STEEM Is Trading Higher than HIVE . I think that tis is due to HBD debt
It looks like the price of STEEM surpassed the price of HIVE.
When I wrote this paragraph, Coingecko showed that the price of STEEM was $0.04483 while the price of HIVE was $0.04309.
NOTE: STEEM was trading at 0.99 HIVE on HIVE-Engine. This is unreliable because the trading volume on HE is less that a dollar a day. The TribalDex liquidity pool was trading at $9.46. Again the volume is low; so I find it unreliable as well.
I believe that this price inversion happened because HIVE took on unwarranted debt. Back when HIVE was trading at over $3 per token, wealthy investors convinced witnesses to raise the interest rate on HBD to 20%. The witnesses later raised the haircut price of HBD to 30%.
The idiotic decision to laden the platform with debt allowed the rich investors to extract the value of the platform.
The market capitalization of HBD peaked at over $14 million.
The price of HIVE could not sustain the interest rate and HBD investors pulled their funds. According to Ausbit Bank, The market capitalization of HBD has fallen to $8,932,318. We've seen HBD holders convert over $5 million HBD to HIVE as the platform lost 98% of its value.
This year HBD holders converted over a million HBD to HIVE at around $0.05. This generated over 20 million HIVE which HBD investors dumped on the market. The flood created something that financial analysts call a "death spiral."
HBD investors panicked when the price of HIVE dropped below $0.04 and approached the dreaded haircut value. HBD holders converted about 100,000 HBD to HIVE at under $0.04 which generated 250,000 HIVE.
All of the HIVE created by HBD conversion flooded the market.
There's simply not enough people interested in HIVE to absorb this glut.
The mathematics of the dangers of stablecoins was known when the witnesses made the decision to raise the interest to 20%.
They did it anyway.
Why?
Apparently, the witnesses haven't learned the dangers of debt as they are still approving 10% interest on HBD.
The HIVE witnesses debased the currency and clearly have not corrected their ways because they continue to pay exorbitant interest on debt that they should have never incurred.
HIVEans can't even say: "We made a mistake and corrected things." They made a mistake and continue the mistake at a lower rate.
Conclusion
STEEM is trading at a higher price than HIVE. I believe that this is because the witnesses debased the currency with debt.
I think that this is a structural change and that we might see STEEM continue to trade at a higher price than HIVE.
I believe strongly that people should avoid institutions that take on unwarranted debt.
Debt concentrates wealth into the hands of the powerful, I doubt that humanity will ever learn the dangers of debt.
I live in a country that has over $40 trillion in debt.
NOTE: I published this #steemexclusive analysis on SteemIt as HIVE whales tend to downvote people who criticize the centralized powers that control the platform. The HIVE debt pushed down both that price of HIVE and that of STEEM. Things might look brighter for SteemIt as people realize that HIVE is suffering a self-inflicted wound.
I generated the cartoon of a guy discussing finances on Night Cafe
I was just noticing that debt today. After netting out the HBD debt, their market cap is actually a good bit below 0. STEEM's net market cap, after subtracting out the SBD debt, is in the neighborhood of 19 million, even counting SBDs at the full $1. With haircut pricing, the net cap is more like 21 million.
And all those HBD conversions are going to be an inflation problem for them, too.... as we learned after the SBD delisting on upbit. Although 100K is far fewer than we saw after the delisting. I think we saw 6 million or so.
I agree with your take on unwarranted debt. Debt is ok when used sparingly, but it's a nightmare when it's abused. (And, sadly, I also live in a country with 40 trillion in debt.)
I'm actually quite glad that Steem spent more than half a year burning down the SBD supply from the SPS. If anything, maybe we should've burned more.
Oh, and I forgot to mention, I agree that it's structural. It may not be obvious, but according to Yahoo finance, STEEM has been outperforming HIVE consistently for a year or more.
The main point of the article is that I think the price inversion is structural. Our instinct is to think that, since HIVE has more active users, it must be more valuable. The debt extracts the value; so STEEM might be more valuable than HIVE.
The one thing I learned from this mess is that the debt we are facing wasn't created by the borrowers. The debt wasn't created by HIVE authors or curators. It was created by lenders who wanted to earn a large passive income.
The debt didn't provide direct benefit to the blockchain as a whole. It was created to benefit lenders.
BTW: The fractional reserve lending allowed by the Federal Reserve creates a situation where banks can earn about 20% interest on paper loans ...of course the system really just creates boom and bust financial cycles and ladens the host country with debt.
Steem to the moon