Hive Inflation for July 2024 | Running Hot for a Second Months in a Row!

dalz in Hive Statistics • 3 months ago

How did Hive did in July 2024 from an inflation standpoint? Let’s take a look!

The projected inflation for Hive for 2024 is 6.0% on a yearly basis, or around 0.5% on a monthly basis.

Hive has a double currency system, HIVE and HBD, with conversions between them that add or remove HIVE from circulation on top of the regular inflation. Furthermore, the decentralized hive fund DHF, that serves as a DAO converts the HIVE that is in the DHF into HBD.
The @hbdstabilizer has also grown and it is playing an important role in the overall tokenomics, making conversions and trading on the internal market.
Because of this additional mechanics the HIVE inflation and supply can be drastically different in real time than the regular/projected one.

To be able to follow the HIVE supply we need to take a look at all the different ways HIVE is created, author, curation, witness rewards, conversions etc, then net that out with the HIVE burned from conversions, accounts fees, null transfers etc. To get the virtual supply we need to do the same for the HBD supply as well.

HIVE Created

Here is the chart.

The chart above includes:

Author rewards
Curation rewards
Witness rewards
Staking rewards

These are the regular ways new Hive enters circulation, and all of them are through vested HIVE, aka powered up.
We can notice the increase in the daily HIVE issued because it is dependent with the virtual hive supply, or the base for inflation. When the price of HIVE is low, the virtual hive supply increases, and when it is up, the virtual hive supply decreases.

The thing is the conversions are playing a major role in the ecosystem. Here is the chart again, including conversions.

We can notice that the HBD to HIVE conversions are the dominant in the chart. This works in both ways and a big part of them is converted back to HIVE, especially through the work of the stabilizer.

The regular inflation is around 75k HIVE per day.

We can notice the spikes in the recent months because of the drop in the price of HIVE and some users taken advantage of this and converting HIVE to HBD.

HIVE Removed from Circulation

Here is the chart.

The above takes into consideration six different ways of HIVE removed:

Ninja Mined HIVE To HBD Conversions In DHF
HIVE transfers to DHF and converted to HBD
Transfers to null
Null as post beneficiary
New accounts creation fee
HIVE to HBD conversions

The HIVE transfers to the DHF are now dominant. These are transfers made by the stabilizer. We can see a few spikes in the HIVE to HBD conversions (blue), with one occurring just recently. These were due to the increase in the HBD price. We can also notice the drop in recent months, same as the opposite conversions due to the low volumes that the stabilizer is doing.

Historical HIVE Supply

When all the above is added and removed, we get this chart for the all-time HIVE supply.

Up until August 2021, the supply was almost steadily increasing with a small fluctuation. Then a drop in the supply in September 2021. Since then, from time to time we can see some drops in the supply with the recent happening in February and April 2023. July 2024 ended with 441M HIVE in circulation.

HBD Supply

Here is the chart for the HBD supply.

The light color is HBD in the DHF. The HBD in the DHF is not freely circulating HBD and only enters circulation when payouts to the DHF workers are made.

HBD is being created and removed in various ways, but the conversions play the major role here in both directions. Other ways HBD is created are DHF proposal payouts, author rewards and interest.

We can see that after a downtrend in 2022, in the last period the HBD supply is very stable around the 12M, with an increase in the last months.
In the last month the HBD supply has decreased from 11.8M to 11.3M HBD.

Virtual HIVE Supply

When we add the HIVE equivalent supply from the HBD to the HIVE supply we get the chart below.

The light color is HIVE that in theory can be converted from HBD at the current market prices for HIVE.
We can see that the virtual supply fluctuates a lot, mostly because it is tied to the price of HIVE. As the price of HIVE drops, the virtual supply increases and the opposite.

We can notice the sharp increase in the virtual supply in the last period due to the drop in the HIVE price.

When we zoom in 2023 - 2024 we get this:

Here again we can see the increase in the virtual supply towards the end of the chart. The regular HIVE supply has slowly increased in the period.

Projected VS Realized HIVE Inflation in 2020 - 2024

This chart tells the story of the new HIVE entering circulation in 2020 – 2024.
We can notice the sharp drop back in September 2021, when there was a lot of HIVE burned for HBD due to the HBD high prices. Since then, the realized has mostly followed the projected inflation with some small bump on the road. In the beginning of 2023 there was again a reduction in the HIVE supply due to burns for HBD. A sharp growth towards the end of the chart due to the drop in the HIVE price.

Since the creation of HIVE four years ago the realized inflation is at 90M, or on average 23M per year, while the projected inflation is at 100M. A difference in 10M less HIVE created in the four-year period. This is mostly thanks to 2021 when the year ended with negative inflation.

Monthly Inflation

If we plot the monthly inflation in 2023-2024, we get this.

This is a chart for the recent period of 2023-2024. We can notice that the only negative month is February 2023 with negative -1.26%.
June and July 2024 are quite high in inflation with above 1% monthly inflation, July at 1.33%!

In terms of absolute numbers, the HIVE supply in July 2024 has increased from 435.5M to 441.3M, adding 5.8M HIVE in circulation, while the projected one is around 2M.

Yearly Inflation [%]

The yearly, projected and realized inflation looks like this.

With July having high inflation the overall yearly trend for 2024 for Hive is to end above the projected one of 6%, or somewhere close to 9%. After seven months in the year we are now close to 9% on a yearly basis. Will see how the rest of the year plays out, but the last two months have moved the needle up!

Net HIVE Created by Category in July 2024

Here is the new HIVE put in circulation by category for the month.

Conversions are positive with 3.5M HIVE created in this way. This is the main reason why there is now more HIVE in circulation. Conversions are the main variable that is changing the Hive inflation and when they are positive the inflation is above, or when they are negative the inflation is below the projected one.
The curation rewards are in the second spot with 1M HIVE. Next are the authors rewards with an 500k HIVE added.
Some HIVE was burned for @null as beneficiary and account creation fees.

Note that authors rewards are paid 50% HIVE, 50% HBD, and the HIVE share only is at 500k, while approximately the same amount was paid in HBD equivalent.

All the best
@dalz

#hive #inflation #data #jul24 #stats

3 months ago in Hive Statistics by dalz

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starkerz 3 months ago (edited)

@dalz, this looks like an emergency.

I’m guessing most of this is due to HBD APR being constantly converted into hive each month and then sent to Binance for selling to fund people’s living costs passively.

Is there any evidence that this is the case? I’m assuming here that the hbd being converted back into hive is being sent to Binance and sold.

If this is the case, this is hbd holders diluting hive power holders and it should be considered an attack on the eco system (albeit most likely unintentional, but this 2.5 year bear market in the hive price is also unintentional. Hive price ain’t going up, how are we giving out free money to passive holders in such circumstances?)

Is this where we are at?

Are we damaging the hive price so that HBD holders can cash out at an ever greater proportional cost to the chain each month?

If this is the case, then the days of high APR, imo are now demonstrably completely unsustainable and need to come to an end fast before this gets worse.

We will have to take short term pain as the HBD holders convert back to hive and cash out to find such wonderful free yield elsewhere, but at least the chain will have a chance to survive in that case.

Imo we are playing with fire here. Maybe I’m wrong, but personally, I’d rather act with caution and deleverage risk from the eco system during these insanely difficult times for hive power holders

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4 votes

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dalz 3 months ago

We had a lengthy conversions about this on discord, touching on multiple points and issues, and just for transparency and if someone whants to read or add something I will list a few thing here:

hbd is debt, do we have enought growth to support the debt?
interest adds debt, around 1.6M yearly
DHF adds debt, 3M yearly
virtual HIVE supply as inflation basis, that includes HBD in the DHF adds more inflation when the prices drop
regular HIVE supply as inflation base will reduce inflation

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1 vote

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starkerz 3 months ago

For clarification:

We will look to prioritize removing the virtual (DHF) supply from the inflation basis of hive which should not be in place unless we see two higher lows on the rails and the 20MA above the 50 MA (hive price going up, not down)

Discuss reducing the size of the DHF to protect hive from an inflationary spiral

We will also look to lower HBD APR drastically

We will look into reducing / eliminating non essential spending from the DHF.

Let’s see how this goes

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1 vote

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ertytux 3 months ago

I agree with your observation, if the HIVE flow converted from HBD that then goes to Exchange accounts is recorded, your hypothesis can be confirmed without much effort. We need to educate our HIVE/HBD users to better ways to use their money without leaving the ecosystem. I also agree that the APY of HBD is insane, in any case it should be lower and that of the HP higher to balance.

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1 vote

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vimukthi 3 months ago

What do you think about using DHF to buy and burn HIVE off the market as a temporary measure. It is very easy to move up the price of HIVE based on the current liquidity levels. If there was a script that buy and burn HIVE from market at random intervals, could this be a positive (at least for the short term). I'm merely exploring possibilities. I have not fully analyzed the potential side effects.

HIVE price going up will mean more HBD getting added to DHF. I have not done any calculations. There must be some levels where burning HIVE + any pumps caused by it leading to DHF gaining more HBD than it spend.

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starkerz 3 months ago

Possible!! Worth considering

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1 vote

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vimukthi 3 months ago

Thank you for your feedback!

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bitcoinflood 3 months ago

Lots and lots of inflation happening at these lower prices. As always thanks for the report!

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2 votes

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hivetrending 3 months ago

Is most of the HBD->HIVE conversion volume from HBD stabilizer?

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1 vote

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dalz 3 months ago

Its diferent each month, in the last month there was a lot of conversions from regular users, dont know the exact numbers but roughly its more user based for the last month... in other months the stabilizer can dominate

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1 vote

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hivetrending 3 months ago

Interesting. I wonder why users prefer conversion instead of transacting on the internal market.

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dalz 3 months ago

Usualy conversiobs are used for bigger volumes... for example blocktrades did one for 300k HBD

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1 vote

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hivetrending 3 months ago

so that one conversion accounts for approximately 1.5M Hive, or around 25% of the monthly inflation.

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mypathtofire 3 months ago

People selling HBD interest I guess. Thanks for the report Dalz.

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1 vote

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dudeontheweb 3 months ago

Obviously, our ecosystem is currently out of whack. The witnesses need to get together and discuss the APR on HBD.

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1 vote

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sircork 3 months ago (edited)

Speaking as a partner in the @PolleNation witness, I can tell you that when we discussed how to initially decide our interest rate setting, we both agreed that 20% was perhaps too high. We ended up landing on 15%, because we wanted to set an example of being a bit lower.

But we also know that if we set it too low, it would be too far out of line with the other witnesses and wouldn't actually affect much mathematically but could signal the wrong intentions about our faith in Hive to the stake driven investor constituents of the community.

It would take a very difficult to achieve consensus to get it lower across all the witnesses, but we have tried to set a bit of a precedent with our opting to be one of the lower ones.

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2 votes

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nonameslefttouse 3 months ago (edited)

Fun fact: When there was talk about raising the rate to 20%, it was said to be more of a temporary promotional offer to get people excited about HBD. When there was talk about lowering the rate including people signaling a lower rate, some started threatening to dump HBD, while others encouraged "The Hive Community" to shift witness votes around, favoring those signaling 20%, and insisting those signaling any less do not know what they're doing.

Then, later, for a few days it dropped to 19%, and again the people panicked. Reacting much in the same way. Profits now, f later.

If you need proof, it's all recorded on a blockchain somewhere. The process was automated and several contributed. There were even people saying HP holders are just jealous of the returns, so that's why they want to lower the rate. All kinds of petty, superficial nonsense.

So based on lessons from history, if you want to buy approval, set it at 20%, especially if you're not too concerned about the future. Some people will love you for that. The system is designed to be flexible, especially in the case of emergencies. If you want to be flexible, chances are you might be bending over backwards for approval and might even lose votes if you make a move.

I was just reading some other comments here from starkerz. Sounds like fun. I recall a time I was talking to elmerlin, long time ago. Him and I both saw this coming.

Good times! Have fun Hive!

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12 votes

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sircork 3 months ago

I don't need proof, hehe, first of all, I would take your esteemed word for it, and second of all, I know these roads, Neo, I know where they go. Every.Single.Time.

Which is why when I suggested 15% to Witty as my partner in @PolleNation, he agreed 20 is probably too high and also that if we went any lower, it might just end up being committing witnecide before we even got off the ground.

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nonameslefttouse 3 months ago

One thing I've noticed traveling down those roads: It's really difficult to get a ride when you're holding the sign that reads, "You're going nowhere, fast."

They'll just drive right past. Straight over that cliff...

In life. In general. That's just how it is, I guess.

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1 vote

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sircork 3 months ago

You've seen a little of my history around here, right? From my first journey and my, how do you say it, um, <sarcasm>boundless optimism</sarcasm> about so many people and things back then? You are preaching to the choir boy, for sure.

I have a better outlook this time. Maybe it's because in hindsight so many people finally seem to have caught on to all the things I was right about, ahead of my time. So this time, I find, I have enjoyed a little more acceptance. I also got older and a little bit nicer.

A little bit...

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nonameslefttouse 3 months ago

I've grown to be quite patient. Don't hold grudges. Don't really expect anyone to give a shit about what I have to say. Now if I could just learn how to fit in and follow the herd.

I joke.

But yeah. Friendly heads-up: Get some popcorn.

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sircork 3 months ago

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lovewindpsiders 3 months ago

I read a post on Leo finance not to long about the quarterly report of bitcoin prices, and I noticed it is usually during the Q3 that the market slows down with lots of bearish movements. I am wont to think that this could be a pattern that reflects or gives insight into the inflation other crypto projects in this case hive is experiencing now.
From the report, maybe by the Q4 things will start looking better.

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1 vote

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tough 3 months ago

Seems like the price and the drop in the price is causing the inflation actually

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starkerz 3 months ago

Can result in a death spiral. We need to take some actions here.

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4 votes

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outwars 3 months ago

Thanks for the report. 2024 is looking dicey with the high inflation, and we're not yet done with the year. It seems there might be a snowball effect happening. With the low Hive price, more are converting their HBD to Hive. But as more Hive are in circulation with lower demand, that can push the price lower.