Time vaults are something we discussed on a number of occasions as relating to Hive Bonds. The basic idea is to have a vault where HBD can be moved into, similar to the Hive savings option. However, this would have a longer lock up period, say a year, and carry a different interest rate.
This is another step in the evolution of base layer fixed income options on Hive. As stated in the other article, this would allow for layer 2 innovation with bonds being created, represented by a token. This ultimately could serve as collateral for a lending program, all tied back to the base layer of Hive.
It would provide transparency we do not see in the existing financial system. Also, we have an element where everyone knows the duration, amount, and interest rate on the underlying asset.
Here is where blockchain can provide enormous value.
Now we will take our mental modeling a step further to discuss a permanent HBD time vault.
HBD Creation Center
Over the two days we covered a couple of ideas.
The first was Ragnarok. In this article we discuss the idea of using HBD as the centerpiece for a prize pool. The basic concept was that HBD is used for tournament fees and the purchase of in-game assets. Whatever comes in is put into HBD savings and left there.
What this does is create a growing amount of principal that is used to fund the ongoing prizes. For all practical purposes, the HBD is still in the circulating supply but it is locked up.
A one year time vault would also benefit this.
Our second article covered the idea of creating a Hive lottery. This would utilize the same idea. HBD from the sale of "tickets" would enter savings and never exit. The interest would be used to pay out the winners. Again, over time, as more tickets are sold, the HBD locked up would grow. This would translate into an expanding prize pool each month.
Essentially, projects like this would be HBD creation centers. The coins coming in end up creating more HBD, expanding the money supply. Yet, the net result is actually a reduction since we have the original coins "locked" up.
Except they are not.
While projects can say the HBD is not going to exit, the reality is that, they can be removed at any time. Hence, the blockchain (and community) cannot trust them to remain in that state.
Here is where a permanent time vault enters.
Permanent HBD Vault
The idea here is to remove the option of removal.
By establishing a permanent time vault, we are effectively creating a "burn" option yet having the HBD still providing benefit to the ecosystem.
Under the two previous examples, the HBD that comes in is moved to the permanent vault. This prevents it from ever being removed. To the blockchain, it is akin to a burn since the coins are no longer in circulating supply. They are locked up forever.
The key is that they still have value to the ecosystem. Each month, interest is paid on the locked HBD. It provides the prize pools as discussed in the two projects, offering liquid HBD to the community. Hence, we have a consistent flow to the money supply.
Another factor is that, since HBD is debt, this is no longer a threat to the ecosystem. It is offering a benefit to applications and games while also removing the downside.
We also see a steady, growing creation of HBD. This would hopefully mirror the growth rate of the ecosystem, one that is focused upon integrating HBD as the stablecoin used for transactions.
The rate should be permanent, aligning with the overall targeted growth of the system. Of course, having the ability to alter the rates in the other vaults allows the witnesses to adjust based upon the ever changing circumstances.
Community Driven Initiatives
When we see projects that are put together for the benefit of the community, it is helpful to have features that can present value to all. We know the Decentralized Hive Fund (DHF) was set up to provide value to the ecosystem. Anyone involved with Hive benefits from the development that is created through that DAO.
A permanent time vault could offer something similar to all on Hive. As people partake in an unowned project like Ragnarok, the funds raised could be locked away while still generating interest. This benefits the community by establishing a base line supply of HBD while removing the debt threat on the locked coins.
We can think of this idea like public funds. The difference is that we are now dealing with a system where human intervention is removed from the equation. Imagine if they did something like that with Social Security instead of the money simply being placed in the general fund.
With Hive we can do something similar. Any project that is "community" related could utilize this option. Naturally, not all have to use this option. With other time vaults, projects can opt for this concept without permanent lock up. This would simply be another option available in the wallet system.
Once established, then innovation can occur. What are some other ways the community can utilize something like this? That could trigger other ideas of projects that benefit Hive.
This is another addition that could open up even greater possibilities.
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