I have read the opinions of some of the more prominent and technical writers on this space over the recent decision by witnesses to increase the interest rate on HBD savings to 20%. There is some aura of skepticism, but generally there is an affirmation that the move is largely correct at this given time. My opinions don't vary much from what has been said so this will be short.
Of course if you are an active participant on the Hive chain and you see that the interest rate is suddenly 20%, there is an incentive to save more in HBD and enjoy that attractive interest. Mind you, 20% is a lot and you definitely won't get that saving in the traditional banking system.
There will be concerns about sustainability if you're a skeptic like me, but I recommend you read the articles of edicted, taskmaster and some other technically gifted analysts here. One thing I can pick out from this move is that it is very likely a short-medium term one made to achieve some specific objectives.
So what are those objectives one may ask? In lay man's terms developers are looking at ways to grow our userbase in the shortest possible time and this is one of such moves geared in that direction. As stated before, you can't call a great product so if nobody is using it and we have seen similar moves by projects such as leofinance to get noticed.
Internal Action Good, External Action Better
We obviously expect those of us already here to take advantage of this decision by increasing our HBD in savings. It would be unsurprising to see more of us converting Hive to HBD and locking in savings. Some of us (like me) may even decide to convert fiat into HBD, as there is no reason to keep money in traditional banks that do not pay substantial interest.
What is of concern to us as a community though is an ability for this move to attract external attention. HBD may not be the most stable of stable coins but a 20% interest rate is attractive nonetheless, and is sure to grab a few investors attention. If we can get substantial demand for HBD coming from new investors, then it will be a win-win for the Hive chain as yet another mechanism for onboarding people into the Hive universe.
What's more, getting massive liquidity locked in HBD savings cannot be a net negative. It will positively affect HBD prices and eventually trickle down to other areas of the chain. The threat of massive dumping is also minimized as we are not subject to price action unlike volatile tokens on the Hive chain which go up and down.
Conclusion
We'll see how this goes in reality, but the move does feel like the right one at the appropriate time when growth is needed.
