HBD in the early days of HIVE used to be very volatile. Which made it not a very good stable coin.
One big idea to try and improve the peg was to increase interest rates on staked HBD.
That way, more funds would be attracted, and a larger supply would increase liquidity and make it easier to arbitrage prices.
The rate hiking cycle from 0% started on February 28th 2021.
| Date | 28.02.21 | 02.06.21 | 18.07.21 | 18.12.21 | 10.04.22 |
|---|---|---|---|---|---|
| Rate | 3% | 7% | 10% | 12% | 20% |
The hardfork 25 on June 30th 2021 enabled HIVE to HBD conversions (HBD to HIVE conversions have always been possible).
And to use the hbdstabilizer to provide liquidity from the DHF to the internal market.
| Interest Rate Period | 0% | 3% | 7% | 10% | 12% | 20% |
|---|---|---|---|---|---|---|
| Price Average | 0,967 | 1,427 | 0,987 | 1,013 | 0,98 | 0,989 |
| Standard Deviation | 0,121 | 0,336 | 0,084 | 0,088 | 0,016 | 0,026 |
Ever since the implementation of HIVE to HBD conversions and an increase of the HBD interest rate to 12%, the stability of HBD increased significantly, as shown by comparatively tight volatility numbers (standard deviation) around the mean price.
Of course, there is still some way to go. Even under heavy market cap shrinkage, BUSD maintains a standard deviation an order of magnitude lower than HBD.
The tools to achieve this seem to be in place. Maybe HBD does indeed only need a larger supply on the market to further stabilize its price.
Market price data: coingecko
Period analyzed: 25.03.20 – 01.03.23
