For awhile I have been thinking about what Hive would look like without HBD. The Hive Backed Dollar has been around for as long as Hive itself, and goes back before the fork as well. Much as changed since then with its economics and yield. The markets have also changed quite a bit since their creation, now making HBD seeming less suitable than it did when it was launched back in 2016. With the drop in the price of Hive, this puts extra pressure on sales of HBD due to this. So at time of low token price, keeping a stable coin going does not seem like a smart plan.
Based on dalz reports, much of the selling pressure on Hive comes from HBD conversions and the DHF. Recently the Decentralized Hive Fund has had a major haircut, seeing daily funding drop considerably.. And even HBD has had its own form of soft haircuts with the reduction of interest rates now half of what it used to be sitting at 10% at the moment.
So what would Hive look like without a secondary token? Estimated payouts on posts would be set in Hive and not USD. Though front ends could still do an estimated conversion without the need for HBD. Besides that? I guess we would no longer have a stable coin and DHF payouts would be in the form of Hive instead of HBD.
And without HBD around, the interest rate would not cause selling pressure. And if HBD does not have any benefit to hold, besides pegged to the dollar. It will quickly have low volume, so I think it would be best just to get rid of it.
But how do we get rid of HBD without hurting the current stakeholders? That is the second part of this issue, but I think I have an idea.
The minting of new blocks would have to changed for a certain amount of time. So all of the rewards across the board would need to be reduced. Author rewards, curator rewards, and witness rewards. So each would need to be reduced by 33.3%
Once this has been done it would built up a treasury of Hive funds, these could be set in the code to pay out to HBD holders over a certain amount of time, based on their stake at the time of the HBD snapshot. This process may take years, honestly I do not know how to calculate how long this would take. Maybe someone else reading this post can figure that out. But I would hope it would be like this until around 2028, just to time ourselves with the next Bitcoin halving and potential bull market.
As these funds pay out to the HBD stakeholders it will be powered up, to reduce selling pressure right away on such a change. But those Hive traded for HBD can be powered down during the normal period if they choose.
Once all HBD has been converted back to Hive and paid out to stakeholders the previous block minting will return to normal.
So that is basically my thoughts on how to remove HBD while still addressing the stakeholders of the token. It would be a major change, requiring the code of the blockchain to be altered for a period of time. And eventually completely removing HBD from the ecosystem.
