An interesting debate sparked yesterday regarding the reduction (or not) of the APR of HBD in savings from 20% to around half, probably gradually. Discussions were prompted after the posts of consensus witnesses gtg (here) and deathwing (here). In the meantime, the latter came back with a response post after feedback.
First of all, those interested in the topic should stay alert, because I believe witnesses were just testing the ground for now, to see how much drama they'd create with such changes, the comments, and especially potential vote swings. I believe there is much more consensus on lowering the APR among witnesses, they are just analyzing the reactions.
Before I go on about this, I want to share my current focus on HBD / HP, so that people understand where my bias is. I currently have very little HBD (186 to be exact), over 33k HP, and almost enough HIVE to make another 1k powerup on HPUD. So, I am currently all-in on HP.
Now, what do I think about all this...
The Timing Is Awful!
If the thinking is we shouldn't be the only ones offering an exotic yield for a stablecoin, we should have lowered it soon after we remained the only ones offering it.
That wouldn't have created false expectations of a longer-term predictable APR of 20% for HBD in savings, even though it wasn't based on reality, which means that APR is flexible, and witnesses can change it at any time (but if they don't have good enough reasons, things may backfire).
At the same time, that wouldn't have put pressure on second-layer projects on Hive during the bear market, and I know many if not most of them will support the drop of the APR on HBD because they can't compete with it, particularly in the bear market.
Why else is the timing awful? Because to expect that that HBD withdrawn from savings to go to HP is, sorry to say... fiction, for the most part.
Anyone from outside the ecosystem who came for the APR of HBD will not switch to HP, they will withdraw and move to another stablecoin. Because that's what they are seeking. Plus the 13-week powerdown compared to the 3-day lockup on savings are incomparable.
There is a big risk of crashing the price of HIVE (even further) by taking this action now. If this action is taken in order to load up HIVE at lower prices, it is irresponsible, and I hope this is not the case.
Reasons Are Not Convincing
There are very serious reasons why the HBD interest should be lowered, even to zero, at some point, and even as an emergency, without any debate.
This is hardly the case, and the reasons provided for doing so are kind of light, especially given the timing. Think what would happen if they start lowering the APR for HBD in savings and in a few days the SEC says no to at least one of the ETFs... Where will HIVE stop then? What will happen to the confidence of the community? Those who aren't hardcore, I mean, but even those to some degree...
One more thing to be taken into consideration when setting an HBD interest rate. Hive is a worldwide network, not one for 1st tier countries only. We should consider inflation rates, and exchange fees wider than our own countries because I've seen some rates proposed that are really low (not by witnesses).
When to Lower HBD Interest Rate Then?
If that remains a priority without going into severe debt-based scenarios, I'd do that in the second part of the bull market. And lower it gradually.
My reasoning.
Right now, everyone who wants to buy HIVE and power it up will do it at some point, even with a 20% APR on HBD, based on the expectation of a higher return on HIVE during the bull market. You don't need to lower the APR for that. Lowering the APR will only scare away outside money which will crash the price of HIVE.
In the second part of the bull market, the reverse scenario will happen... People will start to take profits and move them to HBD in savings. At 20%, that might increase the inflation from HBD, so lowering the APR until the end of the bear market could make sense, in my opinion. Helps second-layer projects too during the bear market.
Posting Rewards
One paragraph about the "draft" on posting rewards percentage shift to HP holders. Let's keep in mind PoB should be more like "proof of wider distribution" for HIVE, which helps make the entire network more resilient. So I think it's a bad idea because it centralizes HP instead of distributing HIVE wider!