The APR on HBD savings will always stir passions on Hive, but I hope this article won't go in that direction, but be more instructional instead. I just want to say before I get into the main topic, that if everyone would sell HIVE for HBD thinking of protecting themselves against a short-term downtrend, and earning an interest too, that would put pressure on HIVE and accentuate the drop. Of course, others think long-term and buy HIVE at these prices.
To understand what happened with the APR for a short while (and might happen again), we need to understand how a median is calculated.
How Is the Median Calculated?
If you don't remember from math how a median is calculated, it's pretty simple. Here it is:
When you have a set of data points, to calculate the median you do this:
- you order the data set from the lowest to the highest
- you pick the middle number from the ordered data set, and that gives you the median; if there are two numbers in the middle (when the data set contains an even number of elements), the median is given by the mean ("average") of the two elements in the middle
Examples:
- The median of 1, 7, 4 is 4. We can easily see that after we order them: (1, 4, 7).
- The median of 2, 7, 3, 8 is 5 (the mean of 3 and 7, because they are in the middle of the ordered (2,3,7,8) data set)
Median is Used in Different Places on Hive
One place where the median is used is when calculating the median price over the 3.5 days it takes to make a conversion from HIVE to HBD or vice versa. I think the data set is composed of hourly price points taken throughout the interval, but I'm not sure. Also, the end formula takes into consideration the price of HIVE at the end of the interval, but we are not here to talk about that.
Another place where the median is used is when calculating the APR for HBD in savings.
In this case, the data points are given by the APR settings of the consensus witnesses plus the backup witness that enters the rotation.
What Happened with the APR Today?
To be honest, I didn't notice anything until I saw a thread that it changed to 19%. I checked it and that was what PeakD said. Don't have a screenshot, unfortunately, because it soon after changed back to 20%.
So, what do I think happened? Here are the top witness APR settings:
If we take the APRs and form a data set with only the consensus witnesses, and we order them, we have this:
(7%, 12%, 12%, 15%, 15%, 15%, 15%, 15%, 17%, 19%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%)
Considering only the consensus witnesses, the elements that would give the median would be the mean of 19% and 20%.
To this data set, we need to add the backup witness in rotation every time. This means we will always have a single element that determines the median, and not a mean of two. If the backup witness we add has an APR of 19% (or lower), then the APR for HBD in savings, given these APRs, would be 19%. If the APR is higher than 19% but lower than 20%, that will be the new APR, if it is 20% or higher, then 20% is the APR.
Of course, this is a changing situation, and I analyzed a static one. But in this case, I believe given the equilibrium at the consensus witnesses level, the APR was given by a backup witness, and fluctuated as the backup witness changed and the new one had a new APR setting.