Hive Ends July Deflationary! Hive Inflation And Supply For July 2022

This is a report for the Hive supply and inflation for July 2022.
The main event for Hive in July was the HBD pump that caused a lot of HIVE to be converted to HBD, does making HIVE deflationary in July.

Let’s take a look at the data!

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The projected annual inflation for 2022 is around 7% , or 0.58% on a monthly basis.

The thing is Hive has a double currency system HIVE and HBD and there are conversions between them that add or remove HIVE from circulation on top of the regular inflation. Furthermore, there is HIVE in the DHF that is slowly being converted to HBD and also HIVE sent to the DHF is also converted to HBD. Because of this additional mechanics the HIVE inflation and supply can be drastically different in real time then the regular one.

To be able to follow the HIVE supply we need to take a look at all the different ways HIVE is created, author, curation, witness rewards, conversions etc, then net that out with the HIVE burned from conversions, accounts fees, null transfers etc. To get the virtual supply we need to do the same for the HBD supply as well.

HIVE Created

Here is the chart.

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  • HBD to HIVE conversions
  • Curation Rewards
  • Author rewards
  • Staking Rewards
  • Witness Rewards

All the above are paid as Hive Power or VESTS, except for HBD to HIVE conversions.
We can notice that the HBD to HIVE conversions are the dominant in the chart. Thing is this work both ways and a big part of them is converted back to HIVE, especially through the work of the stabilizer.

The regular inflation is around 60k HIVE per day. In July there was on average around 263k HIVE per day from HBD conversions, although as noted most of them are converted back to HBD. In fact because of the HBD pump a lot more HIVE was converted back to HBD.

HIVE Removed From Circulation

Here is the chart.

image003.png

The above takes into consideration six different ways of HIVE removed

  • Ninja Mined HIVE To HBD Conversions In DHF
  • HIVE transfers to DHF and converted to HBD
  • Transfers to null
  • Null as post beneficiary
  • New accounts creation fee
  • HIVE to HBD conversions

We can notice the spike in the blue line at the end of July that represents the HIVE to HBD conversions. A total of 2.8M HIVE was effectively converted to HBD in two days.

HBD Created

Here it the chart.

image005.png

The above is a chart for HBD created without the conversions. It includes to following.

  • 10% share of the inflation to the DHF
  • HBD Author Rewards
  • Interest payouts
  • HIVE to HBD conversions
  • Ninja Mined HIVE To HBD Conversions In DHF
  • HIVE transfers to DHF and converted to HBD

Here again we can see that the conversions are dominant when it comes to adding a new supply of HBD.
The HBD created from HIVE transactions to the DHF are now dominant. This comes from the @hbdstabilizer.

The ninja mined HIVE conversions are also adding significant amounts of HBD in the DHF. Note that the HBD in the DHF doesn’t count as debt. We can see the spike in the HBD conversions at the end of July here as well.

HBD Removed

Now let’s take a look at HBD removed. Here is the chart.

image007.png

HBD is mainly removed when converted to HIVE, but also with transfer to @null and setting null as beneficiary on posts rewards.

HBD is being converted to HIVE when the price is below the peg. In July on average there was around 122k per day converted to HIVE and again most of it is from the stabilizer.

HIVE Supply

When all the above is added and removed, we get this chart for the all time HIVE supply.

image009.png

Up until August 2021, the supply was almost steadily increasing with a small fluctuation. Then a huge drop in the supply in August and September 2021. An increase since then up until recently when we can notice the drop at the end.

HBD Supply

Here is the chart for the HBD supply.

image015.png

The light color is HBD in the DHF.
As we can see the HBD supply has expanded a lot in 2021, but it has been in the downtrend in the last months.
While the HBD supply in the DHF is growing and it is maintaining the cumulative supply, the HBD supply excluding the DHF has been going down up until now.
In the last month the supply of HBD (excluding the DHF), increased for around 1.6M and the HDB in the DHF also increased for 160k. As mentioned, it was because of the conversions from HIVE to HBD. With this amount of HBD and the HIVE price the debt is now at 4.1%, but will decrease in the following days having in mind the price action for HIVE.

Virtual HIVE Supply

When we add the HIVE equivalent supply from the HBD in circulation to the HIVE supply we get the chart bellow.

image017.png

When we zoom in we get this.

image019.png

The light color is HIVE that in theory can be converted from HBD at the current market prices for HIVE.
We can see that the virtual supply fluctuates quite a lot, mostly because it is tied to the price of HIVE. As the price of HIVE increases, the virtual supply decreases and the opposite.

The virtual supply was quite constant in the month, with a drop at the end as the HIVE price started increasing.

Monthly Inflation

If we plot the monthly inflation, we get this.

image026.png

The red is the HIVE only inflation, the light white VIRTUAL HIVE inflation.
The monthly inflation in July is -0.29%! A negative one. In terms of absolute numbers the HIVE supply has contracted from 385.4M at the beginning of the month to 384.2M now, or a -1.2M HIVE reduction in the supply for the month.
The projected monthly inflation for 2022 is 0.58%.
On the other hand, the virtual supply has expanded in July because of the increase in the HBD in circulation, but with the current price action for HIVE it will go down in the next few days as the 3.5 days average price kicks in.

The highest the monthly inflation has been is 1.54%, and on the low side it has reached negative -3.83% in September 2021. A reminder that these are monthly numbers, to get the yearly equivalent just multiply *12.

The yearly inflation, projected and realized looks like this.

image029.png

Quite the differences in the past years between projected and realized inflation. Again mainly because of the HBD conversions. In 2019 and 2020 we can see that the realized is quite above the projected, while in 2021 the inflation is negative -2.7%.

2022 is projected at around 7% (0.58% monthly). For the first seven months of the year the inflation is at 4%, and it is set to go to projected level. It remains to be seen how this will unroll in real time.

Net HIVE Created By Category

Here is the new HIVE put in circulation by category in July 2022.

Screenshot_1.png

We can notice the -3M HIVE removed with conversions in July 2022.
The curation rewards come on top in terms of HIVE created with 861k HIVE. Usually the conversions are on the top for HIVE created but this months it is the opposite!

Net HIVE created in July 2022 -1.2M.

All the best
@dalz

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