RE: Debt Amplifies Dips
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If we cut the HBD interest rate, a few speculators may dump their holdings and cause a "crash,"
This is why they call it a death spiral.
I just looked at Ausbit Bank. It reports that the HIVE Marcap dropped under $100K and that the HBD/HIVE debt ratio is 11.487%. I suspect it will get worse.
If we cut the interest rate with HIVE trading at $0.123; we could expect a large number of investors to dump their HBD. It will probably be in a slow building cascade, we might see one million dump. This would push down the price of HIVE. Then we might see another million dump, which further pushes down HIVE.
It is conceivable that we would see investors dump 5 to 8 million HBD. Some would be sold on the exchange. Most would be converted to HIVE.
5 million HIVE converted at $0.123 would be 40 million HIVE.
The market cannot absorb 40 million HIVE.
This crisis that we are facing was foreseeable when the witnesses voted for the 20% interest rate.
The merchants of debt won this debate simply by putting everyone who disagreed down.
So, not only did they hurt the platform from a financial perspective, they turned what could have been an open market of ideas into a toxic place.
You Are Right
You are right. HIVE's best hope is that miracle occurs and there is a break out. HIVE could then start gradually reducing the debt.
Sadly, there are few people in the universe smart enough to carry off such a plan and they would receive resistance from whales.
!WINE
I suppose I could start by withdrawing my votes from all witnesses over 15%. I may be a small orca, but it's more than nothing.
In theory, the HBD interest rate is set by our witness votes.
So, if hive users voted for witnesses supporting low interest rates, then hive would lower the rate.
Unfortunately, our votes are weighted by HIVE POWER; so, in reality, the rate is set by whales.
The witnesses are in a terrible situation where they have to enter a high interest rate or perish.
For the last several years, I've been voting for active witnesses who support a low interest rate.
!PIZZA
Why don't you vote per @antisocialist's recommendation for those whales that aren't selling Hive? That is directly impacting the price of Hive, not interest on HBD. You appear to me to be dancing around the actual problem.
Witnesses have expenses. Some might even have employees.
For that matter, a primary reason that blockchains issue stable coins is so that the people hosting the chain can pay their fixed costs.
So, I would not witnesses for selling HIVE.
The interest on HBD costs way more the cost of hosting, and does not provide any real value to the chain.
!WINE
I agree that witnesses - and other devs - have costs they need to cover. I'm not saying that selling is evil per se. However, the capture of inflation from the pool by whales exceeds 90%, and my understanding* is that most of that is put up for sale. Most of that selling isn't to cover fixed costs of running servers, but simply to provide cash income, ROI on capital. The interest on HBD isn't more than that, or even half of that.
The interest on HBD is not a significant contributor to the selling of Hive, and is not the reason Hive price has crashed. It is the whales selling their 'dividends' and recipients of DHF funding dumping Hive on the market to get fiat. That is the reason that Hive has continually lost position - and if you examine the reduction in Hive's market position the rate of it's decline has been steady and continuous, not impacted significantly when HBD interest was set at 20%.
The HBD interest rate is a bugbear that has no significant impact on Hive price. Whales and DHF recipients selling is the cause of Hive price declining. The monthly interest on my HBD savings is <$25. I do not sell that interest. It does not impact the price of Hive, and shockingly I am one of the top 1500 accounts. Most people get less than me for interest on HBD savings. Look at Hive sales on exchanges, and the total HBD interest distributed monthly is a pittance in comparison to the volume of Hive sold.
It may grate on your nerves, but it isn't a significant factor in Hive price.
*Edit: the bare majority of stake month to month maintained by the ~36 whales is consistently >50%, and <51%. That means that whales sell every Hive they get beyond what is necessary to maintain their bare majority of stake and maintain total control of governance by maintaining the majority necessary to elect the witnesses that run code and therefore govern Hive.
You're aware of why the whales would resist. It is their extraction of value from Hive by selling that is what matters to them, and that has caused the value of Hive to decline to approach the haircut.
That is the problem.