I will have to disagree with you. :)

Not only I disagree with your thoughts, I will also attempt to change your mind. Normally, I don't try to change anybody's minds, and nobody really can change anybody's mind other than their own.

Your first mistake is, you are making it sound like offering 20% APR for HBD was a sudden and quick things. This is not true. It took almost two years of efforts to get to this point. Not only it wasn't sudden, it was done in a methodical, careful, calculated, and strategic manner.

Witnesses reached consensus of allowing Hive blockchain pay APR for HBD for the very first time in its history last year. March 2021 to be exact. This initial APR was only 3%. Even before this happened, there were discussions and efforts to make HBD work as a stablecoin and pegged to USD as it was originally intended. One of the biggest efforts was the hdbstabilizer, which turned out to be a huge success. Not only hbdstabilizer helped with the peg, it also earned extra funds to Hive Decentralized Fund. How cool is that!

At the same time Hive core developers team worked on layer one code that allowed converting Hive to HBD, also with the goal of making the peg work. Previously, we could only convert HBD to Hive. Core dev team also made a change to pay APR only to HBD in Savings. This exchanges wouldn't be rewarded for HBD held by their users, and this will also encourage people to remove HBD from exchanges. Keeping your assets in your own wallets, is a general crypto philosophy - "not your keys, not your money". 

After few months of 3% APR, witnesses decided to raise the APR to 7%. After couple more months they raised to 10%, and then 12%. Nothing is done here quickly and suddenly, chasing the numbers. It took a year since the first introduction of APR, for witnesses to raise it to 20%. Within this time, a lot of things has been discussed and potential risks considered. Even before getting to 20%, we had 15% APR for a very brief time.

I think 20% is reasonable, just because of the crazy inflation. USD has been losing its value over the years. Last couple years it has lost even more of its purchasing power and continues to do so. Since HBD is pegged to USD, HBD would be losing its purchasing power as well. So it wouldn't make sense to hold HBD or save fora  long time. Now that 20% APR mitigates the current inflation in USD and loss of purchasing power, HBD can be an attractive investment instrument. 

Compared to traditional market returns 20% sure is high, but compared to ROI in bitcoin and other meaningful crypto projects is much higher than 20%. First HBD with 20% APR would/should attract crypto enthusiasts. But why would they go for 20%, when they can make 100%, 200%, or higher holding bitcoin, ethereum or hive?

While the goal is to attract more people from outside Hive ecosystem, the very first beneficiaries of the HBD 20% APR are the Hive community members. They get to have another option to invest. Now it becomes a choice among holding Hive, HP or HBD. It is not a zero sum game, so we don't have to choose only one option. We can diversify. We can have HP for meaningful engagement in the decentralized network, and also we can have some saving in HBD for various reasons. Some of us maybe saving to buy a car, a house, vacation, or just using HBD as a hedge during bear markets to increase their HP even more if opportunity presents.

HBD experiment is definitely not a quick things. Nothing about HBD is quick. lol. Even with 20% APR, the growth of HBD holder is very slow. Numbers don't lie. But even if all of the sudden there was a huge interest in investing in HBD, there aren't many of it in the market. HBD available in the market is under 10 million. This is nothing compared to Hive market cap, and crypto world. 

For HBD to grow significantly in supply, people will have to convert Hive to HBD which burns Hive. Those who want to have large amounts of HBD, say in millions, will have to buy Hive first then convert them to HBD. Such actions would result in decrease of the Hive supply, and increase of Hive in price. For HBD supply or market cap to reach a billion, Hive price will go up to $100 easily. Again, this wouldn't be a sudden and quick thing. Even if it was, we wouldn't mind to have $100 Hive suddenly. lol

There are several reasons why I believe witnesses reached the consensus of 20% APR. The first one is that APR can be lowered or even completely remove with a click of a button. If there were some events or conditions that raised the alarms of some threat the Hive network, witnesses would quickly be able to see that and change the APR parameter. No forks required.

Other reasons are that witnesses know there are protective measures in place to safeguard the Hive blockchain against potential risks. There is a haircut rule, that in essence no longer keeps HBD pegged to USD if HBD supply went higher than 10% of Hive market cap. There is a small fee for converting Hive to HBD. At the same time Hive itself is a great investment instrument, that will attract HBD holders to buy Hive if/when prices drop.

Are there unknowns that can be potential risk? Sure. There is always something that may have not considered or are wrong about. Luna fiasco made us all to reevaluate our positions and thoughts about HBD and risks to the network. I did as well. At this time I don't see any risks. But tomorrow things may change, we may learn new things that suggest otherwise. When/if that happens, the protective measures will be triggered, and we will be just fine.

Lastly, HBD has never been a short term game. It is long term game. It has a lot to offer to the world. So its growth will be beneficial for Hive network, its participants, and those who utilize HBD. Having an algorithmic stablecoin that actually works, in a network that provides fast and free transfers is a big deal. Regardless, if the world accepts it or it just remains a Hive thing, it will still be useful in many ways. 

To answer your question - "why?", I say because it was/is time for HBD to shine.

I concur. I did start switching to 50/50 post rewards instead of my preferred 100% when the announcement hit, but the last crypto sale led me to sell off a lot of HBD for HIVE, because the staking is where I see the most long-term value. Do we want people here for a quick buck, or long-term? But on the other hand, the 20% return could help encourage people to accept HBD as a marketable currency instead of just offloading it immediately for Bitcoin, so I can see the argument for encouraging an ecosystem for it.

I understand your concern, I had the same feeling at first, but fact is there is so little of HBD in circulation there’s no way big money can come in fast. That’s just the sweetest part of it. As the supply dries up, maybe the interest rate should be lowered, at least that’s what my take on it is.

We need a lot more HBD.  If you look at the present float of HBD, even at 20% per year, it will take about 20 years to get to 1 billion HBD.  

If you think that makes HBD a legitimate stablecoin, I would disagree.  That is still a small fraction of what it takes to  a legitimate force in this world.

So this is the first major use case for HBD, creating more HBD, which is badly needed.

We also have other use cases being formed.  This means we are going to have to get even more out there.  So the belief that this is just a fly by night, get some fast money in, that is not how I see it.

It is laying the long term foundation for HBD as a legitimate stablecoin.

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