There was a ton of excitement generated when the Witnesses increased **the interest on HBD in savings to 20%**.  This was for good reason.  A move like this could really propel Hive into focus.  We all saw the success of UST and LUNA.

That said, there are a host of issues with HBD.  At the top of the list is liquidity.  We have around 10 million HBD on the open market, excluding those locked in the DHF.  This means the float is very tight as evidenced by people trying to buy large chunks of it.  There are offers being made for anyone willing to sell 50K or 100K worth of HBD.

One of the solutions is the announcement of the **pHBD-USDC liquidity pool**.  Having a couple millions tokens available for purchase is crucial.  The goal there is to develop the deepest HBD liquidity pool.

For this reason, people will have to decide where to place their resources.  In this article we will take a look at the two options and define what each entails.

![image.png](https://images.hive.blog/DQmTzL5RJX2Sm465of17mLJ4kAPhx7KzKKNG1L4TWC9gLMt/image.png)
<center>[Source](https://images.hive.blog/DQmQYtgcAKqMudPiB3N9XynQNn8JpjPf7ErnoSnANHU5BAq/hbd_yields%20-%20Copy.png)</center>

# HBD In Savings

There is very little downside to this.  With HBD placed in savings, one is engaging in a very low-risk option that now pays a sensational return.

HBD is a base layer coin.  Having it deposited into savings eliminates dealing with any third party.  All activity is done directly on-chain, through one's own wallet.  Nothing leaves the ecosystem.

At the same time, the 20% APR is **paid out in HBD**.  One is earning the same coin as is deposited.  Obviously, this created more HBD, which the market sorely needs.  From this perspective, it is helping out distribution.

In the world of Decentralized Finance (DeFi), 20% APR might seem like nothing.  However, bear in mind that is an outstanding return.  This is like 40 times (or more) what a savings account in the traditional banking system pays so it si not to be scoffed at. This was the [annual return Warren Buffett](https://leofinance.io/@taskmaster4450le/now-everyone-on-hive-can-be-warren-buffett) used to become the richest person in the world at one point. 

What this option does not really help with is the liquidity problem.  Over time, producing 20% on the HBD put into savings will expand the distribution.  However, it will take a long time.  Nevertheless, each new coin created does help.

The key with HBD is savings is **low-risk, strong return**.

# pHBD On Polycub

This is a development that is designed to target the **liquidity** issue.  To start, we have to mentioned, anything placed in the pool does NOT generate HBD as a return.  Instead, the payouts are in the native token to that applications, POLYCUB.

We are seeing the bridging between the Polygon and Hive chains taking place.  It is a big step forward to allow easier access to Hive.  Polygon is gaining in popularity and accessing the EVM forks is always a good idea.

There are some additional risks with the pHBD option.  Since we are dealing with a second layer solution, we are introducing **third party risk**.  No longer are the tokens on-chain.  Instead, they are going to be in "wrapped" form.  Each HBD will be swapped out for a pHBD.  This is done all the time so it is nothing to fret about.  The key is that one needs to trust the Leofinance team and their platform.

Another element that is added is the **price volatility** of POLYCUB.  Unlike the HBD in savings, the return on the pHBD vault is done in the native token.  Hence, one is taking on the risk of POLYCUB price movements.  This is compounded by the fact there is a 90 lockup before claims.  Anything that is taken out before that is subject to a 50% penalty.

Which brings us to the return.  Since we do not have the details, we can only speculate based upon numbers we saw tossed around.  What we do know is that the return on pHBD will be higher than the savings on Hive (30%-40% APR was mentioned).  This makes sense since people need to be compensated for the additional risk they are taking.

Of course, the 50% penalty on claims has to be factored in if someone is opting for that.  We might want to point out that, with the price of POLYCUB being so low, there is the opportunity for the return actually to be a lot higher.  If POLYCUB increases in price during the 90 day lockup, one could actually come out way ahead.  This is adding an element of speculation which might appeal to some people.

At the same time, we would be remiss to overlook the fact the price could head down also.

While this does not directly generate more HBD, it is seeking to solve the liquidity problem.  That said, there will be more HBD produced as **a portion of the pool will be placed into savings**.  Part of the HBD that is swapped in will be used to generate the 20% return.  Some will have to remain liquid, say 50%, for people swapping.  However, anything above that can be deposited into savings, helping to create more HBD.  Ultimately, these payouts will be swapped into pHBD and deposited into the LP, further helping the liquidity.

The final component is that your money is always available to you.  The 50% penalty does not mean that the funds are locked up.  If one chooses, he or she can pull out the payouts along with the money in the pool.  This can be done at anytime.  With HBD savings, there is a 3 day period before the funds can be accessed and interest can only be claimed every 30 days.

# Which To Support

There is no right or wrong answer here.  It basically comes down to the individual and one's **risk tolerance**.

HBD in savings is less risky.  The return, however, is going to be better in pHBD.  One produces more HBD while the other is meant to help with the liquidity issue.  In my opinion, both will work out well in the end but it is up to each to gauge his or her own investment preferences.

The goal is to get 2.5 million in pHBD in the **liquidity pool**.  This is to serve as an easy way for people from the outside to get involved with HBD.  By purchasing it out of the pool and then swapping it over, one can then get involved with the 20% on-chain.  For people who are playing with large sums of money, this is a welcomed idea.

It is always nice to have options, especially when they pay a very strong return.  Whatever people choose to support, the important thing is to start thinking about **HBD** (or pHBD) and how you can implement it into your portfolio.

All of this will ultimately help Hive a great deal.

What are your thoughts on each of these options?  Which has benefits, or drawbacks, that will influence your decision?  Let us know in the comments below.

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