The ever-discussed topic around here. Thirteen weeks power down period. Each week 1/13 of the stake converted to liquid.
Word on the street was that during the TRON Sybil attack on Steem, exchanges were amazed by the 13 weeks power down period. Looked quite a lot to them. Well now they know it 😊.
The power down period is in line with the overall staking rewards topic for Hive. I have written about the Hive staking rewards before:
The overall conclusion there was that Hive staking rewards are great. They can go from 13% to 20% APR and are one of the best in the crypto industry. What can be improved is the UX, make it easier for delegation and receiving daily rewards. A one click integrated button in the wallet.
Before going forward let’s take a look how things stands with the other DPoS coins and their unstaking period:
- EOS – 3 days
- TEZOS – 21 days*
- TRON – 3 days
- Cosmos (ATOM) – 21 days
- ICON (ICX) – 5 to 20 days
Compared to the above, Hive 13 weeks or 91 days, looks quite long. The longest unstaking period for the coins above is 21 days.
Most of the Hive Engine tokens also have shorter unstaking periods. Usually around 4 weeks.
It almost feels like a no brainer to shorten the time. On the other side we have seen a price increase to 1$ recently with the 13 weeks power down period.
Sometimes it looks like fundamentals don’t matter much in crypto at this stage of development.😊
However, lets explore this topic once again and see will we make some meaningful conclusions.
Let’s go into some pro and cons of shorter unstaking period.
Pros for shorter power down period
- Investors will feel more comfortable locking their stake for shorter period,
- Attract more investors just for the passive income,
- It might increase the overall share of powered up Hive,
- less liquidity, more scarcity and drive the price up
The pro of the shorter power down goes in the direction of making investors more comfortable in powering up hive as they will not have their tokens staked for 3 months. If this happens it might increase the demand for the token, reduce liquidity and push the price up.
Cons for shorter power down period
- Putting the importance of the short term over the long term,
- Attracting speculators that have no long-term commitment to the project,
- Decreased stability of the network,
The cons seem to be in the direction that short power downs will attract more speculators then a long term investors. This will make the token more speculative asset then a long term project. At this point I think that almost all crypto is speculative, but lets just add this here as well.
What are the other options?
Can we think of other options, then just shortening down the power down period?
Options that can make investors more comfortable powering up HIVE without feeling trapped.
One of the proposed options was from @theycallmedan where people can make instant power down for a fee. Meaning one can power down in instant and burn some HIVE in the process. Let’s say 10% fee.
This means that there will be a fixed fee for converting Hive Power to liquid HIVE.
Another interesting option would be to try and introduce the free market to the power down period.
What this means is creating a market for Hive Power to HIVE, where HP can be traded for liquid HIVE. How much would it cost to convert HP to liquid HIVE will be decided from the market conditions.
I imagen when the HIVE price will go up more people want to cash out, meaning that HP will become cheaper. This can be used for someone who wants to accumulate more HP. When there will be no significant moves in the price the market will be more or less stable.
Introducing a fixed fee for instant power down or a fee decided on the market will bring some additional security risks. If an account is compromised the hacker can cash out immediately. A solution to this can be a two factor authentication where more than one confirmation will be required.
I personally prefer a market solution for Hive Power to HIVE conversions. But I imagen creating such a market on a blockchain level would require quite an effort and will be complicated to pull it off. Shortening the period to four weeks might be more simple and elegant solution.
Still its worth debating these things and see if some of the top developers can look at it.
What is your opinion on the topic?
All the best
@dalz