HBD or HIVE? An Analysis Of Both
We recently saw a lot of attention paid to the Hive Backed Dollar and for good reason. After the Witnesses increased the APR to 20%, this became one of the more attractive stablecoins on the market. We now have a strong return without any 3rd party risk. Unlike many other stablecoins where the staking has to be done through a second layer application, with the HBD in savings, that is all base layer.
After the announcement, many were wondering if people would abandon Hive Power for HBD. This obviously turned out to be unfounded as the amount of Hive locked up as HP is not changed that much. It is a vital point as we will see in a few moments.
Hive Backed Dollars (HBD) hold great appeal and merit the recent attention. We need to keep in mind the potential of HIVE along with all the benefits of staking it.
For that reason we will compare the two in an effort to give some clarity to people.
As always, this is for educational purposes only and not investment advice.
Source
Hive Power
Hive, when staked, becomes Hive Power and increases people's influence on chain. This pertains to all governance issues along with the distribution of the reward pool. It also provides access in the form of Resource Credits (really Mana) as a result of the amount of Hive powered up.
Therefore, Hive Power carries a bit more value to users in addition to a simple ROI. This is something we must consider.
When everyone saw the 20% APR on HBD, the focus instantly shifted to that. Since Hive Power does not passively pay that, many felt the inclination would be for everyone to shift into that. The aforementioned reasons certainly played a part in that not coming to pass.
There is another factor that is essential: speculation.
HIVE is a volatile asset. The price can fluctuate greatly. Many feel the long-term trajectory of the coin will eventually be upward. For this reason, it is not unrealistic for it to move 400% or 500%.
Here is where we see a major difference entering. This is coupled with the fact that smaller accounts can easily have a triple digit growth rate. For this reason, in comparison, the 20% annual return could pale in comparison to this.
Here is the key: this is all potential. The returns are not guaranteed. Nobody can assure a triple digit growth rate on a smaller account nor can we state with any certainty if the price of HIVE will go up. Like any asset, there is the possibility it goes down.
It is why this is speculation. The return depends upon what people do along with market activity. There could be a large return. We also see where the path to loss exists.
HBD
There is no way to deny the appeal of HBD in savings now that it is paying 20%. It is a rate that is one understands compounding along with the state of the existing financial system should get people's mouths watering. The possibility for long-term growth, both of individual accounts and the entire ecosystem, are enormous.
From a personal perspective, there is little doubt that HBD is a pathway to wealth building. When we compound 20% over the course of a couple decades, with additional contributions, that can easily result in millions. The is how powerful this rate of return is.
What this does is it puts Hive at the forefront of the fixed income market. Globally, the money invested in this realm dwarfs that of speculation plays. It also helps to usher in a new era for cryptocurrency: the focus upon yield.
Instead of everyone seeking to "moon" their holdings in a few months, the goal is to build over an extended period. Here is where the power of compounding enters the picture.
Over time, the rate of return could be less but then the risk associated with putting HBD in savings is reduced.
Risk Tolerance
The decision to go with HBD or HIVE comes down to a simple notion: what is the risk tolerance with this particular money.
We can easily see how the holding of HIVE versus HBD is a completely different risk model. Those who are willing to move up that scale are willing to "bet" on the price of HIVE eventually moving higher. For this, they are also taking on the potential for loss.
So far we framed this discussion as one of different types of investors. It is true that speculators versus yield hunters are completely different. Yet, they can also reside within the same person and certainly within an individual portfolio.
The answer to the question of HBD or HIVE is often both. Certain money belongs in the fixed income category while other resources can be applied to the speculation arena. It all comes down to the risk management structure one is applying and how he or she wishes to build a portfolio.
For anyone on Hive, the best part in all this is options are being provided. The fact that people have serious choices to make is important. There are now opportunities to structure one's financial matters in a way that meets individual needs while also generating a return that will eventually make a difference.
By working within one's risk tolerance framework, we can see how people are able to decide where they want to put their money to fit their needs.
As of now, Hive offers selections that can appease both the speculator and yield seeker, even if they are the same person.
What are your thoughts on both these coins? Which options do you feel is right for you?
Let us know in the comment section below.
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One thing that one need to consider when talking about HBD is that it's actually going to sustain it's dollar-parity. As we see on that OTHER BLOCKCHAIN that shouldn't be named, their backed-dollar is all over the place regarding it's value.
!1UP
That is true. At this point, when I use the term stablecoin, it is with the presumption that the coin is actually stable.
As for that other one, no point in even focusing upon that chain. It has little use so people on Hive ought to act like it doesnt exist.
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I, personally, do trust the Hive Blockchain to keep up HBD as a stablecoin. But, considering that it has a kinda-convoluted way of working, I think that the majority of the investors won't see HBD as a true-stablecoin, but as a pseudo-stablecoin. Thus, with higher risks.
Why would the majority of investors see it as a pseudo-stablecoin? Algorithmic stablecoins are starting to gain a lot of attention. I think people will feel they are more stable than the ones that claim to be backed by assets yet nobody knows if they truly are. What is backing USDC? Nothing more than a claim, that cannot be substantiated at this point, that they have 1:1 backing.
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Which other Algorithmic Stablecoins are gaining traction lately? I want to take a look at them and see how each of them are working, to compare them with HBD!
UST...FRAX USD....
UST has been on fire.
And now everyone is rolling them out.
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That chain has no stablecoin, just volatile assets depending on billionaires market manipulation.
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If you look from a certain angle, this HIVE->HBD conversion and high interest on HBD savings may look like an exit plan for big HIVE bags. If that were the case, I think they had not spent this much time to adjust haircut.
That is true.
And how many have actually converted their HIVE to HBD? This is in place more than three weeks now and it seems the amount of HBD is the same (and most of that is still in the DHF).
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???
Not sure what that means.
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We are very lucky to have HIVE and HBD for me 50/50 is perfect. If you want more influence overweight Hive and if you want stable passive income overweight HBD.
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I also now take my payouts 50/50. At my age, I need to get the baseline investments growing. HBD with a 20% return fits that need very well. I know there are other options out there but something that I can really sink my teeth into in a risk averse way.
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It's a genius set up, if we're being honest, HIVE is actually the savings account here considering it's literally putting your money out of supply, so you don't spend it. Hbd is more like what you're rewarded to buy coffee, pizza or whatever else makes you happy:)
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Commerce is a vital feature we need to add to the HBD use case. This is something that is overlooked. When that is a major use case for a currency, then a lot of other things comes into play.
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I am on the 50/50 side of HBD and HP as well, I want influence and I want passive income so I work on both.
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I decided to go the 50/50 route, this reduces the risk of blaming myself that I did not do the right thing by investing in only one scale). Thank you for the very clear explanation of the economics of this choice.
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That is always an option that does help to fill both bags at the same time. It would be good to see how many are actually using that path.
Either way, we can see how it enhances both the baseline return (HBD at 20%) along with the speculator in us.
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Yes, the speculator inside me is always alive), but I have other assets that allow me to look at the situation in a different way and calm my ambitions a little. lol.
Yes, the profit, with the 50/50 option, is correspondingly reduced if the scales tend to go in one direction, but a small profit is better than its complete absence). I'm a little tired of believing my intuition).
I've been splitting my earnings about 50/50 for awhile now, even before they jacked up the rate to 20%. I like the stability of HBD and the potential with HIVE. !LOLZ !PIMP
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The HBD Stabilizer is certainly providing more stability. What we are also going to see is that should tighten as more use cases are developed and things expand.
With the pHBD addition to Polycub, we have another avenue. Add in a couple more projects looking to implement it and we see how things are starting to gear up.
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I will have to check out the pHBD route. Still liking my wounds from CUB a bit... little down on the defi projects. Like you say, there needs to be a use case or it is a crypto that's only purpose is to make more of that crypto... and I'm leaning away from those.
CUB is still in play. The development model is on Polycub and will be rolled over to Cubfinance.
The price decline is not permanent. All aspects of those platforms are being reworked.
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Hive for power up and HBD for savings for more profit in future. These are my aim about hive and HBD. I wish to earn good to accumulate at least 1k HP in this year, wish me luck Task Master 😇
Ever since the hbd apr went to 20% I have been putting my earned hbd in savings. The 50/50 post rewards I don’t convert to all hive now so am diversify in both hbd and hp.
Regarding the risk tolerance of investing in either hbd or hp I think is crucial to know and be reminded of is this needs to be a long term investment. It’s not going to 10x overnight or within the month. Many bloggers like yourself succeeded through hard work and consistently active on the chain. Newer folks have to look at it in a way where this is a buy and holding for years to see results. I believe which ever hbd or hp invested the longer we hold on to them the more rewarding it becomes. Compounding is automatic in these rewards so time in the market is better than timing the markets. Thanks.
All true. Both sides require long term focus in my opinion. That said, markets can do crazy things and pumps can come at any time. That said, being able to take advantage of them is powerful.
However, we cant smartly live with a full total risk on attitude. Sooner or later the market bites everyone. Have to be smart in our approach in my opinion.
That is what I try to do, although am not always successful.
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If either one is taken away,the chain suffers, if both are kept, everyone is opened to opportunities.
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Since the HBD apr increased. I have put a bit more into savings. I should try and split it even. 20% is really awesome !
That is up to your risk tolerance.
Getting 20% with very very low risk is hard to beat. Nobody can knock you for taking that route in my opinion. It is a terrific return that can result in a large account over time.
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I would say comparing the two is only normal, but saying one is better than the other is just insane!
Hive is volatile, yes, HBD is supposed to stay stable. Having this in mind, It's rather fascinating that people can so much forget that HBD needs hive to survive, if it's paying 20% interest, it's literally drawing that value out of hive, so if hive was to tremble to the floor, HBD would do same because the work hand in hand.
HBD is an incentivizer, HIVE is what backs it up, if you take away HBD, you kill an investor's joy, something that had added value to the chain, and then if you take away Hive, HBD doesn't exist anymore...
It's better to say we're just looking to understand which to focus more on as a long term investment or as a short term investment just to maximize profits, this will help anyone make a better decision.
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That is true although it is exaggerated at the moment because the use cases for HBD as a medium of exchange are rather small right now. Build that up and it takes on a completely different meaning.
This is not necessarily the case. While conversion will shift the "value" around, at least in theory, HBD can actually add to HIVE's value.
The challenge is people only see one or the other because the commercial use cases for HBD are non existent. However, there are a lot more potential use cases for a stablecoin than just staking for APR.
People simply do not correlate the attributes properly. That is like saying the USD only can be put into a bank and earn interest. That is one use case and, quite frankly, a minimal one.
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I'd say HBD during bearish seasons and HP during bullish ones, but how can you tell them apart?
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Hard to time markets but you are right.
If playing in that arena, the risk on is HIVE and the risk off move is HBD.
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It is hard to pick one. That's why I invest in both.
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Same here
The best thing to do is to be reasonably invested in both. That way, you miss out on none. But like you said, it all comes down to one's risk appetite
That is what most are opting for I believe.
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I am building Hive Power and Hive Dollars (HBD).
Nowadays I have around 1635 Hive Power and $1409 HBD. Hive has the potential to increase (or decrease) a lot (in value), while the Hive Dollars (HBD) is giving a very good, low risk and steady (hopefully long term) passive income. Probably building both is right. And if someone like to trade, there are opportunities to buy (or sell) Hive with/for Hive Dollars (HBD), so it is possible to build these with each other, because buying and selling at the right time can increase the amounts people have in their wallets.
A couple nice amounts you in your wallet.
The holdings really grew over the last few months. Congratulations.
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I see both as being important for long term growth. HIVE is where the value really lies as it has to go up as what we have here is that good. The small amounts of HBD I am staking daily will change once HIVE is a higher value and then that wallet will take on more importance as a passive income for the pension years. HIVE though has my main attention as that is where the real value lies and don't see that as a gamble long term. Both HIVE and HBD are important however and every account should be growing both.
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There is no doubt that things change a great deal when considering a higher HIVE price. That is something that we all will be happy to see.
We are moving forward, it just takes a great deal of time.
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I had been pumping most of my earnings into HBD, but the other day I read a good post about getting a better percentage through curation. I don't maximize all of that like I should, so I will likely just stick to putting funds in savings. I have a unit bias I want to reach.
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It is a tough choice really. Either way, one will come out ahead in the long term. However, we have to make choices about it.
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Great analysis. At the moment I invested in hive to have more power (yes I bought them 😅). For HBD I think I will continue 50/50 with hive staking. I do not consider HBD a real stable coin. I am too little in this moment and I am not so much online, so my objective is to grow (slowly 😅).
@mad-runner @barnabo73 this is a real interesting one, great summary and put some light on our discussions.
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More influence is a great thing. There is a reason why HP is the base for all that takes place.
Having it is very helpful.
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Maybe you want to analyze this in a future article, about the powering down timeline, 13 weeks? How this number came up and why exactly 13? How is this affecting many people not wanting to power up more because of this long wait in case you want to power down?
I used to treat my HBD rewards as something to convert back into HIVE / other coins. These days I’m converting all to pHBD and staking in pHBD-USDC for the juicy APRs.
It’s all sustainable thanks to the 20% on-chain rate. I truly believe we could see mass adoption of HBD and Hive as an algo-stablecoin option in crypto, we just need sufficient external liquidity
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Liquidity is vital. We also need to create more. We also need use cases.
We also...
The list is huge but we have to start somewhere. It is a matter of just pushing ahead step by step.
Over time we should see it all start to multiply.
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I am investing for a long term maybe in 2 3 years for 100% power up. I believe if i had more HP I can get more return In the future.
That is a great starting point. A lot of this platform starts with HP. So going all in for a couple years is not a bad idea.
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How about inflation?
Currently at around 16% if you figure it out the way they did in 1980.
Now that the current price of Hive is around $0.80 on CoinGecko.com it is hard to justify converting to HBD to beat inflation by 4%.
If I had a big stack of Hive and am a content creator it is hard to be risk adverse to the only complete social media platform on a Blockchain.
I believe as the community grows we will see some of the censorship critics on other platform moving over.
Maybe, a Premium membership video platform like Rokfin is needed as a 1st layer solution where the content creator gets a bigger percentage of the fee would attract those with bigger followings.
If we attract more creators with followings that will also increase the size of the community and I would assume the amount of staked Hive by creators trying to get more influence through staking.
I will stake more HBD but will not tamper with my HP.
Lol I like that!
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I think that is how most are approaching it.
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Hive is an underrated coin and it can pump to a great height at any time. Staying invested in Hive long term can give that opportunity to grow our investment value.
Hbd on the other hand , gives an interest rate of 20% right now which is pretty good. No other decentralized platform offers such a huge interest rate on stable coin investment. In fact , the interest rates are better than most of the bank interest rates across the world.
Considering the fact that both have more pros than cons, I would personally recommend both options.
It will be interesting to see how all of this grows. We are building different strategies to increase the viability of both these coins.
We are slowly growing it all.
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Yeah right ! Its a marathon not a sprint !!
Without a doubt. Those who understand it are going to be well rewarded.
The price of HIVE will go up at some point. We have no idea when. Yet it will and those who keep building will see the benefit by filling the bags.
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.
Cant argue against either option. It is nice when people know what they want and go for it. Hopefully we see more people who understand the value of both tokens and opt to build their holdings.
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Both coins are best ,hive is home of opportunity investment, imagine looking at hbd with which is stable coins with higher intestine in a month and hive staking and upvoting I can't just wait to be bigger account but for now I will steak with hbd interest
Hive is opening up a lot of doors to people. We are now to the point where people have legitimate options to consider.
This is creating hard choices to be made.
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Hard choices indeed because everything look sweet
I need to build my Hive Power for better curation, but where possible I want to add HBD. HBD is my passive workhorse that will keep working for me and pay off later on.
Yes that is the investor's dilemma most are in. They want both which is understandable. We just have to keep pushing the idea to all who we can.
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I focus on both… been putting little bits in HBD for a while now, while growing my HP.
Will continue with that.
Got 185 HBD in saving right now… I see this as a very save investment, for the long term. Even if the APR would go down again.
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It is a terrific investment and starting with 185 and adding to it will help. I have a feeling the 20% will be around a while.
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Ok, great…
I will add to it gradually like I already was doing.
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Great read, I prefer Hive Power because of course, the reason you point out here
It gives us a power to influence not only the chain but also someone's lives by supporting their work which I think will give you a greater reward.
Kudos to you for always making valuable post
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I feel both is right for me and I have stuck to growing both simultaneously, I won't be powering down for HBD and I won't be converting HBD for Hive power.
I am after the 20% APR on HBD just as am after increasing my stake on the chain. I like that we are presented we choices, which is great to experience on Hive.
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Both seems to be the consensus and what most are doing. It only makes sense to try and do both simultaneously. It is not easy to do it that way so long term focus is vital.
However, over time, say a year from now, all of our holdings in both coins can be larger.
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I think I am on the middle ground, I like taking risks, but calculated ones. My strategy for hive is to just keep stacking HP and grow my influence through my income from the blogging side. Since the other half of the rewards come as HBD this goes straight into the savings and some of it will enter the polycub ecosystem. I certainly do love the other tribe tokens as well and some of them are just used to buy different dividend paying tokens. I like my EDSM producing EDS and those give me liquid hive every monday. Not much the last payout was 0,77 but as I keep stacking those EDS tokens this payout will also grow with time. Just as staked utopis pays a little liquid hive every week. every liquid hive I see immediately gets powered up. I think I powered down 10 HP one time when I was new and I just wanted to test how it works, but as it appeared in liquid form I immediately powered it up again.
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There are many different ways to approach things. It is amazing when you think about it and how things progress. We have a lot of terrific ways to get rewarded and fill both HBD and HP.
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HBD all the way. I am buying all the HBD on the internal market. As much as I can every single day.
That is a good approach. I cant dispute the idea of going after yield. 20% is a great basis to build a portfolio.
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I’d like to have 1,000,000 HBD by the end of 2022
I was thinking a lot about the direction of my actions to get the best profit from this - it looks like a long-term investors can easily go to hbd and get their stable profit - bit what is the insurance that the 20% won't be reduced to 15 or 10 after some time...
In the other hand, having a good amount of Hive can give You the hope it will grow after another Bitcoin run and You can sell them with 2-3X benefit amount.
Today, price of Hive is a much lower than hbd so maybe it is a good time to buy Hive using our HBD resources and when the price of Hive will go over HBD price again - we can accumulate much more money than 20% of benefit...
There are many possible strategies and and many different ways how it will go in future - always a risk, always to decide for everyone themselves.
I am still thinking what to do with my Hive :).
Thanks for the post.
HP is King for me, people do notice that you are IN for a ride, and the power to curate is just too thrilling. Using HBD also means losing something resembling socio-ecological status on this blog and chain. Who'd really want that?
I understand the APR and the game theory for why the LPs with HBD are important and that makes me want to add my contribution there as well, it's still all about (H)Power for me. Give me 1 Million Hive today and I'd power up 950k tomorrow.
I like both and that is why I like the 50/50 payout option. I do think HBD has some potential and the 20% APR is way too amazing.
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Your analysis is very good and interesting, and I enjoy reading it. I have a few questions about the hive and HBD. What do you think if bitcoin falls dramatically? Will hive still follow because hive belongs to a platform that is constantly printing money? Another question about HBD is whether the APR is fixed or variable. Do you believe the value of hbd will remain stable if the APR is reduced to 10% or 5%? What is the reason for HBD's high APR?
Precisely the volatility of an asset is what makes it more representative at the time of betting on it, that said, the hbd is more attractive for the security of investment, but forget that it is simply a stable reference, like the usdt tether, some time ago the hive had a range of 300%, we are aware that the market fluctuated surprisingly with a bullish cup accompanied by the weekly btc period, but that helped in the same way that the hive was positioned in this bullish chart that made the valuation of small accounts grow, I remember I only had a few more than 100hp and my account statement was valued at 700$. #leofinance
I feel most relaxed with acquiring the two, although I'd take much preference with Hive because we would see what would happen in coming future.
HBD on the otherhand is like a secure bank with 20% APR waiting to take holding in HBD savings.
The two are vital as they play their role.
Hey there, @kellybellz, check this one out too.
I'm, personally, trying my best to amass both. I had been doing a push for 10k HP, but with the 20% APR on HBD I'd have to be a complete idiot to not see the long-term value in that. And, as I'm here for the long haul... it's a no-brainer to dump extra into that. But, I've also never ever powered down anything so, I'm going to keep stacking both. I don't write prolifically - I have two very young kids and am pushing hard to transition from QA to Developer in my day job, which leaves me less time than I'd like... but I still manage to blog about the things I enjoy and it's definitely helping achieve my goal of gaining enough HP to help small accounts get nice-feeling updoots, and helping me put something speculative away for when I'm retired and running D&D for old folks LOL.
Having both is good, although for small accounts like mine, growing HP is priority but can still squeeze a little bit of HBD into savings :)