Does the 13 week powerdown impact HIVE's price?
Hello SPIers, today we talk with HIVE and HOVE POWER but more specifically how HP and its 13-week powerdown effects the price of HIVE.
For the 0.01% of people reading this that do not know the difference between HIVE and HIVE POWER.
HIVE is liquid HIVE. Its main use case is to used as a utility token for spending within the HIVE eco-system. HIVE can be bought and sold.
HIVE POWER is staked HIVE. This has many use cases including HIVE governance voting, content curation, leasing, delegating, increased visibility on the platform and of course downvoting. There are more use cases but these are the top ones that came to mind. HIVE POWER is subject to a 13 weeks powerdown were you receive 1x13th of your powerdown amount weekly for 13 weeks. If your HIVE POWER is delegated, it will take a further 5 days for a cooldown period. HIVE POWER can not be bought and sold directly.
With the BS out of the way, lets jump into the subject i want to talk about.
How does the 13-week powerdown impact the price of HIVE?
Love it are hate it, the 13-week powerdown has been in place from day dot. There have been many discussions over the past 6-7 years to reduce it or even get rid of it completely but so far, no changes have been made. I personally think the setup for HIVE, HIVE POWER and the 13-week powerdown is really smart. Not smart, it's genius. Its a little bit crap for us the end users but the model is before its time and build to last decades. It does have flaws but the positives far outweigh the negatives.
You guys who read these SPI posts will know I pride myself are being able to think up long-term sustainable financial token projects. I dont toot my own horn often but im one of the best for doing this on the blockchain. SPI and EDS alone are levels above everything else on offer within their classes. When I look at HIVE's tokenomics, im humbled to know there our minds out there 100x better than mine at this stuff.
From my POV
HIVE is set up in a way that you pretty much must have it staked to earn anything from it. If your delegating, you need to wait 13 weeks and 5 days. It's long enough to trick us into never powering down. For your personal account, how often do you powerdown? Probally never, you just keep earning HP, adding a little each week and delegating it out to some project for some reward like some token, some upvote, or something. The thought of a 13-week powerdown is just too long, seems like alot of work plus you'll miss out on 5 days of earning during the cooldown, haha.
Why can't we earn from HP while it's in cooldown? think about it. We still earn from our HP when it's on powerdown, why not during cooldown? Probally a deterrent put in place to make you not wanna undelegate and keep you invested.
The 13-week powerdown is pretty much a trap for the average user and ensures that most people are always building their wallet and not spending it/converting it out. This has to have a huge impact on the price of HIVE because most HIVE is powerup up and we see that even during bull markets when HIVE is mooning, people will not powerdown knowing they will miss out on the best action, they will have a "im too late" mentality. They would be right as well, HIVE peaked at $3.5 last cycle and was over $2 for only 4 weeks.
To take advantage of that, someone would have had to known when HIVE was going to roughly peak and then plan a powerdown 3 months before that time and also be ok with not earning anything from holding liquid HIVE while it's mooning. You can see why the average HIVE user will continue to hodl HIVE POWER. If HIVE POWER were more liquid, it might never have gotten to over $2 in the first place.
The 13-week powerdown is crap but it does a very good job at keeping most HIVE staked and non-tradable. The result is much less liquid HIVE is available to be traded on exchanges and when the bull market comes, demand vs supply increases the price because there is not much supply.
What are your thoughts?
Have you ever thought about how HPs 13-week powerdown impacts the price of HIVE before?
We would think that the price of HIVE would be lower if there were no powerdown because people would have instant access to their HIVE to sell it when HIVE has a 10%+ day or 30%+ week. The truth might be the price of HIVE could be higher because maybe the 13-week powerdown puts alot of people off investing in HIVE altogether. When I first joined STEEM, I thought it was all a scam but I was posting silver content anyway to other platforms and posting it to STEEM was mostly copy/pasting so why not? Turned out to not be a scam but I could understand why most people would be put off by this in the beginning.
Let me know what you think below
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|---|---|---|
| SPI token | @spinvest | SPI |
| LBI token | @lbi-token | LBI |
| Top XV token | @spinvest | XV |
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I think that the 13 week is definitely a good deterrent for people to not just withdraw it all. There have been lots of voices and opinions against it but those are often the ones looking to quickly cash out and exit. That doesn’t go over well when everyone is doing that at once!
I think one adjustment I would noodle on is if one wants to sacrifice a percentage of the total amount a shorter power down could be added. I would make it steep though, 15% or so and it would be a 2 week power down or something and the fee goes to the DAO.
Hmmm, thats a good idea about having a tax on shorter power-downs. Something like that would have the potential to turn HIVE into a deflationary token as its inflation decreases over the years and if enough HIVE is burned from people dumping.