At the core of the HIVE ecosystem is a unique dual currency system designed to ensure stability, encourage participation, and sustain the economy of content and applications. This system consists of two native tokens: HIVE and Hive-Backed Dollars (HBD), each playing its specific role.
1. HIVE – Primary Utility and Governance Token
HIVE is the primary native token of the HIVE blockchain. Its functions are diverse and critically important for the operation of the entire network:
Governance: HIVE holders can convert their tokens into Hive Power (HP) – a staked (locked) version of HIVE. The more Hive Power a user has, the greater their "influence" in the network. This influence is used for:
Voting for Witnesses: Witnesses are validators that produce blocks and maintain the operation of the blockchain. HP holders vote for the witnesses they believe to be the most reliable and efficient.
Voting on DAO Proposals: In the future, and even now, HP holders participate in voting on proposals for protocol development, rule changes, and the allocation of funds from the Decentralized Hive Fund (DHF).
Influence on Content Reward Distribution: The more HP a user has, the more weight their "upvotes" have in the distribution of content rewards.
Transactions and Network Resources: HIVE is used to pay for network resources (e.g., for posting, commenting, and conducting transactions). While for most users transactions are "free" (i.e., there are no direct gas fees), they consume "resource credits," which are replenished over time and depend on the amount of HP the user holds. This prevents spam.
Content Rewards: HIVE, along with HBD, is part of the reward that users receive for creating and curating content on platforms such as HiveBlog, PeakD, and other applications built on HIVE.
Trading: HIVE is traded on various centralized and decentralized exchanges, providing liquidity.
2. Hive-Backed Dollars (HBD) – Decentralized Stablecoin
HBD is a stablecoin pegged to the US dollar (1 HBD ≈ 1 USD). It is a unique feature of the HIVE ecosystem, providing stability and additional utility:
Stability: The primary purpose of HBD is to serve as a stable unit of account within the HIVE ecosystem. This is particularly important for content creators who receive rewards and for dApps that require price predictability.
High Interest Rates: HBD offers attractive, decentralized interest rates (annual percentage yield, APY) for holders who stake their HBD. This encourages the holding of HBD and supports peg stability. The interest rate is dynamically adjusted through witness voting.
Conversion to HIVE: HBD can be converted to HIVE through an internal conversion mechanism, providing liquidity and maintaining the peg.
Content Rewards: Part of the content rewards is paid in HBD, providing content creators with a stable income that is less susceptible to volatility compared to HIVE.
Incentive and Distribution Mechanisms
The HIVE economy is built on a number of incentive mechanisms:
Rewards for Publishing and Curation: Users who create original and valuable content, as well as those who curate (upvote) such content, receive rewards in HIVE and HBD. This creates a self-sustaining content economy.
Rewards for Witnesses: Witnesses who ensure the security and functionality of the blockchain receive rewards in HIVE for each block produced.
Decentralized Hive Fund (DHF): A portion of the new HIVE created by the network is directed to the DHF. This fund is used to finance projects and initiatives that contribute to the growth of the HIVE ecosystem, decided by token holders through voting. This ensures sustainable development without dependence on external investors.
Power Up/Down Mechanism: Users can "Power Up" (stake) HIVE into Hive Power to increase their influence and curation rewards. The "Power Down" (withdrawal) process of Hive Power takes 13 weeks (in parts), which encourages long-term holding.
Thus, the tokenomics of HIVE is designed to create a balanced and sustainable ecosystem. The dual currency system with HIVE for governance and utility, and HBD for stability, along with mechanisms for content rewards and decentralized development funding, make HIVE a unique platform for the future of decentralized applications and communities.
