One of my students asked why I am given to powering up my liquid tokens to hold more stake in Hive, especially the Hive-engine tokens like LEO and SPORTS. I told him that I am doing this to cross the poverty line. The response sounded hilarious at first, until I dug deeper to explain the Concept of "vicious circle of poverty" to him.
There is one temptation that comes with allowing assets to remain in liquid form in a Decentralized Proof of Stake (DPoS) platform like platform like Hive. Staking is one of the income generating concepts on the Hive blockchain. Holding a stake gives a user an influence in the system and helps the user to earn a part of rewards accrued to a content when he votes the content.
Generally, the mentality of the poor man is that he eats and dies. The poor man always have a little and that little is to be kept for himself and probably, his family, and none else in case another supply does not come.
It is a hard thing for a poor man to save let along make an investment, because he thinks he may not live to see the next moment. The man stricken with poverty rarely would give to another because "he always doe not have enough for himself".
Here is what Prof. Nurkse has to say as one of the reasons of vicious circle of poverty:
...on the supply side there is small capacity to save resulting from low level of national income. The low real income is a reflection of low productivity, which in turn is due largely to the lack of capital. The lack of capital is a result of the small capacity to save and so the circle is complete.source
This can be schematically explained thus:
Low Income → Low Saving → Low Investment → Low Production → Low Income
I would say that the capital needed on a DPoS system is the amount of stake. This is so because a staked token/coin places some limits on the investor's freedom to easily access the tokens during market hypes that may cause impulsive trades.
As shown in the modified supply diagram above, having a low stake of HIVE or hive-tokens would lead to the following:
- Low investment drive,
- Low curation, and
- Slow account growth
Low investment drive
Staking of HIVE and Hive tokens would always keep the investor in the alert of how to make the amount staked top grow. On Hive blockchain, there are several ways to make this happen. They are:
- Delegation to Dedicated Curators for optimum Curation rewards
- Joining active curation trail for automated and effective curation
- Supporting Community curation
- Support DApp development for tokens in return (maybe), e.g., @Actifit, @LEoFinance @Hivehustlers, etc.
All four operations listed above come with ROI not less than 10% with or without little effort by the curator. Any user without a stake or with a low stake cannot earn that.
Low curation
Now that operations on Hive blockchain are based on Resource Credits which are a function of amount of tokens staked, any user without/with low a stake would be limited in terms of votes, comments and even financial transactions.
Indeed, a Hive user with low stake of HIVE or Hive-token cannot vote many posts, as such, i=cannot earn more rewards. Earning therefore stops at what others would give to the user.
Slow account growth
Accounts with huge stakes of Hive do earn huge number of follwership and high level of engagements even if they joined today. Take a look at Hive whales like @Theycallmedan @Ocdb @Blocktrades, etc, and Hive token community accounts and whales like @Steem.leo @Taskmasterr4450 @Dtrade @rollandthomas, etc. People are following them and would freely engage their posts in case they wish to give some comment upvotes. This cannot be enjoyed by accounts with low stakes.
Image source - screenshot by @hivebuzz
Curators other enjoy giving huge votes to these whale accounts because they believe everyone would want to upvote them and that means more curation rewards. This cannot be enjoyed by accounts with low stakes.
Final Words
The underlying fact here is that holding high stakes on a DPoS platform means more health to the platform. It means more sustainability into the future of the platform.
Consider is no one wanted to to hold a stake on Hive, then creating contents would be useless. Content creators are giving in their best because stake holders are available and are ready to share their value to others in terms of upvotes.
Users who fail to hold huge stakes would also earn low because they only drain the system. They can't cross the poverty line. They won't have much value when the bull market and mass adoption comes. Thanks to Hive-engine tokens that allows any Hive user to hold huge stakes even with small capital.
Be a builder!
Be a stake holder!
Be a curator!