Everyone Should Hold Some Stablecoins
This is not a law but simply my own personal viewpoint. Every portfolio needs some form of hedge against possible calamity. Stablecoins are clearly the best way to hedge yourself and simultaneously remain in the ‘Crypto market”. One could also look at tokenized gold or even stocks for that matter. However, stocks would probably not really serve as a hedge but perhaps to some extent due to the volatility being lower than the Crypto market. That being said, we are living in unprecedented times, where anything could really happen.
Stablecoins are also cash-generating assets, provided they are locked up in lending or DeFi vaults and protocols. This is where Hive Backed Dollars are superior in two ways.
When using platforms like BlockFi and Celsius, users are able to earn 8% on their deposits. In some cases 9%, which are both still pretty good rates, especially compared to the interest available on bank deposits. With all the chaos in the banking sector of late, I doubt whether many Crypto enthusiasts will be looking to banks for anything other than necessity. Vulnerabilities within the banking sector are currently being exposed and people are waking up to the Supremacy of self custody. The HBD interest rate is currently 12%, which is the highest in the industry, to my knowledge. Obviously, DeFi farming pairs can offer more but there is also the real risk of impermanent loss.
Optimizing The Optimal Yield
There is an aspect of Hive Backed Dollars that you can also use to your advantage. There are times when the price does not hold the peg too well. Picking up some HBD when below the peg also helps to maximize your return. For example, over the past 90 days, HBD has traded as low as $0.88 and as high as $1.03. Maximizing this variance can be quite profitable and even repeated as an almost “guaranteed” trade!
I have recently published a few articles that have addressed the rise in financial censorship. Should a person be limited to financial services according to geographical location? Once again, the innocent person completely excluded from conflict must suffer because of the actions of others. True decentralization is the only solution but that is still a dream. There are only levels of decentralization, where one is more decentralized than another. When it comes to lending, traditional options are extremely centralized. BlockFi and others are actually categorized as CeFi (centralized finance) and so are not the best of choices in this current chaos and unpredictability. The recent collapse of the banking sector, which is directly linked to the conflict between Russia and Ukraine, is absolutely shocking.
Hive Offers Decentralization
Though not perfect, Hive is a lot more decentralized than even PancakeSwap, which is supposedly DeFi. Hive is one of the best examples of Web3 that we have to use as a reference point at this time. Holding HBD makes a lot of sense when you consider the risks associated with centralized services. Sure, when the world is more stable, the concerns are a lot less. However, as we are currently witnessing, worse-case scenarios are happening! Are you prepared for a worst-case scenario?
Hive offers the best yield and if you are sharp enough, you can increase your margins. Furthermore, Hive offers one of the most decentralized ecosystems on the web. In a similar way that people are finally waking up to the value of Bitcoin, a decentralized Web3 ecosystem like Hive will eventually be seen for the value that it offers. This is exactly why holding onto your HIVE is also a good idea!