Hive: Growth Versus Security
There is a quandary that arises. When we are looking at some of the potential growth areas with Hive, we see some issues. There appears to be a lot of things standing in the way of massive expansion. Many feel it is best simply to get rid of them.
The challenge with this idea is the fact that we often have to choose between growth versus security.
We all want Hive to grow rapidly. For this reason, proponents of this believe all barriers should be removed. However, when we look around the cryptocurrency industry, we see this might not be the most sensible approach.
In short, someone has to be minding the store. If we are not paying close attention to security, this could mean the end of our ecosystem. Attacks come in many different forms, including hacks. It is getting to the point where it is a weekly occurrence.
For Hive to truly excel, we still need to take the long-term approach.
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HBD Stablecoin
The last few weeks are filled with news about the potential of the Hive Backed Dollar (HBD) and moves to push that into the forefront of the industry. We had the witnesses moving the interest to 20%. At the same time, a liquidity pool was established on Polycub. A number of articles were written about other projects that are being discussed.
Essentially, HBD could be the breakthrough that Hive is desperate for.
Of course, there is the issue with liquidity. Here we see a challenge if we are going to pull in hundreds of millions of dollars in investment. We have under 10 million HBD floating outside the Decentralized Hive Fund.
This should not be a problem since the correlation to HBD and HIVE is rather simple. Just convert HIVE to HBD. Many start to do this until they realize there is a 5% penalty fee on top of it. Thus, if the price of HBD is below $1.05, someone is taking a hit.
Why is this in place? Many feel this should be eliminated.
Here is where security versus growth enters. Sure it would make life a lot easier from a growth perspective if we didn't have that. It could, however, open up the door to price manipulation.
Here is where a challenge could enter. If someone was able to game the pricing, and acquired a large amount of new created HBD, that could be converted back to HIVE and used to gain control of the system.
Naturally, there is another barrier in place to help prevent that since it takes 30 days after power up for governance to take effect. That said, it still could hurt the price of HIVE, sending it plummeting, thus affecting other things such as the haircut rule.
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Balancing Act
Could the 5% fee on conversions of this manner be altered? It is worthy of discussion. Since that went into effect, the governance delay with power ups was implemented. Perhaps this added level of security will allow for the altering (if not elimination) of the fee. As a compromise, maybe it could be dropped to 1% or 2%.
The tendency, from observation, appears to be erring on the side of caution. This means a run up similar to TerraUSD and LUNA is unlikely. That system operates similar to Hive yet without some of the safeguards. It also has a great deal of Venture Capital funding. Hive is relegated to the community for its growth.
Another aspect that stifles the pace is the haircut rule for the creation of HBD. If the market cap of HBD reaches 10% of HIVE, then it stops printing that and payouts come in the form of liquid HIVE in addition to Hive Power.
This is being moves to 30% in the next hard fork. Some believe it could easily be 50% or even 100%. Again, erring on the side of caution.
As frustrating as it can be, the goal is to avoid the death spiral fears that USDN suffered. Here we had a situation where someone with a lot of WAVES was able to use DeFi to produce a lot of USDN and attack the system. Fortunately, for that ecosystem, it ended in reverting back to normal.
However, we have to be careful of vulnerabilities such as that. We know there are many instances where attackers will not stop until something is completely destroyed.
Source
Resiliency Comes From HIVE
We often find ourselves in the chicken-or-the egg situation on Hive. We want to drive things higher but have to limit it due to security concerns. Many are focused about how to make Hive more resilient. After all, if something is going to be a player in the creation of a new financial system, it best be defensible because attack will come. For the moment, Hive is so far off the radar nobody is bothering to go after it.
This will not be the case as success is enjoyed. Hackers, governments, bankers, and scammers will all be at the door in full force.
The way Hive is designed, one of the big keys is HIVE. We need to make this as resilient as possible. For example, growing the market cap allows for a larger cap on HBD. How do can that be done? Chicken or the egg.
While technical developments can protect the infrastructure, money attacks have to be defended at another level. Here is where the major players seek to exploit if they want to take you down. At present, Hive is an easy target with a cap under $500 million. Chump change to those on Wall Street.
Attack vectors get more difficult with growth. Now we are back to the quandary. Growth becomes a form of security. However, there is a period where the growth can open up vulnerabilities which derail the entire process before that point is reached.
It seems, each time one problem is solved, a couple others show up. This is because of the balancing act. Do we eliminate some of the defense measure that were instilled? In some instances, it might be a smart move. This is especially true if others were implemented.
Ultimately, one of the best defenses in cryptocurrency is to have the native coin in as many Diamond Paws as possible. These people are the ones who are willing to stand up to attacks when they take place.
At times it is not easy to deal with but the issue of growth versus security is always in play. It is a trade-off, often an unappealing one. That said, nobody wants to wake up and find Hive, not only under attack, but crumbling.
It is for this reason that the equal attention is required on both factors. If growth becomes a threat to security, then it is not worth the cost.
Something we all should keep in mind.
What are your thoughts? Where are some areas that discussion is worthy regarding adaption to move forward.
Let us know in the comment section below.
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BEER.1% fee for HBD conversions seems reasonable to me. In my opinion, it should not be eliminated.
As in terms of growth, we are getting there slow and steady, no need to rush and burn.
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I would say at some point it can be talked about in terms of elimination. A lot of Hive's defenses are enhanced by size. However, we dont have it now.
At this point, dropping it a bit might be a better option. I have no idea what that will require though.
There is a lot to be said for this mindset. While we are all impatient, building something sustainable does take time. We have a number of issues to work through and they are not going to disappear overnight.
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It should be there but maybe changed so it would not require an HF to adjust. Like the HBD interest rate, witnesses could signal the fee rate.
So in case of an attack, it would be another tool under the witness's belt. If it all feels secure, they can drop it to 0 or close to 0. If the chain is threatened they could hike it up to 5% or even more.
It seems like a reasonable solution, but I haven't given it a deep thought.
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You bring up a good point. Witnesses having the tools when a threat is there is what is really crucial. They might not have to be in place all the time. With the situation regarding Elon and Twitter, perhaps a poison pill of sorts. The Witnesses can defend the chain if the attack shows.
Of course, that is if there is time. That is one thing some of the latest additions did, provided time. Like the 30 day lock before powering up gets governance. A big move can be addressed.
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The mere possibility that someone can take advantage of governance and hurt Hive is concerning. Security is a very important issue, hence I take security that slow process with growth.
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It is how many feel especially those from the development side. Security is always a concern and, without it, much is lost anyways.
So slowing growth in some areas to ensure security is never a bad idea, even if it can be frustrating.
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Slow growth is not bad, I guess we can never eat our cake and have it at the same time. Security is important, else, the growth we're striving for wouldn't matter.
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Yeah there are some strong vultures out there. We need to be prepared.
Hive will have its breakthrough moment. It is just a matter of moving ahead in a sensible manner. Which comes first, or should I say, which is the bigger priority: growth or security?
The answer ends up being both which is tough to balance.
Sometimes safety is a smarter bet.
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I am on the security side of things as well, it matters not to me if Hive takes forever to grow, as long as it is secured I am happy, I don't want to wake up the next morning and question what the hell is happening on Hive due to attacks or hacks.
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For me, it's 50:50
Being my early stage on Hive, I kinda pay more attention to growth than security.
Maybe later on when I'm more influential with more hive, HP and HBD to protect, I'll pay more attention to security.
But generally, they really should be paid equally attention.
The problem is the growth might mean nothing if the security is not there.
All the growth could easily be undone with one hack. Security has to be there from the beginning. Odds are, to do it later would be akin to locking your door after the robbers left.
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Ohh.. You've got a valid point.
I guess I have to be more careful then.
Starting all over again is never fun for anyone.
Thanks so much @taskmaster4450le
It's such a tough balance and we know that the Hive whales are very security minded I do appreciate they do not make a lot of risky moves and also Hive is a fairly steady investment and HBD has been performing pretty well as a "mostly stable" token.
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They are. Many of them are from the coding background, something that is ingrained in them. We do have steady and stable covered. Growth is where we are lacking.
It is really a tricky subject, something most do not really pay attention to. The answer to growth or security is obviously both, but to what degree?
That is the challenge. As stated elsewhere, all the growth in the world can be undone by a single hack.
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I guess I see Hive as the security layer and if you want speculation you move to the 2nd layer.
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Very interesting what you say. You are at the inventor's level and you should be on the securities team by the time you think about it.
But in my opinion, growth and security are two sides of a coin that complement each other. As a rung of the growth ladder rises, so will other rungs of the ladder. Growth will always be followed by security developments.
But what you must always watch out for is the security system should not be one step too late. Otherwise, collapse will occur. It's the same as we make stairs, but don't make handrails for those who climb them.
Growth does provide a degree of security. There is benefit in size. It makes things harder in terms of exploit, at least from the money attack level.
That is true. Never good to shut the barn door after the horse left. Defeats the purpose.
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Your analogy is very relevant. Doesn't every system have weaknesses?
We always consider our weaknesses as well as our strengths.
The discourse you convey is a very good warning, at least it will be an early warning system for each of us here to think about it together for the common good.
Certainly there are weaknesses and the goal should be to eliminate as many of them as possible.
We will see how it all unfolds. With size comes a defense but also more attention.
There is a trade off there too.
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Your idea seems spot on.. See the problem with crypto is that people aren't really interested in the technology or security as much as we'd like to believe. They are interested in growth and prices going up. When that occurs then they worry about security protocols and all those things. That's just how it works.
So i think the misleading points made in crypto about oh decentralization and use cases are malarky and baloney.. Nobody really cares about any of that. That may matter one day it certainly isn't worth a hill of beans right now.
The thing about technology is slow growth is the worse position you can take. That's like thinking in terms of like an old outdated strategy from warren buffet or something once you got all the money in the world. Sure that's great when you're already in that position.
however hive is still not reaching not even the mainstream of crypto forget the mainstream to everyone else. It shouldn't be worried about security or anything else. Only thing it should be worried about right now is marketing pure marketing and if it takes 90% of it's resources to run gimmick like marketing that's what it's direction should be.
Forget all this nonsense about secure chains and and securing the networks. Crypto already has that locked down with much bigger significant networks.. that's not hive's strength.. hives strenght is in a currency and people buying as much of it as possible and getting it into as many hands as possible that's what would be idea for hive.. to stick to that so called" stable coin hbd and make something of it and try to keep it stable and remain stable..
it probably only needed that stable coin. that's another thing hive mechanisms are unnecessarily complicated. so sitting back and going longterm is a mistake.. by that time technology and the crypto world would have moved on to something else.. hive is just stuck in this state of mediocrity because the community is very confused and don't know what to do about what hive is or suppose to be.. going all over the place not working for it.. nobody knows what it's trying to be or do and none of the directions it goes in has been truly successful with the exception of splinterlands and i can't even predict a stable future.
Atleast with bitcoin myk i know based on freemium services it's going to get millions of users and all a curency needs is to be stable and have enough wallets. it doesn't have to build or do anything else. so i know bitcoin myk can accomplish that. my predictions for you all are undetermined for the most part and communities don't like projects with undetermined fuitures. why would i want to invest money behind that?
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In every organization security is very important and for this I am of the notion that the 5% Shouldn't be removed as long as it will keep things in check.to be frank in as much as we want hive to grow security must also be in place if not all effort might end up being in vain.i believe with time hive will get to where wea are all aiming for but we need not need run faster than our shadow
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That is true but can it be adjusted? Are there other security measures that can be implemented?
All worthy topics of discussion. I do not profess to have the expertise, especially from the technical side, to even approach this.
But there has to be a balance on some level. Where that is might be near impossible to find. More just a feeling our way through it game.
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In the aspect if security it definitely have an important role to play in the blockchain which should be taken quite serious.
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I will be prioritizing security over growth, it makes no sense for me being defenseless in the quest for growth.
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I think keeping the tokenomics secure is important, but I also think that there needs to be a renewed focus on the key system. I think that something needs to be done to overhaul that to make it more accessible to the general public. If we could do something to eliminate that barrier then it could possibly help drive growth.
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Not sure how the key system can be changed.
What are you thinking? Any ideas?
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I think people need something that integrates with their Google play store or Apple ID. Something that allows me to install a dapp and get started using it just as easily as I would a web 2.0 app on my smartphone. I think we get spoiled in the US and forget just how many people worldwide don't have a computer. Everything is done on their phones.
Listen to the latest AMA. Khal said they are doing something similar with the mobile app once it goes live in the Apple Store.
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I watched it but I had students in and out of my office so I missed some of that part.
You have said well.
I believe the aspect of security should be primay on Hive in other for us not to wake up and see all efforts crumbling.
Thanks for this information
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I think security should take the priority and we can't compromise on that part of the ecosystem. What I do think should stay is the 1 percent fee on the HBD conversion. I think it should stay as that would keep the Hive's foundation working smoother. Growth can come through many ways but not at the cost of the security.
That is true. And there are other mechanisms in place, at least for governance. Even converting a lot of HIVE to HBD and then reversing it on a major price move doesnt affect governance since there is a 30 day window on HP taking effect in that way.
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Actually, the major issue with the conversion of HBD to hive is liquidity. While 5% is very large an amount for conversion, if there is enough liquidity, the decentralized market could be used without impacting the price much
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Conversion and the internal exchange are two different things. The 5% is on conversion, turning HIVE into HBD. The Internal exchange has no transaction fees. And there is some liquidity there through the HBD stabilizer which is 1% below the highest bid price (I believe).
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Okay but I have seen people having issues with buying large amount of HBD due to purchasing the coins at different price in the Internal market.
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Is it possible to have adjustable fees for HBD conversions depending on the amount to be converted?
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I am sure there could be some type of tiered system put into place.
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Any security protocol already in place shouldn't be eliminated, if it adds a layer of protection.
Someone taking control of Hive's governance, isn't that what happened to Steem?
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Yes that is true. A lot of that was tied to the ninja-mine stake. Su was able to get a lot of HP for very little money and not on the market.
That is no longer an issue since that is now in the DAO on Hive.
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I tend to go with security. I prefer slow growth.
Hive need to protect the system from hackers. Because of the increase in HBD, many people account that's not well secured will be hack.
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That is true. The fact there are no smart contracts on the base layer is helpful. But yes hacks have to be prevented.
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Yes
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Security always come first, funds should be SAFU.
Only reason that ETH is still a top altcoin even with high transaction fees because user (Dapp developers) believe in it's security.
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Hard to argue against their attention to security. Sadly the layer 2 apps do not seem to be as concerned considering all the hacks.
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We should be taking our time and do things the right way. Hive is not desperate and maybe some people are. Many of us have been in the community for a long time now so security is and has to be at the top of the list over and above everything else.
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The development team does a good job of putting precautions in place. The safeguard after the Sun situation really helps.
We simply need to pay attention to this on all levels. It is vital.
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It seems, each time one problem is solved, a couple others show up.— just like a clock, problems don’t ever get to finish or stop working .
The Growth vs Security duel must be a stalemate. One cannot be forgone or neglected for the other . Attention needs to be focused on both in a way that both will always complement each other in the place of things generally on the Hive platform. If I’m to choose sides though , I’ll be opining for more beefed up security.
I don't understand why anyone here would want the platform to explode with users. All it brings is more spam, trolls, low quality content and smaller payouts. There's little to gain from quick growth compared to security and the quality of the platform.
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I think security is really important and I'd rather err on the side of safety. I know that the witnesses can probably make changes to fix things if it starts happening but I still think it doesn't hurt to have these safeguards.
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Security all the way. A glitch in security has the power to damage trust and that's what keeps people in crypto. Growth is good but what's the whole point of growing if you will get recked and ruined. I feel consistency towards both is all that matters. One can not be looked at as more important than the other both have there place and are needed
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You mentioned in another post (something that Dan encouraged as well), that small fees could be added to conversions and internal market with clear destination towards HP holders. If such fees were introduced, then I believe the fee for conversion from HIVE to HBD can be lowered in the first instance and possibly removed as the HBD supply and volumes increase. Maybe the conversion time for both ops could be lowered to 48h instead of 3.5 days. It is enough to protect against intra-day price manipulations. And with enough money thrown at the market, it doesn't matter as much if it's 48h or 3.5 days.
If you buy HBD on the external exchanges, there isn't a 5% haircut is there?
I wonder if anyone knows how much HBD is sitting on the external exchanges.
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This post by @taskmaster brings some thought provoking issues to the burner, and it provided an answer in the balancing act, growth in Hive must go along equally with security.
The truth is that a lot of persons do not completely trust that hive will last long. Security is an issue. We have all heard of a lot of these things crumbling down. It is not something we can handle 100%. But being optimistic may increase the drive and trust
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