During the Townhall space some days ago, Rondon spoke about the possibility of removing the reward pool and that got most people in a frenzy. Hive without a reward sounds strange to many people, including myself. However, this is not a new idea. It has been mentioned several times in the past, but it seems a few powerful figures in the Hive community are leaning towards this idea, which raises a lot of eyebrows.
Where does Hive inflation go?
Currently, based on my understanding, Hive inflation is distributed into different pools, namely: the reward pool, the Hive development funds, Hive savings and stakeholders. The reward pool which funds Hive's SocialFi takes the lion's share of Hive distributed Inflation. Removing it means inflation is either reduced or channelled to other departments, which I don't think is necessary.
Hive tokenomics is near perfect. It satisfies every stakeholder in the ecosystem--investors/Hivepower holders, creators, node operators, etc. Removing the reward disrupts the most important aspect of the Hive blockchain which SocialFi. Without it, Hive is just another blockchain. Some might argue that SocialFi on Hive has been a net negative for Hive, but I will argue it hasn't been done the right way.
Nevertheless, I believe the reward pool would be removed against the wishes of the vast majority because this is not a democracy. Hive is stake-based. Those with stakes dictate what happens on-chain whether we like it or not. But then I ask, how does Hive move forward without a reward pool?
If I were an investor, I would certainly not be buying into a chain where a vast majority have years of advantage, mining and earning the token for free. The whole point of removing the reward pool is to reduce hive inflation, so whales or large stakeholders can make more money, right?
Institutional Investors want not just profit but also control. We saw that with Justin Sun during the steem debacle. So whatever setup we are going to have after the reward pool has to prioritise stakeholder interests which has always been the case on Hive. I will argue that removing the reward pool doesn't necessarily bring in new investors or developers. It drives the one thing Hive has going for it--the goodwill of its users who are mostly for 2nd and 3rd countries.
But Hive isn't a charity, it should be profitable to investors.
I agree, but that has nothing to do with the users. The onus is on Dapps to be profitable and self-sufficient. Without the reward pool 99.8% Dapps die and that wipes off the userbase as well. Also removing the rewards almost makes Hivepower useless for individual accounts and only valuable to dapps that will need resource credit to run their platform.
So here is what I think will happen in the next few years:
Hive launches smart contracts, discontinues the reward pool and redesigns its tokenomics. This is most likely going to be unsuccessful without some heavy spending on marketing and web3 politicking to attract developers and institutional investors because they will be the group the blockchain caters for once such changes are implemented.
Second, the blockchain will lose most of its current active users who want to earn the Hive tokens. Dapps won't be able to cushion the effect of this said change because they don't have the means to do so. This kills SocialFi on Hive and possibly leads to another fork.
Removing the reward pool creates many problems for Hive which will take years to rectify. Hive doesn't have that time. There is serious competition in the SocialFi industry. We should figure out how to improve the current system without having to compromise the vision and mission of Hive.
Hive's current problems have nothing to do with the reward pool and removing it will solve none of these issues. Hive should focus on improving its visibility and that entails doing proper marketing and collaborations.
Hive dapps also need to source alternative revenue streams aside from the reward pool. The over-dependence on the reward pool has made them docile and unproductive. This also applies to communities. If we collectively increase the standards for curation, I believe stakeholders will get in return the value they give in terms of upvotes, and dapps can figure out how to monetise the time and attention of users, which is standard for most social apps.
Lastly, the Hive token should have more use cases. Hive Smart Contracts might just be the answer. Resource credit will also play a huge part in increasing the demand for Hive as more dapps come into the ecosystem. These are some of the solutions that can improve the use case of Hive.
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Check out this short thread on projects with potential airdrops.
