numbers for crunching
I've stated with much certainty that a Hive/HBD AMM yield farm directly on-chain is a no-brainer. It's only a matter of time.
What I haven't done is run through the numbers. Last time I claimed we could generate demand for 100M HBD matched to an equal amount of Hive. Is that true? Or am I just making stuff up? Not even I know anymore.
But how much inflation do we want to allocate for such a yield farm? This would be a topic of much debate. I've always said voting on a sliding scale over time is the way to go. Too bad that tech doesn't exist yet, eh?
In any case, let's look at 1% inflation.
On one side of the spectrum we have 1% inflation. That's like 4M Hive printed a year at these levels and distributed as yield in a competition of liquidity.
It's safe to say that competition to farm this pool would be very high. Why is that? Because 20% APR on curation is the competitor, meaning it's almost guaranteed to crash to at least 30% yield no matter how much inflation is allocated to the reward.
Printing 4M Hive in a year and expecting 20% yield after competition sets in, we would find ourselves with x5 more liquidity than the reward. Meaning 20M Hive coins would get pulled into the Hive/HBD LP with 1% allocation of inflation. That's an automatic exponential gain (compared to risk) because the yield of 1% a yield is tiny compared to these other yield farms out there. As of now Hive has something like 8% inflation... haven't check in a while might even be lower or slightly higher. This deflationary vision is a false one.
What about 10% total Hive inflation?
At 10% the yield farm would be getting more inflation than proof-of-brain, which would be a political battle for sure. Highly doubt we could win that war. However, if we did allocate 10% inflation to a Hive/HBD pool it would suck in like 200M Hive into a black hole of liquidity... forever.
More likely Hive would spike fiercely before actually 'burning' half the supply. I feel like it's an automatic x10 but that's just like, my opinion, man.
Also the amount of liquidity we'd have between Hive and HBD would be absolutely legendary. The stabilization that would take place of HBD would be massive. It would be very hard to push it far past the pegs without triggering the haircut limit. For me, this is the obvious answer and only a matter of time before Hive complies to receive exponential liquidity gains, much of that liquidity getting sucked off the exchanges and pumping up the price immediately.
If it were up to me, I'd allocate the 10% and create more inflation than witnesses, bloggers, and curators make combined. It wouldn't matter, the token price would moon as we print smart inflation that brings more value than it leeches. This is not a hard equation. Smart inflation equals growth and prosperity. Why do you think the FED is furiously printing? They aren't some incompetent boobs bumbling along as they go. They know what they are doing. Just because the system is broken doesn't mean everything everyone does at the top is a bad idea.
In any case, even allocating 1% (4M Hive/year) to an AMM yield farm of the Hive/HBD pairing would likely generate exponentially more value than the cost. It could x2 the price immediately simply allocating 1%... that's nothing. Look at this other Defi networks. They are nuts.
In my view, this topic is a critical top priority. A mega-bubble is coming, and DEFI yield farms are liquidity magnets. The longer it takes Hive to make this upgrade the less we will be seen as relevant. Sometimes liquidity is the killer dapp. You need it for any kind of stability, and AMM is superior. We have the tools to easily accomplish this adaptation. It's just a matter of when it becomes a priority.
It will be a very high priority when DEFI networks gobble up all the liquidity of the next mega-bubble. You'll see. Exponential liquidity is exponential. The DEFI bubble hasn't even begun yet. These systems are designed on logarithmic/exponential curves to create infinite liquidity. The mega-bubble will prove this a thousand times over. The ICO craze was a joke compared to what's coming. Mark my words.
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