Did Hive Find the Perfect Growth Incentivizer?

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(Edited)

At the beginning of February, @smooth came forward with an idea which turned into a proposal.

The proposal was very interesting and was received positively, even though other attempts to stabilize the HBD were made in the past, largely unsuccessful.

At the beginning it created some controversy, because it drew funding from the development fund at the expense of other projects which were cut off, but this situation seems to have improved.

Unlike other attempts to stabilize HBD, @hbdstabilizer does it at no cost to the Hive ecosystem, other than this temporary disruption of the development funding. But this stabilizer either returns the funding entirely as it receives it, or even makes a profit, as you will see next.

When HBD price is outside the interval considered "stabile" in the stabilizer script, @hbdstabilizer makes profit for Hive Development Fund (HDF).

When HBD price is within the "stabile interval" (I believe it was set as 0.99-1.01), the funding from HDF is simply returned every time it is received.

Here's another benefit for Hive ecosystem: when the price of HBD is higher than the peg and needs stabilizing (like nowadays), the stabilizer sells HBD (to lower its price) and buys Hive, which it will send to DHF. This way a buy pressure for Hive is created.

Let's recap:

  • stabilizes HBD
  • no cost for Hive ecosystem
  • profit for DHF, which turns into more development funds available, including for the stabilizer
  • buy pressure for Hive

I only see benefits, and frankly didn't find any drawbacks, although I tried to. But if you know any, please do share. The funding issue for other projects was only temporary, and as far as I understand it, the more this runs the more profit it will make, the more funds will be available to fund various projects.

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Yesterday @dalz published one of his famous stats posts. It is about @hbdstabilizer and how much funds it received and how much it sent back to DHF.

The report is a very revealing read. But I'll just share a few quotes from it:

[...] a total of 2.1 million HIVE was sent to the @hive.fund from the @hbdstabilizer account.

That means the stabilizer bought 2.1m Hive! That's a nice chunk in two months adding to the buy pressure.

At the moment of writing this there is 2.7 millions HBD in the fund, meaning a 27k HBD daily budget. A few month back this budget was less than a one million HBD. The @hive.fund has grown its available daily budget significantly in the last months, more than double, or almost triple.

The @hbdstabilizer has a big impact in this, but its not the only one, the slow conversion of ninja mine HIVE to HBD is happening with around 38k HIVE (20k HBD at current price) added from that as well, and the overall inflation. The increase in the HIVE price has also a part in this.

[...] there was almost 1.2 million more HBD added to the fund from the @hbdstabilizer. If we compare this with the 715k HBD received its almost a half a million difference in HBD or 70% more.(*)

*) @dalz says the numbers might not be very accurate here.

So, now we have the stats... It looks like the stabilizer is doing a great job. HBD is slowly approaching peg. But it also looks like the stabilizer is doing a great job making profit while stabilizing HBD.

And when we have a proposal that makes profit to the DHF and creates buy pressure for Hive as side effects of its core function, isn't that also a perfect growth incentivizer?

There we go: a growth incentivising stabilizer. ;) Who would have thought? Well, @smooth did.

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9 comments
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Imagine a person using good economics and business skills to make a plan and then that plan works as it should.
I love the idea and it just goes to show what can be done when people focus on simple projects that add value to the system. Something so small but makes such a big difference to the token.
It was a great job by smooth and hopefully we see a lot more like it in the future.

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These are the best projects. The ones that make sense when you explain them in simple terms in a few paragraphs at most.

I'm really impressed by how well it worked, even though I liked it from the first lecture.

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That is very true. No imagine 100 such projects being put together and operating at the same time.

I would say that is the goal. To get a lot of things going in different directions, all of them ultimately feeding into the same ecosystem.

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The idea is that a change in the next hard fork should help the peg of HBD. It is nice to see it becoming a priority to the community.

The stabilizer was something that I misunderstood at first too. However, the fact that it is adding to the DHF pool, enhancing the lifespan on that is great. It does add some buy demand to HIVE also.

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Yes, the Hive -> HBD conversion will likely have a strong influence on avoiding future HBD pumps.

But it's likely a script like this stabilizer will still be useful, because it is... automated. It doesn't get tired, it always pays attention and it works like clockwork every hour, checking the HBD peg and acting.

What we can't expect is the same level of profitability as the stabilizer + the HF changes improve HBD peg. Then it will probably be only marginal profit here and there. Same with Hive buy pressure from this bot. It will go down when HBD will be stabile.

But that's its main function to help with the peg, not to make profit or to create buy pressure for Hive.

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But it's likely a script like this stabilizer will still be useful,..

It is actually going to be part of the blockchain coding.

Here is a write up of what how it will work:

https://gitlab.syncad.com/hive/hive/-/issues/129

It is not going to be a money maker per se. As you mentioned, the goal is to put a cap on the price of HBD and remove the incentive to push the price higher.

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(Edited)

Thanks for pointing me to this interesting conversation on gitlab. I think we are talking about different things. The conversation is about conversion Hive -> HBD, which will be added in HF25 as blocktrades announced a while ago.

When I say stabilizer, script or bot or something like that, I mean @hbdstabilizer and the code which defines this little project's functioning.

Unless I'm missing something, they will continue to coexist after HF25 as different things, one in the blockchain core as a new function, the other as a script running on smooth's server, probably.

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Unless I'm missing something, they will continue to coexist after HF25 as different things,

I don't plan to immediately turn it off, so we will see. It will likely have a lower profit margin to the extent that the conversion function keeps the price below 1.05.

However, as long as the price is above 1.00, there is profit to be made and it is even possible we can "make it up in volume" even at few cents margin, still endnig up with a large profit. Or perhaps with the prospect of large pumps removed by the conversion function, the price will naturally settle closer to 1.00, at which point the stabilizer may not be needed (or may not be seen by voters as a good use of limited budget for such low profit).

Hard to guess everything in advance.

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Even if the conversion works perfectly and voters consider at some point the stabilizer proposal is no longer needed, it's good to know we have it in our sleeve, if it turns out we need it back.

And it would be great if it will compensate through volume to continue to be profitable after HBD is stabilized.

Thanks for dropping by!

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