I'm about to power up a little more Hive into HP, but before doing so I wanted to look into the details of power-ups and power-downs. In this Hive 101 post I look at:
Let's dig in
To truly participate on the Hive blockchain (have Resource Credits to interact with dApps, participate in governance, and earn), users have to "Power Up" their Hive (turning it into "Hive Power", or HP for short). Doing so locks the Hive to their account, and there's a 13-week unstaking process (Power Down) for users to receive all the HP back as liquid HIVE (1/13 each week).
This system exists for the following reasons:
13 weeks is a long time (~3 months). Compared to other blockchains, it's very long, e.g.:
Steem originally had an incredible 104 week (2 YEAR!) unlock period, which was changed to 13 weeks to address several concerns, including attracting shorter term investors.
Hive inherited the 13 week cooldown and it seems the decision makers at the time felt it preserved a good balance between liquidity and commitment - i.e. it's long enough to deter abuse but short enough to allow eventually exit liquidity. It also preserved one of the key parameters of the chain during the fork, which may have been done in an effort to not introduce too many changes during a tumultuous time.
The Power-Up / Power-Down mechanism require users to be more thoughtful before they decide to either participate (by getting HP & RC) on Hive or simply invest. Investors may choose to forego potential passive rewards or find flexible options (such as Binance Earn, though the APRs on that are quite volatile), however if they wish to earn through the Hive blockchains intended reward mechanism, they are required to Power Up.
This illiquidity probably brings concerns to users who aren't necessarily completely bought into Hive, and may make them less likely to invest.
On the other hand, this locked staking means there are fewer circulating tokens that could dump during periods of market volatility, making HIVE likely less volatile than if the locking mechanism wasn't there. However, the caveat here is that lower liquidity can mean that smaller volumes & thin order books can move the price more.
Supply changes, meanwhile, are much more predictable, which can provide comfort & trust to some users.
The net effect is that Hive staking generally reduces volatility by limiting instant sell pressure, but it can also amplify price sensitivity if demand or liquidity on exchanges is low.
I think the mechanism is likely ATTRACTIVE for users who fully understand and appreciate the underlying value of HIVE, but is UNATTRACTIVE for speculative investors. Whether the former or latter has a stronger effect on the price of HIVE is hard to say.
I looked around to see if any long-term Hivers (Hiveans?) have talked about potential changes and, as usual, 
(1) Just shorten it: Switch to a shorter period that still balances liquidity & commitment, but just isn't so damn long (e.g. 13 --> 4 weeks)
(2) Fast-lane unlock, with a tax: Option to Power Down instantly for a 5-10% fee
(3) HP to HIVE market: Allow users to trade Hive Power for liquid Hive on an internal market
(4) User-defined Power-Up / Power-Down: Create various timeframes users can select for Powering Up their Hive which will give them different benefits (Dalz mentions yields, but theoretically could influence everything from governance power to RCs)
Personally, while I love HIVE and am about to go power up some more, I DO think 13 weeks is a bit excessive and would be interested in further exploring some of the options above. Is it a huge deterrent for me? No, it's not, because I have a long term mindset on all my "investments" and anyways I want to participate on Hive. However, I can see why it would deter many other entrants (including some I'd love to see on Hive). I'd love to hear some new discussions on whether people think the current 13-week period continues to be what's best for Hive.
Images in this post were created using Midjourney AI
