Hello fellow PWR holders,
I've been thinking about the matter for quite a long time and I believe now it's an appealing time for this kind of transition. Grab a coffee and get comfortable, there's a few things to digest.
The first and most important:
The PWR token is transitioning from a soft-pegged HIVE token to a growth token. This essentially means the project is not ''necessarily'' covering the peg with HIVE at a 1:1 ratio anymore.
On paper it may appear to be a simple change, but in practice I believe it has many more implications. Let's explore the changes and talk about the motivations for them.
But Why? One Main Reason: VSC
(If you don't care about the context, you can skip this part)
VSC Kills completely the small market fit for PWR.
The just launched Virtual Smart Chain (a.k.a VSC) works with a liquid version of staked HBD. It's only a matter of time for Hive Defi to get launched and get better Hive Derivatives.
In it's current state, PWR can't even try to compete. Not to mention the small niche it is. If the demand for HIVE is small, imagine the demand for something soft-pegged with that in a slow dying environment like Hive-Engine.
Nah, most PWR holders are there because
1# - simply trust me (thank you for that).
2# - are small gamblers/arbitrage hunters on Hive-Engine.
Don't want to extend more than necessary, there's a lot more to cover.
Changes in PWR Token Economics
With a PWR token depegged, now the price can fluctuate. This enforces a couple of things.
- Changes to Distribution Formula for Hive Power Delegators: Formula will now be sensible to PWR price Vs. HIVE (Similar to other projects on HE like BRO or LEO).
Formula for distribution currently assumes PWR is always at 1:1 with HIVE. This provides a lot of predictability for PWR inflation. It protects the price when down, but also prevents the price from going up that much. This is awesome for a project which pretends to be soft-pegged, but not for a growth intended token.
For that reason now the formula will be sensible to the PWR price. The APR will still be a fixed number, but the amount of PWR tokens sent will fluctuate.
Price goes up? Less tokens.
Prices goes down? More tokens.
Change it's NOT live yet but will be out of the oven in a few days. Give it a week or two max.
- PWR Staking & Liquidity Providers APR: For now these will remain as they are minimum until September. After that I'll probably consider reducing staking to a single digit number and eliminate completely PWR emissions from LP's.
My intention for Liquidity Providers is to receive HIVE only as a reward.
- BuyBacks & Protocol Owned Liquidity: Although I don't have a strong policy regarding this matter I like the idea of using excess of funds from the project to buyback PWR from the market and send them back the issuing account.
This way delegators are receiving their share of the pie without extra inflation.
I'm also playing with the idea of setting up a separate account as a market maker for the PWR-HIVE market.
Changes in PWR Assets Management
Being depegged also means the project isn't necessarily forced to hold HIVE to always honour a peg. I can use project funds to search for opportunities around else instead of being 100% HIVE (which you can do anyway on your own).
I like the Ethereum ecosystem, more concretely the RWA ("Real World Assets") sector. I like how people like Michael Saylor leveraged debt to get a massive Bitcoin position.
-> In fact I played with the idea in the past.
My long-term vision is to build a big portfolio of crypto assets and use a vehicle like PWR to share this wealth in a fair way.
For now I'll be taking this approach:
- Hold a 'blue chip' like BTC or ETH
- -> borrow debt in $$ with protocols like Aave or Lend.Hodl
- invest/trade other assets with the borrowed cash
'Profits' will be used from time to time to buyback PWR from the market.
PWR will be 'backed', but not 'redeemable'.
Holding PWR you get exposition to all of these with 0 work from your side.
The only requirement is (obviously) to trust me.
I'll keep sharing monthly reports as usual.
Long-Term Roadmap
In no particular order, only as a future point of reference.
- Migrate PWR and all the required Smart Contracts from Hive-Engine to VSC
- Permisionless PWR-HIVE Liquidity Pools (on VSC).
- As the project grows and once the project reaches a certain size, scale it up to a defined legal structure.
"I Want Out"
I fully understand that these changes may take more than one by surprise (I still believe they are necessary).
So I will understand if someone wants to withdraw from the project. No questions asked. No hard feelings.
For at least 2 weeks after the publication of this post, I offer to buyback any amount of PWR at 1:1 ratio.
Conclusion
Only constant is change, and PWR is no exception.
This post could be extended in many ways, but for the moment I prefer to keep the information contained and simply let the doubts arise.
Doubts? I'm all ears.
Tagging any PWR holder with 500 or more tokens (sorry for the small masstagging).
@x30
@yabapmatt
@oldmans
@spinvest
@dera123
@resiliencia
@mawit07
@trumpman
@ichheilee
@lbi-pwr
@toofasteddie
@tiffin
@bozz
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