There's something on my mind ever since I noticed the elasticity of the HIVE rewards pool (a few years ago, when I started to be a witness and got more involved with the tech). By "elasticity" I mean the number of the HIVE tokens minted in one week period.
During the last few months it went from over 800k, to under 750k (748k, to be more specific). That's almost a 10% decrease in minted tokens.
We know HIVE is a hyperinflationary token, and we kinda love that about it. It's this hyperinflationary nature that makes it so appealing as an entry point in the web3 world. But, to be honest, any adjustment towards scarcity is something that I find useful. Scarcity creates demand and it usually increase value. Ask any Bitcoin maxi about that and you'll get at least 15 minutes of continuous talking about how important it is that BTC has only 21 million created ever.
I don't know the exact mechanisms by which the rewards pool is shrinking, without looking into the code, but I assume there must be some algorithmic adjustments between the number of HBD in circulation (also known as the HBD / HIVE ratio), the peg and the actual market value of HIVE. The correlation that I see from the top of my head, again, without looking into code, is that the higher HIVE goes against USD, the less tokens are minted.
You can see that easier in the rewards you get for your posts. A couple of months ago, if you were to cash 20 HTU* for a post, with a 50/50 split, you would have gotten 5 HBD, the rest would have been 5 HIVE (assuming HIVE was trading at $1). But while HIVE was trading around $2, you would have probably gotten 5 HBD, but only 2.5 HIVE (as you get the amount of $ in HIVE for the second part). I know it can make your mind hurt, so I won't insist on the calculations, I just wanted to point this out.
If this trend continues - which we all hope will do - we may see the rewards pool shrinking even below 500k. At that point, the value of HIVE compared to USD may be in the $3 - $5 range.
This looks like a virtuous cycle: if the HIVE price goes up, the number of HIVE minted goes down, creating more scarcity, potentially driving the price even higher.
* HTU = Hive Token Units, the value displayed near your posts, which is not HIVE, nor HBD. For an explanation of how the rewards are working on the HIVE blockchain, have a look here.
