You know you're in a HIVE pump cycle when...

https://images.hive.blog/0x0/https://img.inleo.io/DQmNwLxsx1F2Z3GLnFrV4YKExCmYuiTxYtPJWrmrYHw1r6D/warning.png

The Hive SBI program was designed to provide incentives for users with means to lock in ongoing support for others. There are dozens of ways to win Hive SBI sponsorship from others and not have to pay anything out of pocket. It is not a whales club.

In response to https://peakd.com/hive-167922/@yecier/open-letter-to-hsbi-ke3

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For groups like @freecompliments that have HSBI integrated into their model, the rising vote values during HIVE spikes make the flywheel continue to be sustainable. There are several reasons this isn't playing out.

1. As inactive users learn of the hive pump and start voting their accounts again, all other accounts are controlling a smaller portion of the total Hive rewards pool. Hive SBI delivers the same rshares per HP but the value at payout is smaller.
2. Hive SBI allows users to build up pending balance when they are inactive. When they all start posting again in response to HIVE pump, it puts pressure on the Hive SBI voting power and VP% decreases. This has minimal impact on most users, but it decreases the maximum deliverable upvote and that has an outsized impact on HSBI whales.
3. As VP drops, the number of accounts impacted by declines in max deliverable value increases, which makes it even worse for communities dependent on HSBI votes (and harder for VP to recover after things normalize again.
4. To ameliorate the impact of 2 and 3, Hive SBI temporarily cuts the pending balance accrual rate until VP recovers to our target range. This lets max vote gradually recover, but it has a temporary negative impact on APR for everyone else.

This all sounds terrible, right? But... let's say the same thing differently... 

During all normal times, the APR for all active accounts is temporarily boosted by the inactivity of their peers, and during pump cycles this effect is unwound. (This happens at rewards pool level as well as at HSBI level).

So why doesn't HSBI decrease the subscription cost? Because it doesn't matter. The revenue is staked and used to support the votes. If it cost 10 HIVE, each unit would automatically be backed by 5 HIVE at origination. At 1 HIVE, each unit is backed by 0.5 HIVE at orgination. At 0.01 HIVE, each unit would be backed by 0.005 HIVE at origination. Across all three samples, the APR would be the same and the underlying mechanisms in 1-4 above would be unchanged. It would STILL be a problem for communities depending on it when HIVE pumps because their expenses are denominated in a different currency than their income.

# What if we changed the price midstream?

At present, Hive SBI controls roughly ~800k in HP (this includes ~145k in delegation, some of which is paid for directly instead of with bonus units). There are 16k HSBI users, and about 2700 that have posted in the last month.

There are 804k units and 73k bonus units, for a total of 877k units. That means that every outstanding unit is currently 'backed' by 0.91 HIVE. Essentially, you're powering up 1 HIVE and getting 1.82 of voting power for it (half dedicated to you, half dedicated to the other account). That's a really good deal, and it happens because curation revenue growth is outpacing enrollment growth. Since every new enrollment only powers up 0.50 per unit (2 units for 1 HIVE), new users are constantly diluting existing users. As the scale is consistent and this has always been baked in to the mechanics, no harm no foul. However... if new enrollment price is cut to 0.10, then each new unit powers up 0.05 HIVE and gains access to 0.91 HP in voting power. APR would 10x for new users, but it would come in the form of massively diluting the existing users. The burden would fall most heavily on community accounts that built HSBI into their models.

## Such a change would be completely unethical. 

It would also be a material change in the program that would trigger the refund clause (last triggered when Hive forked from Steem) and make every single account eligible for an immediate refund (or as immediately as possible after all the powerdowns we would have to make to meet the demand as everyone realized they were about to be massively diluted and ran for the exits). It also would not help @freecompliments or any other community that integrates HSBI into their program because the APR would eventually settle back down into the same range it has been in for the last five years (the long term sustainable APR) and in the next pump cycle somebody else will publish an open letter to Hive SBI saying that enrollments need cut from 0.10 to 0.01 and using the previous cut as precedent.

# Hive SBI will ALWAYS be 1 HIVE to sponsor somebody else, with 2 units (one for sponsor, one for sponsee) created for each HIVE.

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Learn more about Hive SBI and check your unit levels at https://www.hivesbi.com