Lucky ali is here, and the world of crypto is moving and growing fast, and in this growing world, stablecoins can be a safe option for you because they provide stability, and in this field, most stablecoins are based on US dollars. The Terra crypto firm had UST, which failed as a stablecoin. Also, talking about USDC stablecoin then it has faced trust issues in the past, and that was a serious issue that compromised the trust of people. Because of these issues, Users lose trust in stablecoins. But these problems do not exist on the Hive blockchain because the approach of the Hive blockchain is thoughtful, well-maintained, and cautious. Apart from this, Stablecoin holders on Hive are earning good APR. So the stablecoin name is HBD, whose full form is Hive-backed dollars.

Do you know that UST was an algorithmic stablecoin? Now what is this? Algorithmic stablecoin means it has no backing from real money or fiat. The system that was working behind this stable coin was based on demand and supply, and this was totally unique because it was between the LUNA and UST; this way, it was keeping the price at $1. If you don't know, then LUNA was a partnered token, and Most people know about the LUNA crash because it damaged the whole market. Basically, it is known as a terra-luna crash, and this happened in 2022. At that time, these tokens lost billions of dollars, and because of this, their values were reduced, and both UST and LUNA were turned to shit tokens. So this shows the risk in stablecoins. Now let's check the case of USDC.

It is the opposite of UST and backed by Fiat, and you can say backed by real money. Now let's understand it so USDC holds US dollars, and this holding is for the backing of USDC. If you buy $1, then USDC will have $1 in backing, so this is a simple concept and you can understand it easily. Now let me remind you of the incident of 2023, and at that time, this particular token lost its peg value due to the bank crisis. There is one more coin that faced a similar issue, and that is USDT, which is also the most popular and oldest stablecoin, but in the past, it has lost its stable value. So these incidents prove that even fiat-based stablecoins are not safe.

Hive's main use case is different, and it is not a stablecoin-focused project. Hive blockchain manages supply and risk brilliantly, so let's understand it properly.

Hive has a debt limit rate mechanism/technology. Which means it limits the existence of the Hive-backed dollars, and it works in comparison with the Hive token which is main token of the ecosystem. This rule has name which is "30% debt limit". This will stop the supply of HBD when it grows much. So here you can see the mistake that terra crypto firm did, Hive community is facing it with great mechanism. And this is real solution.

Risky decisions do not exist on Hive because of decentralized governance, because when you see a centralized project, there are small groups and a single entity controls everything. On Hive, the decision will pass after the voting process that is done by witnesses, and these witnesses are elected by the Hive community. Community is the owner here on Hive.

The third factor is also important. It is easy for Hive users to convert HBD and HIVE. There is a delay in the unstaking and conversion process so this thing also good. HBD also offers interest rate on savings and now It is 15%, which changed recently. Earlier, it was 20%. It is sustainable and flctuate automatically.

First reason is main reason but other matters too. Your opinion matters so do a comment below and share this post.

Posted Using INLEO