Staking has been a hot topic in crypto for a long time. Staking rewards are great and a lot of services offer them. Make your stake work for you!
I’ve already wrote a few posts on the staking rewards on Hive and the ROI side of things.
Reminder of the Hive inflation distribution:
- Authors 32.5%
- Curators 32.5%
- HP holders 15%
- Witnesses 10%
- DAO/DHF 10%
How does your Hive stake earn for you?
Your Hive stake, or more accurately Hive Power earns in two ways:
- Staking Rewards
- Curation Rewards
Staking rewards. As we can see from the chart, 15% of the Hive inflation goes to HP holders as staking rewards. HP holders don’t have to do nothing to earn this. Their stake just grows. Passive Income. With the current level of staking share, this is around 3.33% APR.
What I personally don’t like about the current concept of staking rewards described in the HIVE VESTS | A Flawed Staking Rewards Model? is that they are hidden, not visible and not marketed. A daily transaction as a reward can go a long way.
Curation Rewards. Curation rewards are not totally effortless unlike the staking rewards. Stake holders do need to put some effort (votes) to get their staking rewards. The process is even gamified, and stake holders can increase their CR depending on the curation efficiency. 32.% of the inflation goes to this pool and depending of the voting efficiency the APR for this is between 10% to 15%, and sometimes even more.
Your Hive stake earn 3.3% staking rewards, passive income and on average around 12% curation rewards, that require some effort. A total of 15% average APR.
Hive inflation is around 8% at the moment. How can the APR be 15% or more if the inflation is just 8%? It basically comes down to the thing that not all the coins are staked. The less the share of staked coins the bigger the rewards for those staking it.
Now that we are clear about how your stake earns on Hive and how much, the next thing is, can it be improved?
Note that in September 2019 there was a HF which changed the author/curators rewards from 75/25 to 50/50. This is a change in favor of the stake holders. Can we go further? What can be the next step?
Can we change the ratio authors/curators/stake rewards? The 32.5%/32.5%/15%?
Obviously, we need witness and DAO/DHF rewards, can’t mess around with those.
How much can we increase the staking share? Double, 30%? it will leave the author curators to 50% of inflation? Maybe go even further, 50%? Authors/curators get only 30%. Authors only 15%! At this point my opinion is that it’s too low. 15% for authors will lose the blogging aspect totally.
Maybe at some point in future if we have more valuable media tokens, this can be done. But we are not there yet. So, I would say 30% staking rewards will be the next possible step for the time being.
The @realwolf had a post on the staking rewards Hive Staking Rewards with some pretty radical proposition with only staking rewards and a possibility to tip some of those if you like. I think this is a radical shift for the moment. But we might explore a less radical one for starters.
I want to point out again here that first we need to make the staking rewards more visible then the current system! Otherwise it will not make any sense if they are increased!
If we double the staking rewards that will mean that the current 3.3%, will become 6.6%. Again note that this numbers depend on the share of the total staked coins, and they can change.
Now let’s go into some pro and cons of this.
Pros
- Higher passive income
- Daily rewards without any effort (no curation needed)
- More incentives to hold HP
- Attracting more investors?
Not sure about the last one? On the new investor’s topic, except for the staking rewards, power down time should also be taking into consideration but that is a topic for a separate post 😊.
Cons
- Smaller rewards for authors/curators
- Less incentives for posting/curating
- Making it less attractive for new authors to come in
- Slowing down user growth
- Cartels forming
One of the strong selling points for Hive has been get paid to post, and the ability to earn from nothing. This will get smaller now. Some may argue that people who want free coins will usually dump them, as they earn them, but this is not the case for everyone. I know a lot of the authors here that have been earning and investing at the same time growing their stake.
It is a mix bag. Some dump their earrings, others are encouraged to invest. Lowering the author rewards might lose this.
Lowering/Removing the PoB of the system will open the doors for cartels forming, since the ones controlling the stake, control the inflation and they can make sure nobody else got it. Again, closing the doors for outsiders and new users.
The above are just a possible pro and cons. We really don’t know how things will play out until its implemented.
Changing the author/curation/staking inflation share and we have an increase from 3% to 6%.
But if someone is leasing out now, he can get 13% and +3%, or a total of 16%.
Also, one can delegate to some of the curation projects (@curangel, @ocdb, @tipu) and receive somewhere around 10%+3%. No need to renew leases. A bit smaller returns but you set it up only once.
One more option is to follow curation trails.
The point here is that with just a bit of effort and an investor can have easy 13%, without hurting the authors/curation rewards. Is it worth changing the author/curation/staking inflation share?
IMO no.
Is there anything that can be done for better staking rewards?
What I think would help more is having a smoother experience and market for delegating, leasing out and leasing in HP.
A systematic on chain market for leasing/delegating HP. Not to forget @dlease is a centralized service, a third-party platform. A lot of the users/investors, especially new ones might don’t know it even exists. Also, the curation projects. Some know them some not. Again, new users/investors not.
What we want is an integrated button in the hive wallet, just as the stake button, where it says delegate/lease! A small note next to this showing the last 7/30 days APR (13%, 14%, 15%). A one click button and that is.
It will be an integrated delegation/lease pool.
Also, the other way around. You have a button lease, just next to your HP, where you can go and increase your HP.
It will be a system that will incentivize trade on HP based on an internal market, just as the Hive/HBD. Every new user will see this immediately. You have an option to lease out or lease in HP, directly from the system in a secure manner, not some roundabout ways. It will make it more attractive asset overall, and their you go, your staking rewards 😊.
All the best
@dalz