In a crypto enviroment where everything now is about "Buy & Burn", a coin like Hive which has 'infinite' inflation is becoming a much harder sell. Here are some thoughts how to increase the actual demand to support the price longer-term...
Unpopular Opinion: Content on Hive is Worthless!
I know that many don't see it this way or like to hear it, but essentially nearly all content here on Hive is totally worthless from an absolute monetary point of view. If Tomorrow, somehow advertisements on blogposts were introduced with real earnings that are distributed, everything pretty much would fall to near zero.
So where does all the value come from ? Basically people who are willing to buy Hive either a little bit to have the needed resource credits to do all the transactions they need here or bigger buys to have more influence on the network (increase their upvote value) or are building something that needs Hive and the resource credits to run their application on the blockchain.
In the past, I would argue that there were people willing to buy Hive as a speculative investment. However, years of systematic inflation and selling pressure has pretty much all of those people out. Also the crypto narrative now is "Buyback & Burn" so infinite inflation and selling pressure is simply not attractive. It feels like only those who have been here for many years (like myself) have recently used the opportunity to increase the stake they built over the last decade at a really low cost relative to the effort put in.
Too Much Free Lunch on Hive!
I would say that one of the problems here on Hive is that it's way too easy to bring somewhat decent content here on Hive without any kind of investment while acting as a value extractor seeing the content creation as work that brings in a paycheck to systematically cash out that out fully.
^^^This I would say is one of the accounts as an example of content where there is nothing wrong with but overall a big net negative on the Hive Ecosystem just cashing everything out while curation groups continue to give big daily upvotes purely on the 'good content'.
I could make a list of probably hundreds of accounts that in a similar way systematically drain value out of Hive and are able to keep doing it as curation groups continue to provide the big upvotes completely neglecting the overall behavior of these accounts. To check for yourself, just go to the @curangel account, click one of the daily posts and one of the articles that got curated also checking the KE Ratio. It's insane how often you stumble on people who should have their earning potential here cut to zero based on their value extraction behavior. Just the first one I clicked now doing the test again.
The Curation Struggle!
As someone who thinks that content itself generally is overrated here on Hive (esepcially if it's not from a user who is also actually good to the tokenomics), I actually rather upvote users with more mediocre posts of users that actually invest in Hive and where I know that the upvote doesn't land as selling pressure. It makes curation also a struggle because each upvote I would give especially manually needs to proceed with an investigation if the user is actually a net positive for Hive or a net negative. The frustrating thing also is that more than often when wanting to give content an is upvote that most of the time if feels like it will result in just more sell pressure. So most of the time I just stick to Auto-upvotes which also isn't optimal for the platform.
Needed Tokenomisc Update!
Imo, Hive is due for a Tokenomics update giving way more incentive for users to actually buy and stake some Hive. At the same time, I don't make any illusions that anything will happen as the development of the chain mainly seems to happen on invisible things as the only real (positive) change I recall is that upvotes values are now linear instead variable based on the voting %. (In other words, a upvote at 100% is worth as much as an upvote at 10%)
Basically, Hive needs a system where it becomes way harder for 'value extracting accounts' to succeed while making it easier for curators to curate while not making it impossible to come here with nothing and build your account over time.
The Fix What I would propose is to change the default post payout structure to (Step 1) for accounts who don't really hold any Hive Power and who's upvote is more or less worthless (~500HP or lower). Since curatos by default have invested in the ecosystem and help to keep the price up that way, their payout should never be affected and they should just be able to upvote what is the best content so that gets on top.
| Beneficiary (Author Under 500HP) | Post Payout % |
|---|---|
| Autor Post Payout | 10% |
| Hive Burned | 40% |
| Curator Payout | 50% |
Authors are able to get their Post Payout Percentage up by holding more Hive Power (which isn't delegated out but represents their own upvote). I have no clue what the numbers are fair and what they should look like exactly but it's more the idea that I'm trying to communicate. I would say in order to get the Autor Post Payout Up to 25%, only a very small amount of HP is needed as a way to make it so that it's a no brainer for anyone creating content to get there. 500HP (~25$ now) I would say (which I guess is the amount needed on hive.blog to get the upvote slider) bumps up the Author payouts from 10% to 25%. This is easy to get by everyone just by leasing some HP on the rental market.
| Beneficiary (Author 500HP) | Post Payout % |
|---|---|
| Autor Post Payout | 25% |
| Hive Burned | 25% |
| Curator Payout | 50% |
In order to increase author payouts to 50% and the burn to 0%, either a specific number of Hive can be required which is realistic for everyone (using the rental market) or it can go exponential at the end which gives everyone incentive to keep powering up to reach close to the full amount.
| Beneficiary (Author 10000HP) | Post Payout % |
|---|---|
| Autor Post Payout | 50% |
| Hive Burned | 0% |
| Curator Payout | 50% |
KE Ratio Factor The way I see it, users who have been on the chain longer and managed to earn during their time have more responsibility compared to new users. I do think KE Ratio is kind of a broken metric as curation rewards should not really count toward it. I would make that easier in just calculating (Earned Author rewards/ total Hive Power) where it's no problem that the Hive Power is delegated out.
I'm all for making it possible for people to actually earn something here on Hive but not for just maximum value extraction. So a earnings vs HP ratio of 2 seems to be healthy realistic where users are able to cash out half of what they earned without any negative effect. Someone with a rati
| Author Eanings/HP Ratio | Author Reward Penalty |
|---|---|
| 2 | (2-2 = 0) 100% Author Payout |
| 3 | (3-2 = 1) 90% Author Payout |
| 4 | (4-2 = 2) 80% Author Payout |
| 5 | (5-2 = 3) 70% Author Payout |
| 6 | (6-2 = 4) 60% Author Payout |
| 7 | (7-2 = 5) 50% Author Payout |
| 8 | (8-2 = 6) 40% Author Payout |
| 9 | (9-2 = 7) 30% Author Payout |
| 10 | (10-2 = 8) 20% Author Payout |
| 11 | (11-2 = 9) 10% Author Payout |
| 12 | (12-2 = 9) 0% Author Payout |
Basically, the more users extract value, the more their author payouts get burned instead of paid out. Again, Hive only wil work if everyone works along and shows some responsibility instead of only acting as a value extractor. All in a way, it is accessible to everyone so small accounts are not in a disadvantage to build their blog and get earnings.
Double Value Extraction Protection So by both having the Upvote value of an individual user as a requirement and their past earning, it should be possible to quite easily cut out all value extractors here on the chain in a fair way.
So first a system should look at the Hive Power for example giving a user 40% author payout (10% gets burned) and if the Earnings/HP ratio is for example at 4, they get a 20% reward penalty of that and only get 32% Autor Rewards / 18% Burn / 50% Curation rewards.
The Benefits of This System!
HIVE Demand Increase: Since pretty much every author with a system like this has a clear incentive to get some Hive Power as without it cuts into their earnings, there should be a spike in demand (there are a ton of accounts who either would leave which would benefit the chain as the value extraction stops, or increase their HP to a level where it's optimal to still get earnings)
HIVE Initial Small Buy Hook: One of the hardest and most things (for example in mobile gaming) is the first small buy of new users. This small HP requirement to bump up earnings by a lot will cause exactly this and since there is a rental market it is also fairly easy to achieve by users who are not willing to spend or buy anything. All they have to do is to use the earnings they get at the start to lease some HP and they are set for bigger payouts.
Rental Market Boost: Since most of these users who currently mainly extract value won't all of a sudden be willing to buy Hive, they will be directed to the rental market which currently us pretty low on demand and offers. It will boost the demand which will increaste the APR which might bring back investors in the chain who can rent out their Hive Power for a good yield.
Easier For Curators: While now you need to be somewhat of a detective to curate posts if you don't want to feed Value Extractors, with a system like this you are able to just focus on upvoting good content as you know that Hive Will be burned in case the post comes from someone who is here just to extract value.
Extra Hive Burning Mechanism: Inflation is an issue, and this way, a lot of the Hive that otherwise is sure to end up as sell pressure will get burned!
Users Become More Invested! The thing with Hive is that if you actually put some money in it that you become more emotionally invested in the platform and get a longer-term vision. Everyone is still allowed to cash out everything they earned, but that comes at a cost of a really high Earnings/HP ration which cuts down their ability to just keep earning after. It's always possible to come back but they will be forced to either buy or rent a large part of the Hive they earned and fully cashed out.
Everyone Curates & makes Friends One of the nice things about Hive is that you are able to give others upvotes. Many accounts with low Hive Power (or leased out Hive Power) never really get to experience this as they are locked in value extraction mode. Having them all experience the act of giving out upvotes might give the social aspect of Hive a nice boost as it's inevitable that people start finding like-minded users to give their upvote to which makes communities stronger.
Hive Price Up = More New Users The best advertisement for Hive is the green chart where the price goes up. If all of a sudden a lot of users actually need Hive and are no longer able to dump it systematically, the value of Hive should go up which should make it a lot easier to attract new users who start off having to invest a tiny bet which might create a positive feedback loop which gets us going again.
Curation Outflows ? Right now, there is quite a lot of Hive Power delegated to curation groups, which in a way is nice. Forcing everyone to hold Hive Power (not delegate it out) especially done in a whay where the percentage of post earnings they get go exponential the more HP they hold might see an outflow of HP Delegated to curation groups.
Conclusion
Currently on Hive, the amount of accounts that are here just to extract value making content thinking that they are working and rightfully earning Hive that can be cashed out, is very high. An update in the tokenomics of Hive where it simply becomes beneficial to hold Hive Power if you are an author could be a gamechanger especially if it's done in a way where Hive is accessible to everyone also to those who have no means available to actually invest money in the chain. As long as things remain the way they are now and curation groups continue to systematically upvote 'good content' of 10+ KE Ratio value extractors, it's hard to see Hive grow over time because there is no reason to invest while the systematic selling pressure keeps existing...
