By now you should have already seen multiple posts about the planned changes in HBD’s APR. Reducing the interest from an awesome 20% to a still fairly attractive 12%.
First off a 20% APR is something which appears to good to be true. It means doubling your investment in just 5 years. Something rarely seen in traditional financial instruments, especially for a stable coin. Dividend stocks that yields 10% or more are usually viewed risky and are known to be volatile. And from my own experience, my savings in digital banks could only offer 12% APR at most during promotions and only for a month or two until they bring it back down to around 5%.
The good side is that this high APR has been maintained since early last year and has been relatively stable. But while it is fine for now I believe that in the long run this will not be sustainable. I know that eventually this high APR should be reduced to something more aligned with the market. Maintaining this high interest rate on HBD also reduces interest in Hive itself. As investors could just stock up on HBD and earn 20%. To beat this hive itself needs to grow by more than 20% yearly.
Now if the interest rates are reduced we can expect that many HBD holders will sell as they look to invest somewhere else. I really believe that this 20% interest rate is mostly to attract investors and in the same fashion will be the reason they would sell out. This could cause the price of hive to spiral down as well. I think a dynamic APR would be good. A time locked hbd would be good as well. To maintain stability and still offer high aprs.
However if the main focus is to increase the interest in Hive and Hive power. I don’t think this is the only way to go. Reduction of apr in hbd is necessary so that it aligns with the apr of hive and hive power, so that one is not favored over the other. But, while this is needed I’m still heavily in favor of marketing and advertisements to be the focal point in attracting new investors and users into hive. Growing the user base and eventually making it to the mainstream stage. To be honest 1 million users is so little in the social media space and is not an impossibility for us to reach.
Posted Using LeoFinance Alpha
