Hello fellow Hivians!
Today I wanted to chat about HBD our very own 'stablecoin'. With the entire LUNA/UST debacle currently ongoing I wanted to have a dialog about why that would or would not also happen to HBD. To do we will go over how exactly these tokens are 'stable' and what makes them different from each other.
So first off, both tokens were backed by their respective crypto Hive/LUNA and primarily support the development and use of their networks, namely creation of additional dapps and services. Both tokens use a form of delegated proof of stake in that we stake our tokens and then "delegate' via votes for witnesses/validators etc based on our stake. In this both LUNA and HIVE are quite similar. The stablecoins related to each ie HBD and UST are effectively a debt (approximate $ value) that the blockchain owes its users. As in any case the ability to pay that debt and how that debt is paid is of importance.
Although HBD and UST both have a similar methods in maintaining their economic system they do differ in key areas. Most critically UST/LUNA has an ALWAYS guaranteed rate of conversion for $1 worth (albeit with a tax) whereas HBD does so with certain caveats which protect from collapse.
For one, the conversion price is an average price of HIVE over a 3 day period. This helps the network delay any immediate runs by extending out the runway by 3 days. In addition to this instant vs 3 day conversion the other key is that the price only guarantees a $1 conversion as long as the total debt amount of HBD stays below a certain % of the total Hive marketcap. This design was put in place to help combat a bank run. Basically, if the marketcap of Hive drops significantly, the % of HBD over the HIVE total marketcap increases which would then lower the conversion rate of HBD to HIVE. The debt % limit is set by the witnesses and it is the key to the kingdom so to say.
A further failsafe is in place once the HBD debt limit is passed. At this point no more HBD is printed via posts. This means that all posts such as this one for example, would be paid out only in HP which further stops the HBD supply from over-expanding.
I suspect that we will start to see massive stress on just about all algorithmic based stablecoins but I'm still confident that HBD in itself will remain strong.
All right so enough about that, on to the giveaway.
Winner's Choice from the below cards.
If we can meet a designated number of upvotes I'll instead replace the winner's choice with one of the Chaos Legion Rare reward cards.
We will be shooting for 75 votes this week.
How to participate
- Leave a comment including the Splinterlands name the reward should be sent to and your response to the below prompt.
- Upvotes are not required but are appreciated
- Reblogs not required but are appreciated
- Not required but I'd love to hear your thoughts on the post topic.
I will be using Hive Picker to select a winner which will be announced in my next giveaway post.
Previous Post's Winner
Please let me know via a tag in the comments if you would no longer like to be notified of future giveaways.
Congrats to the winner!
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