I've had this idea for a long time. Some may see it as an abomination or a redundancy, but in my head it makes sense. That's why I'm releasing it to the world to see if it catches on. It's simple, perhaps even boring, although for some it will surely be sacrilegious. It's a Hive Power rental or lending service, one that makes the lender a profit and is free for the borrower.
Before going any further, let's first look at the reasons why someone would want more Hive Power (I like to call it Voting Power, it's more intuitive):
- To grow faster: More voting power means more attention from the users you reward with your curation and more resources to post, comment, and interact, which ultimately increases your chances of having more followers and greater exposure for your content.
- Higher earnings from curation: With more voting power, your earnings from curation also grow; it's directly proportional.
So far, the possibilities of increasing Hive Power are through author earnings (what you collect from your published posts) and by Power Up (by staking Hive) directly. The first option can take a long time, the second costs you money.
Whichever way you do it, you have a problem once you increase your voting power: a lack of liquidity. To fully access that money, you have to wait thirteen weeks after Power Down (withdrawing Hive from staking). This means you could miss out on investment opportunities or be unable to cover expenses in the event of an emergency. Also, now that some are beginning to view the KE ratio (Hive Staked vs Hive Power earned) as a measure, you can be "punished" for your Power Down.
So, how can anyone can increase the voting power quickly, without it costing anything and without losing liquidity?
This is where the system I devised comes in (which I'm making available to anyone who wants to implement it on their own or join).
Let's say:
- User A needs Hive Power (HP) and sends the equivalent in HBD to User B.
- User B delegates the Hive Power indefinitely to User A until the latter requests cancellation.
- User B, to make a profit, puts the HBD in Savings and earns interest based on the APR.
- User A proceeds to enjoy their new voting power.
In this system, the person requesting the voting power has the ability to liquidate it within a minimum of 5 days (the same time it takes for a delegation to return to the owner) receive the HBD back and whitout spend a penny in the process. In other words, you have complete control over your funds and can move between Hive Power and liquid HBD with relative ease and speed. You don't have to worry about volatility or losing money on currency exchanges. In fact, volatility is your friend, as in my system the delegated amount isn't recalculated based on the Hive price. That is, the contract is fixed at the exchange price, for example:
- With a Hive price of 0.27 HBD, User A sends 13.5 HBD to obtain 50 HP in delegation. The Hive price then increases to 0.34 HBD, so the value of their 50 HP obtained through delegation increases to 17 HBD. However, the initial 13.5 HBD continues to cover the service, so their delegation does not decrease, nor does they need to send additional HBD unless they want an additional delegation, which would be calculated based on the current price.
- If the price drops, the delegated amount would not be affected either, but in this scenario, User A has the option to cancel the current delegation and initiate a new request based on the new prices.
Lenders have the opportunity to earn high interest in a stable and liquid currency by depositing the equivalent HBD in Savings, thus maintaining the capital security and the economic sustainability of the transaction. You can also continue to earn profits on your delegated voting power. Remember that HP has an approximate APR of 3%, so you can lend that extra money to other users or use it as your own. For example:
- User B sent a 1000 HP delegation. After 30 days, due to the Hive Power APR, this delegation increased to 1002.5 HP. User B updates the delegation to remain at the agreed-upon 1000 HP and recovers those 2.5 HP for personal use or new delegations.
I'm sure some of you are thinking that from the lender's perspective, it doesn't make sense because they can earn through curation or by delegating to other curation projects. However, obtaining an APR greater than 8% through curation is a very complicated task, and curation projects that deliver more than that percentage do so because they do so in Layer 2 tokens.
With this system, the lending user would receive a 15% APR in a stable and liquid currency, in addition to an extra 3% in HP.
Now, to support this idea, I'm launching the service from CANJE(I don't rule out the idea of creating a specific account for this).
For now, only 200 HP will be available for rent; sorry, I'm not a whale 😅. However, we also open the opportunity to others who want to rent their HP. How would it work?
Let's say you want to be part of the system and put your Hive Power to work in this. You would be on a list waiting for a user to request a loan. @canje would receive the HBD and place them in Savings, and you would make the corresponding delegation. Every month, CANJE would send you the interest generated less the management fee. In other words, you would earn an annual APR of 12% on the HBD value established at the time of the Hive Power loan.
If the user wanted to cancel the transaction, we would notify you so you could withdraw the delegation. If you are the one who unilaterally withdraws the delegation, if CANJE cannot cover that HP, the HBD will be returned to the user who requested the loan.
The advantage is that on the blockchain, everything is transparent, and it's easy to verify who transferred and who didn't.
The hardest part of this, I think, will be finding those users willing to rent HP, leaving the HBD as insurance. In the end, the interest generated by those HBDs in Savings is what pays the rent.
Now, imagine this scenario: one of these large whales or curation projects using this system rents 10 or 20% of its HP. It would be quite possible for them to cover their expenses with that alone without having to use Power Down to pay their curators or workers.
Of course, this system works as long as the HBD interest in Savings remains above or equal to the average interest earned per curation. That is, as long as it's above 8% APR.
The only catch is that this entire process would be largely manual. If there's a developer who wants to be part of it and/or contribute to making it as automated as possible, please get in touch. Likewise, if you liked the idea and want to implement your own, you're also welcome to do so.