The existing HBD interest rate on savings is set at 20% APR, a rate that, to put it mildly, highly irresponsible on the part of the witnesses. Network holds 7,810,000 in HBD savings. Annually, this means we are disbursing 1,562,200 HBD in interest to those who store their savings in these accounts.
When respectable financial institutions like banks or the Federal Reserve ask for money from investors, they set rates between 1% and 7%, with 7% being considered high. These rates rarely exceed this range, as historical data evidences.
These institutions use the funds to lend to clients, invest in companies, technology, and equipment.
In contrast, what does the HIVE blockchain gain from the members who store their money in HBD savings? Absolutely nothing. We are literally giving them away our money for free.
Second, lets point out again the HBD interest rates is 20% and let’s compare it with the annual returns of the greatest Western World investor Warren Buffet.
According to TheStreet journal article since 1965 Buffet achieved annual returns on 22%.
Essentially, HIVE saving account is literally the best market product, if you want to quickly become billionaire quickly and with no risk. This situation is alarming and deeply concerning.
Every year, in fact we are giving away $1,562,200 to individuals who do not contribute to the network. While some might call this witness fraud, I don't believe that is the case. A quick examination of the 20 most significant witness accounts reveals that none of them personally significantly benefit from this. In my opinion it rather appears to be a case of financial mismanagement, lack of investment market understanding. Fortunately, we can rectify it with better education and understanding.
The HBD interest rates must be drastically reduced.
To what extent? I propose a reduction to at least the Hive Power APR, if not lower. HP APR stands right now on 3.14% a suggested rate of 2% for HBD would be more reasonable as owning HP benefits network much more then savings.
Owning Hive Power benefits the network and justifies the additional rewards. Conversely, HBD savings simply reward passive participants who do not contribute to the network’s growth.
We must be financially prudent, or the value of our token will continue to decline. To add urgency to this discussion, consider that part of our token’s price drop is likely due to the millions of dollars given away in recent years to HBD savers.
I even claim that some of the very hardworking witnesses did not receive such high rewards for their job in recent years.
I will be glad to attend witnesses, hive devs meeting and discuss it further if needed. In the meantime you can expect me to buy more HBD and use the golden opportunity at my favor.
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