VSC announced HBD liquid staking on their platform.
Note this is not fully operational. For now, someone can deposit and stake HBD on VSC, much like it would on the layer 1, meaning with a 3-day delay if you want to withdraw it. It earns the same interest as on Hive.
The actual functionality that makes this HBD liquid staking instead of normal staking is not activated yet.
For that, the sHBD smart contract needs to be active. That will be the "liquid" part of the mechanism.
How Will HBD Liquid Staking Work on VSC?
I don't know the exact process on VSC, but I will infer based on how others implemented liquid staking.
Step 1. You deposit HBD on VSC (or swap something else to HBD, if available)
Step 2. You stake HBD on VSC. For that, you receive a number of sHBD (which is usually lower than the HBD you stake, since the more time it goes the more interest accrues and adds up to the value of sHBD)
Step 3. You trade sHBD or use it in defi (when they will be available on VSC). sHBD will trade hands from you to someone else or to a defi smart contract. If it's defi, you can take it back once you're done with it.
Step 4. The holder of sHBD redeems it for HBD, whenever they want. There is a 3-day waiting period, since that's for HBD in savings, and that's where HBD is staked for interest on VSC. Interest goes to the redeemer of the sHBD. Everyone else along the way got to use the sHBD when they needed.
What Will the Price of sHBD Be? How Will It Evolve?
In a way, the VSC team made things easier to implement liquid staking for HBD first, since it is a stablecoin, with a relatively clear value.
But the same principle applies for volatile tokens. A well-known liquid staking token (LST) is stETH, with its underlying token ETH, highly used in the Ethereum ecosystem.
Who knows? Maybe we would have sHIVE next as well on VSC? That could increase the amount of powered-up HIVE we have on Hive (since we would have sHIVE as liquid HIVE, matching powered up HIVE through VSC), but maybe there are some other things to consider. I haven't given enough thought to say either way.
Let's get back to the price.
Since the interest of the staked HBD is collected by the end-holder of the sHBD (who redeems them), it makes sense the price would reflect that.
So, while the price of HBD would remain relatively constant around 1$, the price of sHBD will go up in time relative to the price of HBD, to account for the interest that is accrued.
In a perfect world, at an APR of 15%, and the price of HBD of 1$, the price of sHBD would be 1.15$ after a year of staking.
Markets may add a premium or discount to that price, based on the risks involved (slashing, protocol risk, smart contract risk) or the temporary illiquidity of the market at an increased demand for sHBD.
Final Comparison
For people who are used to bonds, a liquid staking token (LST)—in our case sHBD—is like a perpetual zero-coupon bond (no maturity, no coupons paid regularly).