There is a lot of interest in the upcoming pHIVE liquidity pool that is about to be added to the Polycub platform. This will allow for access to HIVE using any Polygon based token.
Over the last month, the Hive Backed Dollar received a great deal of attention from members on Hive. With the increase in the rate of interest, to 20%, we realize how HBD is now at the forefront of the stablecoin market.
There are a couple challenges. To start, the production of HBD is rather slow. Even though there is a 20% return, we only have 9 million HBD as part of the free float. Since the number in savings in significantly less, the amount "printed" is actually less than 20%.
This also causes a problem with liquidity. Polycub has a liquidity pool and is seeing difficulty in filling it. This means that large players seeking to get their hands on $250K or $500K worth of HBD will have issues.
It is a dilemma that is garnering attention. Fortunately, we with the release of the pHIVE liquidity pool, we could see another weapon in the arsenal.
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pHIVE For HBD Liquidity
We could see the filling of the pHIVE liquidity pool being utilized to assist in the efforts to solve the two aforementioned issues with HBD. To see how this operates, we need to understand where HBD liquidity is at the moment. For this, we look to Hive's Internal Market and the HBD Stabilizer.
This tool is paid out of the Decentralized Hive Fund (DHF). It is receiving over 6,500 HBD every hour. This is immediately taken to the Internal Exchange and used for liquidity. Here we see HBD that could be swapped using HIVE and put into the free float. In other words, there is over 150K HBD available each day.
It is also where the pHIVE pool enters the picture.
To illustrate how this works we will use a payout from the pool of 1,000 POLYCUB. For simplicity, we will use round numbers to understanding. By following this, we can see how the pHIVE liquidity pool could help get more HBD on the market.
This can be another way that pHIVE can help out the Hive ecosystem.
The process would look something like this:
- pHIVE liquidity pool pays out 1,000 POLYCUB
- POLYCUB is converted to 4,000 pHIVE
- pHIVE is bridged to HIVE
- 4,000 HIVE is swapped on Internal Exchange resulting in 3,000 HBD
This HBD can either be placed into savings, helping to generate more than 20% HBD annually or bridged back to Polycub and put in the pHBD-USDC pool.
As we can see, the payouts from the pHIVE liquidity pool can be used to help the expansion and liquidity of HBD.
There is also a way to fund the pHIVE pool over time. If one puts the HBD in savings, it will earn 20%. This can be used to for the pHIVE LP.
- 600 HBD paid as interest
- HBD bridged to pHBD
- pHBD swapped to POLYCUB
- 50% POLYCUB swapped for pHIVE
- Both staked to the LP
The key point is more options opening up.
Internal Exchange As The Main Source Of HBD
Hive's Internal Exchange is crucial for the expansion of HBD. As noted, the HBD stabilizer is receiving more than 150K HBD each day for sale, through the payouts from the DHF. This is paid in HIVE which is converted into HBD. Since all the funds in the DAO are part of the free float, the HBD cannot go into savings.
One of the other challenges with HIVE is gaining access to it. A lot of the Western exchanges do not carry it. For that reason, getting HIVE to access HBD can be a challenge at times also. Here is where pHIVE can help to solve the issue.
Even absent outside investment, we can see how this could enhance our forward progress with HBD. Since people who are staking pHIVE are already in the ecosystem, they can use the above method to get into HBD.
One of the biggest benefits to this is it provides volume at every layer of the operation.
- pHIVE-POLYCUB trading will increase
- pHIVE bridge receives more usage
- Internal Exchange has greater volume
- pHBD bridge sees more transactions
With the exception of the Internal Exchange, this generates fees along the way. This helps the Protocol that is set up on Polycub, further increasing its holding and, ultimately, the ROI that is being paid out. This will, naturally, serve, to entice more money.
It is the proverbial one hand washing the other.
The best part of this is we can see how easy it is for people to show up on the Internal Exchange with HIVE. This can be a major hindrance.
Development Of HBD Use Cases
One of the keys for a stablecoin is the number of use cases. Ultimately, the goal is to get the coin used for commercial activity. Since we are dealing with renewed interest in this coin, the integration by applications is really just getting started.
However, we are now seeing more announcements regarding this. The most recent posts by @actifit mentions how they are incorporating HBD into a bridge they are building. This is very important since the two primary use cases for HBD at the moment are for generating more of it along with providing liquidity.
Both are baseline options we need to address. That said, it is vital that the community move beyond that.
We already know that Ragnarok is going to have HBD as the in-game token. All purchases are going to be done using that coin. Then we have the potential for HBD to be one of the main stablecoins on an online gaming platform.
Applications such as this offer HBD the chance to generate commercial activity. This will be one of the pillars that will provide HBD with its value.
In the short run, we can now see how the pHIVE pool could be used to aid in the expansion of HBD.
What are your thoughts? Are there other ways to use these liquidity pools to help either HIVE or HBD?
Let us know in the comment section below.
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