Introduction
HBD (Hive Backed Dollars), the native stablecoin of Hive, is now stepping into a new realm of utility thanks to the magic of VSC. We are bringing our own version of the innovative technology “liquid staking” to one of the best stablecoins out there. By introducing HBD Staking on VSC, we're merging HBD's reliable stability with smart contracts' innovative potential on Hive.
There has been an overwhelming need for better DeFi (decentralized finance) within the Hive ecosystem for a very long time. Outside of using Hive Engine (a Hive side-chain), there really hasn’t been a way to do things like swapping or providing liquidity with HIVE or HBD. With this development, we're not just expanding the use cases for HBD, we're paving the way for many different DeFi applications within the Hive ecosystem. HBD staking is going to be one small piece of an incredible future for the stablecoin and its users.
After providing a decentralized smart contract protocol for Hive, our vision is to add our own network services such as creating a DeFi platform that expands the capabilities of Hive. To this end, HBD will become a fundamental part of VSC for the reasons we presented in our previous post. Let's start by getting to know the essence of HBD, before learning how HBD staking will work on VSC, for those who are unfamiliar with it.
What is HBD?
HBD stands for Hive Backed Dollars, and is the native stablecoin of the Hive blockchain. HBD provides stability in terms of dollar value for the end-user, while also giving the user the option to lock it to earn interest.
This stablecoin is fully decentralized with no backing from Venture Capital funds or a company. This means that your account, along with all held assets, is secure and no one can access it without your credentials (keys). HBD is backed by HIVE as well, providing 8 years of security and stability history on the Hive blockchain. It’s the most stable and secure stablecoin that anyone can use, free of expensive transaction fees.
HBD Staking on VSC
Before VSC was in development, there was only one option for users to be able to use HBD for more than just the basics. Users could lock their HBD in Hive Savings, and earn 15% APR (determined by Hive witnesses). This was the extent of what could be done aside from sending and receiving.
With the introduction of HBD Staking on VSC, everything changes. Users will still be able to take advantage of the interest from Hive Savings by staking their HBD on VSC, but they get some extra benefits. When HBD is staked on VSC, the user still has access to their value in the form of sHBD (staked HBD). So even though your HBD is staked, you will be able to use sHBD for all of your decentralized finance needs.
Giving users the ability to still use their HBD in the form of sHBD while it is staked is just the beginning. Imagine a world where there are DeFi platforms that support sHBD for yield farming, or even as collateral for synthetic assets. These are just a few things that come to mind when you start to think of HBD as more than just a stable coin. HBD staking on VSC will turn HBD into a highly composable asset that everyone can implement into their system.
Resource Credits on VSC
While transactions on VSC are gas-free, there is still a requirement to have Resource Credits (RCs) for transactions. The great thing about this is, RCs regenerate over time instead of requiring you to buy additional tokens to pay transaction fees.
So how do you get RCs? It’s very simple. All you have to do is hold any amount of HBD in your wallet, not staked. As you make transactions across VSC services and applications, HBD will be locked for X period of days relative to the amount of RCs needed for those transactions. Over that period of time, as RCs are not used, HBD will be gradually unlocked for use in your wallet. Each type of transaction uses a different amount of RCs, based on the complexity of the transaction.
RCs operate a little bit differently on VSC than they do on Hive. The major difference, beside the fact that it uses HBD instead of Hive, is that you don’t need to stake an asset in advance to get RCs. On Hive, a user must stake HIVE in order to use RCs through a process call Powering Up. Unstaking is known as Powering Down and takes 13 weeks. On VSC, all you have to do is make sure you have HBD in your wallet when you make transactions. The rest is automatic, and easy to understand for the user.
HBD and sHBD
HBD on the VSC network will have two forms: liquid and staked.
- Liquid HBD is the HBD held in your wallet. As you make transactions, Liquid HBD is automatically locked up relative to the amount of RCs needed. Nothing is locked before you make a transaction, unless you stake HBD manually.
- Staked HBD (sHBD) is HBD that is manually staked on VSC and does not generate RCs. 1 sHBD is equal to 1 HBD plus the interest earned from staking. It will earn the same APR as it would in Hive Savings, and period of X days for unstaking takes place for sHBD. Your staked HBD balance won't change, so you won’t see the amount you earn from the interest until you unstake it. When unstaked, HBD is returned to the wallet including interest earned.
As an example, let’s say you have 10 HBD in your wallet. As you make a transaction X amount of your 10 HBD will be locked for Y period of time depending on RC requirements for that transaction. You can also stake your HBD manually. If you stake 10 HBD, it is locked and you receive 10 sHBD on VSC. Now you can perform transactions with the RC associated with that amount of HBD staked and earn interest while still allowing you to access its value in the form of sHBD.
We hope you are as excited as we are with this news and what’s to come because of this. Let us know your thoughts in the comments and stay tuned because we will have more updates soon.
More articles:
- Choosing HBD for VSC
- @vsc.network/next-phase-of-vsc-hive-smart-contracts-and-v4v-joint-dhf-proposal
- VSC Block Explorer UI Updates