Things are really starting to fall into place.
Over the last week, we discussed a recently revealed project called Virtual Smart Contract (VSC). This is a sidechain that is being constructed that will anchor to Hive. It will bring smart contract capability to Hive while providing an large use case for the Hive Backed Dollar (HBD).
As we will see the potential impact upon HBD could be enormous. This became clear after having @vaultec on the latest episode of Cryptomaniacs.
Having a stablecoin programmed into the base layer is a powerful mechanism for Hive. Incorporating that into the smart contract platform could really alter the trajectory of that coin.
When constructing a currency of this nature, we need to consider many different approaches. Commerce is just one facet of the equation. There are many financial considerations such as lending, collateralization, transformation, and investing. Medium of exchange is just one variable.
That said, we can see this really start to take shape. A lot of what we discussed the past couple years regarding HBD is not being built.
In this article, we will cover the potential impact that VSC could have.
Transaction Fees
This is an ugly phrase on Hive. One of the advantages of this blockchain is the absence of direct transaction fees. Instead, we utilize the resource credit system which turns an expense into an investment.
With VSC, we will see the traditional model followed, at least to start. This will incorporate fees to interact with the smart contracts, as well as setting them up. The coin that will be used for payment: HBD.
Each time anyone engages with the platform, a small amount of HBD will be charged. This might be .005 HBD but it will be there. That means that people will need a small amount liquid. Of course, since transactions are always taking place on Hive, some Hive Power (RC) is also required.
It quickly becomes evident how both HBD and $HIVE can be positively impacted.
Part of the road map entails converting the payment system to something mirroring Hive's resource credit design. Under this scenario, HBD would be staked, effectively providing the user with "credits" which allows them to engage. For example, one might put up 10 HBD and that gives enough transaction power for the day. Another individual who is, say, a heavy gamer, might require 25 locked up.
Infrequent users would have the option of skipping this and simply paying a transaction fee each time interaction with a contract occurs.
Hive Savings
Hive savings is one of the most useful tools for developers. This is something that was overlooked yet VSC is the first major project to mention incorporating it.
By having people stake HBD, the potential exists to place that into savings and earn the interest. Since there is a payout of 20%, this can be used to incentivize node operators. Instead of paying them based upon transaction fees, the payouts could come from the interest earned in savings. Here we see the inflation of HBD being used to foster infrastructure expansion.
This is what Hive does with the Witnesses as well as Bitcoin with the miners.
We discussed how the value of a currency of this nature is tied to the economic productivity it generates. It is what makes the US dollar so powerful.
In addition to security, infrastructure is valuable economic productivity because it actually reproduces. The node system of VSC is what houses the smart contracts that are build for applications and games which generate even more economic output.
Here again, we see the value of Hive savings entering.
Those projects that build on VSC can utilize the savings in a similar manner. A portion of the revenues generated can be placed in savings, offering a steady stream of income. This could then be utilized for development, prizes, or other activities related to the project.
Native Coin
Since VSC is going to anchor to Hive, we could say the native stablecoin is HBD. This is not only applicable at the infrastructure level.
Whatever is built on VSC can incorporate HBD into it. Hence, it could be the native coin for all projects constructed.
Let us use some type of gambling application as an example. A game exists where players bet against each other based upon some criteria. Perhaps it is a battle or some type of card game. Either way, two individuals are pitted against each other, each wagering an amount.
What is this currency? HBD.
We could also see this with non-fungible tokens (NFTs). This is one of the focus areas for VSC. There will be a charge to create the NFTs, again requiring HBD. However, we can even step beyond this.
If the system provides support for NFTs, it would stand to reason someone would want to create a place where people can swap the NFTs. After all, what is the point of a digital asset if there is no place to trade it?
This could be built on VSC. A shop(s) similar to Open Sea would serve this purpose. Now there is a marketplace for NFTs that are tied to VSC.
Again, what is the currency that could be used for purchase? HBD.
Carry this out over dozens (perhaps even hundreds) of projects. We know how smart contract platforms are very popular. The EVMs had a great deal of success, in spite of some challenges that each carries. With VSC tied to Hive, we have a system with a native stablecoin along with decentralized node systems at both the base layer and sidechain level.
This is the potential impact of VSC on HBD. The advantage with this is we are talking about basic stuff. None of this is even taking into account higher end finance stuff like derivatives.
It could be, however, a major sink for HBD.
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