Measure what is measurable, and make measurable what is not so.
Galileo Galilei

Though it was still called Steem at the time, one of the greatest innovations introduced by Hive was to separate the equity aspect of the system from the monetary aspect, into two separate tokens. This has since been replicated by other successful networks such as Terra/LUNA. Equity undermines the monetary function of a token, because equity is expected to take risk and make great returns in compensation for that risk. On the other hand, a good monetary token avoids risk and remains stable in purchasing power to best facilitate commerce with predictable outcomes.

Utility vs Speculation

Hive and crypto broadly have another separation problem that is not widely discussed - speculation vs utility. The difference between a Ponzi-esque system and a business that creates real value, is that in a Ponzi system all returns for investors are coming from the money brought in by new investors/speculators. In a real business, people don't "invest" in tokens to gain utility, they make a payment and get a product or service directly in return.

Why is this a problem? Well, it is nigh on impossible to tell if any particular crypto is a Ponzi or if it is a real business - because there is no separation between people buying for utility and people buying for speculative gains. In a real business, investors can evaluate a business based on metrics, sales, revenue, expenditure etc., and that can be seen separately from capital raising in the form of equity and bond sales. For Hive and crypto, revenue and capital are all the same bucket, there is no demarcation between the two.

Resource Credits

Take for example resource credits. In Hive, all users can "transact for free". But what really happens is that users who have a stake in Hive, have an automatic allocation of Resource Credits. Every time a user transacts on Hive, they spend some of their Resource Credit allocation. If you run out of credits, you can't make any more transactions, but don't worry, they also recover automatically. Based on how much Hive Power you have, your resource credits grow back to a maximum amount. It takes 5 days to go from 0% to 100%, whatever amount of Hive Power you have.

This system provides a great benefit - ordinary users who don't use the network too heavily as individuals can make posts, comments, votes etc. without even thinking about fees or resource credits, as long as they have a little stake in the system. At this time, just a small stake of 10HP is generally enough for a normal user.

However, the only way to get access to more resource credits is to power up Hive. This is the same action that one takes if one wants to make a long term investment in Hive, or to get involved in Hive curation as a source of income.

Proof of Burn

When you burn Hive (or Hive Dollars), it is clearly not a speculative investment. Burned Hive can never be sold again. It is clearly and unambiguously a cost. When Hive is burned, investors can see that as an approximate equivalent to revenue in a business.

If users could burn Hive for Resource Credits, we could solve a few problems at once.

1. New Users - Newbies often have problems with RC's when they first post. If users could get some RC's by burning Hive, whether as a gift or if they pay money for it, they can potentially get started on Hive more easily.
2. Popular Apps - If a Hive application suddenly has a surge in popularity, they could burn Hive to allocate resource credits to their users, without having to make a long term investment
3. Investors - A better case for investment in Hive can be made if it has a measurable equivalent to revenue. If Hive is regularly being burned for resource credits or for other benefits on the network, investors can evaluate the actual demand for Hive as a product, as well perhaps as determine how much is being spent on RC's for individual Hive application.

I will leave out implementation details generally, but in my imagining of Proof of Burn for Resource Credits not much would change - the current RC limit of every Hive account would become a settling point. If you are above your RC limit, instead of RC's slowly growing to the limit, it slowly decays to the limit. Therefore, burning Hive on RC's should only be done on the fly, people could not speculate on bandwidth as a separate speculative token, as happened on EOS.

I would also suggest that HBD rather than Hive itself should be the main token to burn. The reason for this is because as a stablecoin, burning HBD can more easily be understood in terms of the cost to the user, and how it measures up in terms of revenue more consistently (where price of Hive fluctuates greatly from month to month).