HIP-011 APY, 2022, and the Growth of Hector

https://medium.com/@HectorDAO/hip-011-apy-2022-and-the-growth-of-hector-acb85826bad7 is required reading before voting on this initiative. Please read the article in full first.

The less dilution we enter the Point Of Inflection with, the better. The fewer tokens in circulation when that point arrives, the more pronounced the effect of deflation will be, the more room for growth we will have, and the better the outcome for token holders.

This is why we have been reducing our APY over time - it helps us control dilution in preparation for utility to come to the HEC token. As mentioned, rebasing, staking, and bonding alone are not enough to allow the continued expansion of Hector.

As such it is in the best interest of the project to keep APY rates at a level where stakers are rewarded without diluting the project so much that the future sustainability of the Hector Ecosystem is damaged.

Therefore we propose the following: A HIP vote to reduce our APY to 10,000% over the coming 3 weeks.

We understand that community members enjoy high APY rates, but the current rates are damaging the health of the project and reducing the upside potential for when Hector becomes deflationary.

Users have expressed concern about price action in the recent weeks - this price action is almost entirely because of the APY rates being as high as they are. You can look at all other rebase tokens that experience a similar price development for reference. Tokens are minted at a rate that they create selling pressure which suppresses price action. This is something we want to solve.

Reducing APY will increase the relative rewards per person over time since the selling pressure incurred by rebase rewards will be reduced. Looking at other rebase projects, such as Olympus, reducing the APY gradually to 10,000% (still x100!) is incredibly bullish. This will greatly benefit the runway.

We are in it for the long run Hectorians.

Remember, as utility increases, HEC inflation will be controlled further by burning more tokens. This gives us the potential to raise APY rates in line with the growth of the Hector Ecosystem as profits increase. This is the best long-term position for Hector.

2022 is the year of Hector. This is the first step.