Defensive thinking in a world of exponential growth is more than being conservative. It's being protectionist. Which would be understandable, if you were part of an organization at the top of the food chain. Not so much if the organization is trying to be recognized for its undeniable qualities and expand.
I mean, protect what? A big slice of a small pie? Wouldn't it be better to protect a not-so-big slice of a much bigger pie?
The issue is not defensive thinking per se. That has its role, and in some cases is very useful to prevent you to do stupid things.
The problem appears when defensive thinking turns into a de facto break for your potential exponential growth.
Let's take Hive, for example. Defensive thinking makes people worry about higher inflation, potentially hyperinflation in the bear market under certain unfavorable conditions.
The problem with Hive is not that it has or will have a high inflation rate, it's precisely the opposite. That there aren't enough HIVE (and especially HBD) on the market to service the needs of anyone with significant amounts of money to buy in or sell out. Liquidity is thin and not easily accessible and will continue to be this way for a good while, because there are simply no mechanisms to print orders of magnitude more HIVE or HBD, if needed (conversions are the best way, but that means HIVE is destroyed when is converted to HBD and vice versa, so either way you lose one of the tokens).
I understand that we believe a "money-bag" will come in and moon our bags at some point, because he/she sees no option but to buy HIVE. But I see that very unlikely without sufficient liquidity so that the money-bag feels safe to get in or out without pumping the price to the sky or dumping it into the ground. Or without sufficient incentive to buy and hold long-term, considering the alternatives.
Why is the price of LUNA mooning and passing ATHs, even though Terra ecosystem is far more centralized than Hive?
For a couple of reasons actually, and most of them revolve around their stable coin UST. Why do I make this comparison? Because UST is also an algorithmic stable coin pegged to the US dollar using the relationship with their main token, LUNA.
- Both LUNA and UST are listed on enough exchanges and traded on many AMMs and part of deep-liquidity pools
- As a consequence, UST has had almost 1bn trading volume tracked by coingecko in the last 24h (this includes volume on the linked AMMs to coingecko)
- UST has a market cap into the billions (16bn), but I heard they started low and grew aggressively
- there is a high APR paid for staking UST inside their ecosystem; currently at 20% but will drop to more sustainable levels now that they established themselves as a top stable coin and attracted serious capital
- and last but not least, they started to build a bitcoin fund to back the pegging of UST, when needed
How is HBD doing by comparison? Not well. The problem is not that, because UST was not long ago very small. But exponential growth in their case didn't come from small hesitant steps every now and then. They pushed it like crazy, both when it comes to marketing and development. They are one of the few chains connected to Thorchain so far. That took development effort. They are practically the only big stable coin on Cosmos. So they've gone places where regular projects haven't gone yet, besides the regular destinations.
By contrast, HIVE used to have a pool on Uniswap at some point and shortly after most everyone pulled out. The pool is probably still there, but without liquidity. Sure, maybe given the fees a pool on Ethereum wasn't the best idea. But there was a proposal to fund a pool on BSC, I believe, from DHF. It probably didn't pass, or I would have likely heard about it.
Neither Splinterlands nor Leofinance became what they are today by acting like Hive maximalists. They went out there and connected with other ecosystems. Terra succeeded the same way. Do we have a pattern here?