offers significant value. Even 5% fluctuation which is fairly normal on a good day is a lot as a business.

$0.08

1 vote

Replying to @themarkymark

I agree Hive is complicated. I don't think HBD (or SBD) before it has anything to do with that. Compared with the list of things you mentioned and probably others, in terms of complication, it's just nothing.

Even 5% fluctuation which is fairly normal on a good day is a lot as a business.

I agree that really isn't the goal, its more that it was originally quite flawed and it will take some steps to get it working better.

$0.00

I agree with this; there are lots of stable coins out there. Hive is complex enough as it is. The inflationary hangover from the SBD spikes in the last bull run drove steem price into the ground for a long time. Nothing but trouble in the long run.

$0.00

Sounds good, Better than the sbdpotato.

Could make multiple proposals so the amount can be increased in a more granular way.

2400HBD seems good enough given current small market size.

$0.08

1 vote

Yes I was thinking of multiple proposals as well, including that they have different custodians which reduces risk without the complications of multisig. In any case, as you say we can start small for the current market cap and then potentially scale up.

$0.00