Hello EDSers, today we take a quick look into how EDSI is performing in the current HIVE ecosystem and discuss if we need to adjust anything fundamental to ensure EDSI continues to be operating toward being sustainable long term.
Im going to assume that you have a basic understanding of how EDSI tokens work. and you will already know that the weekly HIVE pool paid to EDSI token holders is equal to 12% of the account's HP balance. The idea is that if we powerup HIVE each week, the income pool will always increase.
Let's go back to the start
When EDSI was launched in 2020, it was easy to earn 15-20% from delegating HP, there were many active games, tribes and other tokens. I chose for the EDSI HIVE income pool to be equal to 12% of the @eddie-earner HP balance because it was easy at that time to earn 18% APY from HP meaning 6% could be compounded so growth was built in. This model has served us well to date.
Today
There are projects that will still pay 15-20%+ but sadly these rewards come as HE tokens that have no liquidity to sell so these APYs can not be obtained. Around 6 months ago we switched from delegating our HP to using it toward curation which was 10% at the time. Today curations APY has fallen back toward 8-9% where it historically averages.
Today, our HP earns 8% from curation and 3% from inflation so 11% in total.
Do you see the problem?
Conditions have changed. If we earn 11% from our HP balance but pay out 12% as a weekly income pool, the HP balance over time will decrease. It's not sustainable long term.
Others things to facter in
Before we can look at possible solutions, we need to understand a few other things about how EDS miners, eds-vote and EDSD factor in.
- EDS miners
Combined both miners mint 296 EDSI per week with 300k EDSI allocated to pay out miner rewards for another 16-17 years. This means the account needs to power up at least this amount of HIVE each week to cover this.
We collected 75k HP from selling miners which used to earn 260 HIVE per week at 18% leaving us around 40 HIVE short per week. This shortage was made up using the surplus HIVE (HP balance - Circulating EDSI) in the HP balance. Today, that same 75k after 3 years of compounding is worth roughly 86k earning 180 HIVE (11%) per week leaving us with a 120 HIVE gap that needs to be made up eating into the surplus.
- EDS-vote & EDSD
Going to put these together because they both share the same model. In the most simple terms, for every 2 HIVE these accounts create, we mint 1 EDSI token. So if eds-vote earns 400 HP in a week, we mint 200 EDSI tokens. With around 180k EDSI allocated to these, they will add 360k HP to the @eddie-earner account.
For the past few months, eds-vote has been earning around 400 HP and minting 200 EDSI per week but, a few months before that it was earning closer to 600 HP a week. This means we currently have a powerdown of 550 HIVE per week coming from it. In around 5 weeks, this powerdown will end and the new powerdown will reduce to 450 per week to reflect what we are now earning.
Here are some basic inflow and outflow weekly numbers for EDSI
| Thing | Weekly Cost | Weekly Income | Gain/Loss |
|---|---|---|---|
| HP Curation | 0 | 235.00 | +235.00 |
| HP Inflation | 0 | 81.00 | +81.00 |
| Weekly Income Pool | 325.00 | 0 | -325.00 |
| EDS Miners | 297.00 | 0 | -297.00 |
| eds-vote | 200.00 | 550.00 | +350.00 |
| EDSD | 15 | 30 | +15 |
| Totals | 837.00 | 896.00 | +59.00 |
You can see that we are currently above break even by 60 HIVE per week but when the new eds-vote powerdown begins in 5 weeks, our weekly total will be -40 HIVE per week.
Solutions
There are a few but the most simple one is...
- Reducing the income pool percentage to under what the account earns.
As an example, if reduced from 12% to 10% while earning 11%, we would ensure at least 1% compounded growth per year. The result would be a drop in EDSI APY but more HP being powered up.
This is by far the most clear and simple amendment we can make to ensure EDSI continues toward sustainable growth.
Other solutions
Hmm, make more HIVE with another side hustle. eds-vote has been a great success for both minting EDSI tokens and pumping the HP balance. EDSD not so much but looking at current token allocations, I think we could easily reallocate 50-80k EDSI tokens to be minted via a new way.
Its hard to know what to do because we have all the bases covered already. We have EDSI which is an income token transacted for in liquid HIVE, we have eds-vote for HP and EDSD for HBD, what else do we need? There is only 1 more thing we can sell but its forbidden.
Rant
I still dont understand why we can lease HP but not sell upvotes. It's like saying, I can not sell you an apple each day but I rent you my apple tree and you can pick an apple each day instead.
All the vote-selling ban did was kill a once-thriving economy where you could lease HP for 22-25% to people who sold upvotes to people who used liquid HIVE and HBD to buy them. Yes, HIVE and HBD used to have a use case other than to stake them. People thought it was shit that anyone could buy their way to the top of trending posts but it's no better today with all the top trading posts from the same accounts that receive huge auto votes. At least back then you had to pay to get into trending and if you used voting services, you could slowly grind and build your account/wallet for bigger and bigger votes. In all honestly, it was a better time.
.
Moving on
One thing we could explore is creating an EDSI buyback wall. Each week instead of powering up all our earned HIVE, we use some to create an EDSI buyback wall at 1 HIVE each. These EDSI could either be sold back into buy orders over 1 HIVE for some insta profit while holding some in a separate account and receive a weekly liquid payout equal to 20% APY. It's rare for EDSI to trade down to 1 HIVE but it does happen sometimes if someone needs to sell off 1000-2000 tokens. I think this is worth exploring, the main upside would be liquidity and the main drawback would be we'd probally kill the EDSI premium and it would overall trade closer to 1 HIVE. We take from 1 hand to feed to the other in a backward way.
Apart from that, im licked. Hell, we could start an upvoting service EDSI burning service. Burn 0.5 EDSI and get a 1 HIVE upvote from eds-vote, haha. I bet that would work and it would increase the EDSI APY because there would be fewer tokens plus, oh and plus...it would be free because voting costs us nothing. Yeah, I like the sound of that, EDSI token burning cause its not spending, you see? That my friends is what we call a loophole.
Of course, any other solution or new side hustle would only be kicking the can down the road until hardcap time. With that said it would be great to mint more EDSI tokens faster. Sadly and as mentioned we are limited in what we can do because 1, EDSI is 100% HIVE and 2, Hive engine is dead. We could release a new project side hustle and maybe sell 5000 HIVE worth of tokens and it would just be a waste of time.
To Round Up
-The EDSI weekly HIVE income model pays equal to 12% APY of the @eddie-earner HP balance
- We used to earn 15%-18% which left us with 3%-6% to compound
- Now we earn 11% APY and pay out 12% which is not good
1/ Amend the EDSI model to a lower percentage. eg, 10-11%
2/ Start a new side hustle and or EDSI buy back wall
3/ HE is dead and I could probably sell more tokens at the local blockbuster
Overall, a small adjustment on our end keeps us good. Things dont last forever and as someone mentioned to me last week, HIVE inflation and curation APY will decline over the years as more HIVE is created and circulated. A new side hustle would be amazing but to be honest, there is no motivation because there are less people than ever on the blockchain and even fewer buying HE tokens. Our best course of action would be to take the hit on the EDS APY and ensure we remain sustainable.
Please share your feedback below.
