Hive Demand! Where Does The Demand for Hive Comes From? Creating a Buy Pressure

in LeoFinance2 months ago (edited)

Recently I have been going through the Hive inflation in a 2 series of posts:

Some of the things that were discussed:

  • Top Cryptos Inflation, for comparison
  • Hive projected and actual inflation
  • Possible scenarios for lowering the HIVE inflation
  • Lowering down the DAO/DHF and authors/curation rewards

One of the main conclusions was that most of the other crypto projects have around 5% inflation, while HIVE is currently at 8%, and with the HBD conversions it will probably be more than that. To lower the inflation from 8% to 5% one of the possible ways is to remove/reduce the inflation for the DAO/DHF and cut the authors/curators rewards in half.

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Now, lets take a look at the other side of the story. Demand!

Price = Supply VS Demand


Inflation is just one part of the story.

Inflation is something that in most cases is in the hands of the project creators. It is the easy side of things. The hard part is how to create demand? If the demand side is strong, the difference in a few percentages of the inflation would means nothing. If the number of users/owners on Hive grow x10, x100, the inflation wont matter much. Although cutting down inflation sometimes can act as a catalyst for growth. Bitcoin is a prime example of this.

In a recent posts from @yabapmatt Some thoughts on the future and @theycallmedan Hive value props went through a similar topic.

How to create a demand for HIVE?

The most obvious way for running a crypto project, that a lot of others projects are doing is this:

  • Build a good product
  • Create a revenue
  • Introduce buybacks and burns

An example for this is Binance. They have a good product, traders used it, they are making revenue from the fees, and later use a share of this for buybacks and burns of the BNB token. Brave is also doing a similar thing. They have a great browser, people use it, they are making revenues from running ads, and use a share of it to buyback the token. In the process they also reward uses with the BAT token for watching ads.

How can Hive generate a revenue?

The most obvious answer that has already been put in use is ads. Steemit Inc did it on the previous chain. LeoFinance is doing it now for its community and products. They are introducing a multiple projects/webs as well.

But not to forget, Hive is a blockchain. The frontends like Hive Blog, Peakd etc. are just dApps built on it and they can be run by a central authority. They are not run in a decentralized manner.

Hive Blog and Peakd are now somewhere equal in the number of posts made from then and in the traffic as well. What this means is that each of these projects needs to implement a separate revenue pool and buy backs. In most cases, most likely they will introduce their own token and run their tokenomics. Making buybacks for Hive would be a voluntarily act from their side to try and help the whole ecosystem and increases the overall growth.

So, if we look at the ads program from this perspective it seems that it can bring value to the dApps built on Hive, than the core token itself. But this is not entirely true since a part of this value will transact to the core token. More users on the blockchain is good for everyone. If we ever hit a massive adoption, then recourse credits will become a valuable asset and dApps will need it for their users.

The main point from this is that each and individual dApp/frontend should be responsible for ads and buyback programs. They can have their own token and put the buybacks on that or make buybacks and burns on the native Hive token. Eventually a part of the value, directly or indirectly will flow back in the core chain/token.

This is for the frontends. Not all project owners will create a frontend. Hive now has communities. Its easier to create communities and run a project there, then a totally new web. I have already seen some options and ideas for marketing/promoting within a community. A native ads program as well. Communities are slowly but surely growing on Hive.
The numbers of communities subscribes keeps on growing.

As communities grows and more ways are introduced for marketing/promoting they can really boost the demand for Hive. Although for this to happen a larger audience is needed. The introductions of SMT’s is also a step in this direction.

Hive as an Incentivization Platform

Yabapmatt coined the phrase above. This is the idea of creating tasks for upvotes. It is already used in form of contents for creating content, or just ongoing rewards for certain type of posts. For example, Splinterlands content get votes from the game account, other games are also doing it. It’s a form of promotions. @theycallmedan often makes call to action, in most cases a twitter task etc. You need to have a large amount of HP to do this, but it’s a uses case. If/when the price goes up, these types of tasks can be even more popular. It’s a way to reward people without giving out a piece of your stake, but trough the inflation of that stake. Tipping forever 😊.

Some refinement on this might be needed to avoid abuse, sort, and categorize all the tasks. A website where tasks can be created and executed. Like a freelance platform. A hiver goes there and check it out the current task and see if there is something for his taste. The large stakeholders at the same time go there and create tasks. A large audience and a more valuable token will help for this concept to grow.

Hive as a medium of exchange

Aka money 😊. I think this is still undervalued, but it slowly gets on surface. We now have Hive Engine and some Hive is locked there. Its used as a base token to trade the other tokens with. We also have dApps/Games that use Hive as a currency. You buy things in the game with Hive. This is the case for Splinterlands, dCity and all the other games that have come up recently, CryptoBrewMaster, Exode, Rising Star Game, Piggericks etc.

Recently I was negotiating a dCity sale, where the value of the city was almost 10k. The buyer needed a liquid Hive to make the purchase. As more and more dApps/Games are built and more users come, this will be even more apparent.

There has been more development in the NTF space. NFTShowroom, tokenize art, the lensy.io for photos. These also are using hive as a medium of exchange.

But to have this demand for Hive first we need to have these applications and games. The value of HIVE from this comes secondary. Overall, the more application the better 😊.

Demand for the token for governance purpose

This seems far fetched for the regular user, but it can really push the demand for the token. Its usually the whales who are buying the token for this purpose as it gives them influence on the witnesses and now on the DAO/DHF. Having a dozen of whales competing for governance over the chain can create a serious demand for the token. Actually, this is the case for a lot of the DPoS chains, like EOS etc.

But again, to have a system where whales would be interested in competing for governance first you need to have a value in that system. Users, dApps etc.

Resource Credits

At the end just to emphasis the resource credits. Its what you need to make actions on the blockchain. It’s the ultimate value of the chain. Resource credits are gained from Hive Power. At some point its envisioned that they will be able to be delegated as well as a separate asset. Resource credits is what makes Hive scalable (or not 😊).

If the usage of the chain is high enough, and have in mind we are talking about a DPoS chain, not a PoW chain like BTC or ETH. If the usage is high enough resource credits are the ultimate value.

Can this happen? I’m not an expert on the RC system but in theory yes, of course. If millions of people are putting text at the same time (second) there will be issues. Also, Splinterlands is a game that is heavy on activity. Splinterlands players are making a lot of custom JSON transactions each day. If a day comes where Splinterlands has a million players, it will be interesting to see how that will affect the chain.


Summary

In summary the demand for HIVE can come from:

  • Ads from a community run frontends
  • Creating tasks for upvotes
  • A medium of exchange
  • Governance
  • Resource credits
  • Other

But when we think about it, in the last 5 years none of the points above were in full force. Some of them were but in a symbolic and limited way. It was basically the community that kept the project alive. The idea of the system and what it can become. The financial freedom that it can brings and all the things and project that can be built on it.

This is the core value of the chain. The layer zero as many calls it. All the bullet points above can build on top of it.

Some of the points above are already starting off. Its still small but the roots are there. Once a certain level is reached it will just snowball from there and compound. More and more projects built, and more and more users coming on board.

At the end value can come from things yet to be build. The other bullet in the list. Concepts yet to be discovered. For example, Hive/Steem started as blogging platform with a vision for communities and SMT’s.
All the games that we are seeing now were not envisioned at the begging. The use of custom JSON was meant for followers lists only. Now that feature is being used far beyond its original intention. Hive Engine is built on top of it, and all the games.

For example recently we have seen the creation of warped HIVE (wHIVE), on the ETH network, that can act as a collateral or loan, a gate into the DeFi world that has seen billions entering it. Nobody envisioned this a year ago, who knows what it can bring.

What are your thoughts on this?

All the best
@dalz

Posted Using LeoFinance

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You left us at Holybread out.
Our marketplace has let players sell items in game player-to-player using HIVE (Not a HE token) for many many months.

As our new code and Season's roll out we expect this to grow, and sense every needs Hive for our marketplace we feel this will help give Hive value.

Yes ... sorry about that!
There is so many, I have left out some others as well ... like the gambling apps as well.
Wish you guys grow even more in the future.

Its ok, we get left off all the lists.
even tho our marketplace settles with HIVE (not HE tokens)
I am use to it.

But it does make us question the "community"

Thanks for the comment.

Best wishes,

--simplegame

Hive (not HE token) for in game buying is neat!
A bit more promotion from your side maybe to make people more aware of the updates.
Totally rumbling here not to get me wrong. I know building a project is not easy.

It's a great mental exercise we have all went through being on here since 2016.

The answers are plain as day and have been presented over and over but it won't ever happen for a chain like HIVE Unfortunately.

There has to be ads to provide multiple revenue streams. Most of the frontends and the community in general is strangely anti advertisement. They won't accept the reality of the situation. It is kind of like Wikipedia not having ads but then having to beg for donations each year after putting all the competition with a sustainable model out of business.

Secondly the reason these chains have never been marketed properly is because stuff like the DOA ends up going to the witnesses and friends.

The chain isn't built in a way to actually grow and be promoted to be something big. It is just built to be a whale wrestling match / echo chamber where the whales take up large stake and try to passively earn and not get burned doing so. Most of them find out overtime that their money would have been better off in chains that hold their price against Bitcoin better.

I really want HIVE to be something but I don't feel like there will be much improvement with it.

Thanks for the comment!

Nobody is stopping anyone to built something with a reasonable businesses model.
Anyone can build app, web or mobile and implement its tokenomics with ads (built value around his token) or even more, and just use Hive as a secure text storage and its current userbase.

Its true the few whales can control witnesses and the dao, but that is also not for eternity. A big player can come up, buy stake and challenge the status quo. (just not in a way sun did it :).

Nobody is in full control around here that is for sure, although some have more influence then others. Will see how it goes.

Some sensational points raised and I will say I agree with all that is written here.

We are seeing the different categories that are being build upon the base layer start to form. At some point, as long as their is continued growth, we will see this hit critical mass and explode.

In the meantime, we keep forging ahead, pushing the entire ecosystem a bit further down the road. As people become aware of what is taking place, users will join.

There are a lot of options suddenly forming to entice people. The reward pools are expanding meaning people can be rewarded for their time and activities.

Posted Using LeoFinance

Thanks!
Hive is growing in multiple directions, blogging, gaming, NFT arts, DeFi?
Also a very important thing is that Hive users and developers are learning and evolving in the process. New tools are built as well. One successful projects is showing the way for others etc. It also get the attention to outside developers.

Posted Using LeoFinance

The Hive blockchain evolved surprisingly for some features but this is healthy as it is an organic growth. What we can do is learn from practice and transform the way users are using the infrastructure into real features.

Posted Using LeoFinance

Yep, Hive is going into directions that some dont expect it from it :)
Slowly but steady!

Posted Using LeoFinance

First and foremost, an excellent article to read for a still- a- newbie like me. I do not know much to comment but it provided me much needed information on how Hive growth can happen. Nice article.

Posted Using LeoFinance

Thanks!
Hive can scare newbies sometimes :) But dont worry to much, nobody doesn't need to know it all. Just do your thing.

Posted Using LeoFinance

For sure. I will definitely keep reading, commenting, upvoting and posting :D

Posted Using LeoFinance

yes, I have to agree. A very informative read. I find myself making notes when I read your posts. I've recently created a token on HIVE ENGINE and am still developing the mechanics. But it's definitely been a reason for me to use HIVE in exchange for a service.

Tweet:

Posted Using LeoFinance

Buybacks and burns only works when the product is good enough to use on its own. I tend to think blogging on hive doesn't really meet this criterion.

I think RC value growth is the only way forward over the long term. And for that we need ever more apps that people will use.

Posted Using LeoFinance

Agreed.
Good product is a no.1 on the list :)
RC seems like a hive gas to me. Just that is a DPoS chain, it needs much more activity, for the values of RC. More dapps, more users, more usage...

It's exactly like that

Posted Using LeoFinance

This was a really interesting post, will have to read the previous ones now as well!

:)

nft showroom is creating demand for hive.
i am all for real-world demand: art, serivices, real utility.

Yes it is. The more of these use cases the better.

Good one, thank you!

Thanks!

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Do not miss the last post from @hivebuzz:

Hive Power Up Day - Let's grow together!
Feedback from the Hive Meetup Vienna

I'm currently working on a project that aims to bring funds from outside sources into hive, once it's setup properly I will try to get the plan out there for everyone to see, but it's literally a win for everyone, everyone makes money, and we will be buying Hive daily from exchanges using fiat money earned from off-hive. I did some early calculations and we could be talking some very big numbers, but that depends on the adoption and how many community members use the platform.... This should help what you're trying to do and up the demand for hive!

Well that would be great to see!

We're hoping to have everything ready to go within 4 to 8 weeks