Not really a summary
Hello everyone. For those not aware of who I am: my name is Deathwing, and I am a consensus (top 20) witness on Hive. As consensus witnesses, our goal is to maintain the stability of the Hive blockchain as a whole. This includes the "tokenomics" of Hive and HBD.
Since early last year, we have significantly increased the APR on HBD savings. This was mainly done to stay competitive with some of the blockchains out there offering high yields on stable cryptocurrencies. However, the market situations then and now are totally different (on top of that, those platforms have also succumbed one way or another)
HBD during this time has risen to prominence. Previously seen as a relatively safe way to keep some of your funds, HBD was already the main crypto to hold for many - even more important than HIVE for some. Low-risk, 20% APR returns on a stable currency resulted in quite a lot of additional HBD being deposited into savings.
In case you did not know, the total HBD in savings as of this post is 7523227.548 HBD. That is 7.52 million HBD (7.52 million dollars US). At 20% yearly returns, even if we assume that no one else is depositing and no one is compounding their returns, it results in $1.5m HBD printed every year.
Now, is this unsustainable? Not really. We can certainly sustain it as we have in the past. But do we want it? I don't.
Our main currency, coin, token, whatever you want to call it is HIVE. We want people to utilize HIVE, stake them for Hive Power and take part in the governance of the blockchain. I personally do not want our blockchain to be known as "write a post or two, get an upvote, share a photo, get an upvote and you get paid $100, Bob's your uncle". Rather it should be known as a platform that is technically marvelous, where you can freely develop any sort of app that you'd like on top of Hive - be it a massive game, a sidechain, or even a travel map. The freedom is here.
What is my proposed solution to increase Hive and Hive Power importance?
Reduce HBD APR
Why would anyone invest in Hive when you can simply get HBD, lock it up, and get an easy 20% every year? To increase the importance of HIVE, I would like to propose to our community that we reduce HBD APR to a maximum of 12% (as I am signalling right now). The reasoning behind 12% is that even if you actively participate in curating content on Layer 1 on top of receiving passive inflation, the approximate yearly APR you're receiving on your Hive Power is about 10 to 11%. I am hoping that these numbers reinforce the aforementioned notion.
Also remember, HBD is backed by Hive - not the other way around.
Reduce Posting Rewards
Another proposed reduction is to posting rewards. A random number I came up with (that would significantly make Hive more appealing) is decreasing posting rewards by 10% and moving that 10% to Hive Power inflation. In other words, while posts would earn 10% less, the Hive Power people have staked (powered up) or earned over time would have an increased inflation rate. In short, Hive Power would have a higher APR. That should incentivize users to buy, power up, actively participate in governance and participate in curation to earn more Hive Power with compounding returns.