I just had another look at the HIVE rewards fund this morning and I realized it was down with another 10,000 HIVE since 5 days ago. In percentage, this is just 0.0012% but as a trend I find this important. Just a couple of months ago the rewards pool was sitting at above 850,000 HIVE, and, compared with that value, the total decrease means 0.007%, really close to 0.01%. At these levels, these second digit percentages start to be important.
I will try to explain below why, but please take it as an exercise, as an attempt to understand what's going on. This is not even a back of an envelope calculation, it's just me thinking out loud, so I'm most likely wrong. Please correct me in the comments.
So, by looking at the config files in
hived source code, it seems the reward fund is still at 75% of the inflation. So, whatever the amount we see there, it's 75% of the inflation. Now, the actual inflation might be controlled from other parts, I didn't have time to look, but it looks like this number is more or less variable.
My first hunch was to look at the newly added conversion mechanisms. Up until HF25 you could convert HBD to HIVE in a 3 days process, but not the other way around. Now you can also convert HIVE to HBD, which mean we get a lot of HIVE out of circulation, until the corresponding HBD gets printed. So this moving 3 days window in which HIVE is burned, and HBD wasn't yet created seems to put some pressure on the supply. I have yet to understand the exact mechanism, and, like I said, I might be wrong, but that's basically the only major thing that changed in HF25 and this rewards pool shrinking situation creeped slowly after HF25.
So, while I don't know for sure if that's actually the case, I would be glad if it is. Because that means we now have a dynamic HIVE supply. Paired with our unique HBD stablecoin, we get a very interesting setup. As value moves to the stablecoin, the HIVE supply gets some down pressure, which might mean (given other conditions are fulfilled too, obviously) HIVE appreciates.
All in all, this overall decrease in HIVE supply, paired with another huge demand, from Splinterlands (which, to my bewilderment, continues to grow consistently) contributes to a massive HIVE supply squeeze.
And, as we all know, a supply squeeze is almost always a bullish sign.