The market essentially bottomed out right where I said it would yesterday ($39k). Gotta make sure to declare victory now so if it crashes further I can just ignore the incorrect prediction. In any case, there are more pertinent issues to attend to rather than fleeting price action.
Someone is finally stepping up to the plate and actually providing yield to HBD using AMM: @khaleelkazi via the Polycub ecosystem. I had a lot of nasty things to say about the launch but this network should equalize in a month or three and we can refactor from there. In the meantime I've stopped dumping my airdrop and am even considering reentering the LPs a bit considering everything coming down the pipe.
HBD Interest Rates Are Now 20% | We're Building a $5M Liquidity Pair for HBD-USDC
Obviously I'm not as bullish on raising the interest rate on locked stake (and thus decreasing liquidity via timelocks) but now the LEOfinance ecosystem is going to leverage that locked yield into an AMM farm on Polygon... and that's much more promising. It's kind of like getting the best of both worlds. We can lock HBD in the savings accounts and use that locked liquidity to create actual liquidity on another platform... and that platform (Polygon) happens to be EVM compatible which is the biggest ecosystem by far. Bridging value from Polygon to any other EVM chain is relatively painless. This creates a very nice doorway and subsequent bridge out to the rest of the cryptosphere. Interoperability is key.
Now the target is to get $5M worth of liquidity into an HBD/USDC pair on Polygon (more technically pHBD/pUSDC, but who's checking). I think that's a pretty bold statement considering Polycub itself has ness than $400k liquidity, but hey dream big amirite?
Could we make it to $5M?
Sure, easily... especially if Polycub price itself bottoms out and then skyrockets from a static supply like it's designed to do. Even if it doesn't, a double stable coin pairing with high yield is very attractive to liquidity providers looking to hedge their assets which still making massive yields. And HBD has one thing that other stable coin LPs don't: static yields.
Static yields
This means that no matter how many people lock HBD in the savings accounts, they will all earn 20% yield. This is a farm that isn't competitive. It could grow to millions upon millions of dollars, and the % yield that Polycub provides could drop to near-zero, but the 20% from the Hive side will always be 20% as long as the witnesses are signaling 20%. That's powerful, and as you can imagine it is also dangerous in the long term as I described in a previous post. This is a high-risk high-reward scenario, and I think in the mid term (say the next 12 months) we are going to get a huge boost from all these mechanics synergizing together. My next sell targets for Hive are definitely in the $3-$10 range.
Dat timeing doe
This switch to 20% yield on the savings accounts came at the perfect time for Polycub to capitalize. We were already planning to incorporate HBD into Polycub, so this just sweetens the deal by quite a bit. Polycub will be able to leverage the 20% yield on the savings accounts in addition to any yield the Polycub platform provides. It's possible this HBD/USDC pair has 30%-40% yield when everything is said and done. This makes me want to own more Polycub, but even more importantly it makes me want to own more Hive.
You want to own more Hive when HBD yield gets jacked up to the moon?
Yes, of course. Buying and staking HBD is the obvious play. It's the safe play. I don't do stable coins (unless they exist in an LP farm). I have plenty of money and no need for an asset that's going to decline in value every year by design. That being said, if there's massively more demand to buy and hold HBD statistically, then the obvious outcome to this situation is that HBD is going to break to the upside and be worth more than $1.05. That's when the HIVE >> HBD conversions kick in and we see the price of Hive go up significantly. The yield on HBD is nothing compared to the price of Hive going up from HBD demand increasing on a statistical level.
Why would you want more Polycub because of this development?
Well I mean the entire thing exists on Polycub for one, but more importantly governance votes are going to come into play and owning Polycub will allow one to vote on where yield is allocated. Whales with big stacks in the HBD/USDC LP will vote to increase yield to that LP. The governance additions to DEFI are huge and should not be ignored.
How can we cash out if the HBD is timelocked?
That's the big question eh? If the Polycub Vault has a huge stockpile of HBD that's timelocked for 3 days, how does one actually convert pHBD back into HBD? Clearly there will have to be a buffer account of unlocked HBD that isn't getting yield so that people can actually cash out to the main chain. If that buffer account gets drained, it will take at most 3 days to refill the buffer (probably less). In that case Polycub pHBD would become illiquid and people would have to wait to cash out. Honestly probably not that big a deal.
A queue to cash out would be fine and the timelock is relatively small (especially compared to 13 week powerdown). It would also be possible for the Polycub vault to try and buy HBD from other exchanges if it become illiquid like that, but that's a pretty centralized solution that would only be done by hand in case of 'emergency'. (Assuming we can call users needing to wait a few days an 'emergency'.) Not exactly a typical bank run. The vault won't be loaning that HBD out to anyone, so it will all be right where it's supposed to be.
HBD/USDC vs HBD/POLYCUB
If I was running the show I think I'd definitely make an HBD/POLYCUB LP rather than HBD/USDC. The reason is simple: HBD/POLYCUB adds a ton of value to the POLYCUB network and the price of POLYCUB would go up. However, there are tradeoffs in both directions.
The reason why we wouldn't opt for HBD/POLYCUB is that POLYCUB has very little liquidity to the outside, but USDC has BILLIONS. A HBD/USDC pair is highly valuable to Hive, while HBD/POLYCUB is highly valuable to Polycub. I think the idea here is that we provide a lot of value to Hive directly and fill a void that was in dire need of being supplied (no HBD liquidity). Users will be able to buy and sell massive amounts of HBD from this pool instantly instead of having to wait 3 days for conversion. Very powerful indeed.
And to be fair, by incorporating DPOS voting into a defi network like Polycub and allowing stakeholders to manipulate inflation/yield, that creates all the demand for polycub/xpolycub one could need (in theory). The HBD/USDC pair is very valuable to Hive, but it is also very valuable to Polycub as well, as our entire community stems from Hive itself. Everything is synergizing in all the best ways.
Arbitrage
A double stable coin pool also makes arbitrage much easier. With HBD/POLYCUB when the price of pCUB goes down HBD will also go down (and vice versa). This creates a situation where arbitrage is needed to stabilize the market way more often than a double stable-coin pool. Every time the peg breaks to the upside or downside, arbitragers would have to buy or dump the market accordingly. This would make the price of pHBD more volatile than it would be with a USDC pairing, which is exactly what we don't want a stable coin to be.
With HBD/USDC, if users dump pHBD to get USDC (that has BILLIONS of dollars in liquidity all over the place), this would lower the price of HBD. However, if one can buy pHBD on Polygon at a discount and simply convert it to hive after unwrapping it... that's actually a really good solution. The liquidity provided by the LP will create a massive buffer. Whereas bids and asks of $200 on the internal HIVE/HBD market will move the price of HBD, Polycub will provide exponentially more liquidity and allow users to transfer tens if not hundreds of thousands of dollars at a time. Huge huge upgrade.
With this upgrade means that the 3.5 day conversions become much more trivial and the price/liquidity/stability of HBD will will skyrocket by exponential margins. All good things.
Conclusion
I did not fully consider that locked HBD could be leveraged on EVM AMM farms into actual real-time liquidity. This is a huge development and a massive boon for all involved ecosystems (HIVE/LEO/CUB/pCUB). The big factors to consider is that we can have the best of both worlds, timelocked liquidity leveraged into real-time liquidity on another chain connected to the biggest crypto ecosystem in the world (EVM).
The other big thing to point out is that it doesn't matter how many people provide liquidity to this pool, as long as the witnesses signal 20%, the HBD/USDC LP on Polycub will always be at least 20%, which is obviously massive for a stable coin LP. This could actually get both Polycub and Hive itself a ton of attention that it deserves going forward. Exciting times. I think I'm done being bearish for at least another 3 months
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