In the long run it can only work if it's sustainable, which means the DAO needs to profit in doing so or we are just releasing as much or more inflation into the market as if private traders do the conversions. Over the course of the period until HF25 any profit/loss won't affect its long term sustainability though, but we may also not want to run it just ahead of hard fork in case there are any hard fork related bugs not accounted for yet.
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Well I agree it is inflationary, but I don't agree it is the same as if traders do it.
When traders do it they usually try to get it a profit, so it is very inflationary. However, if the DAO does it at a loss, it would be less inflationary, because that loss is technically a burn of HBD which won't get converted to extra hive.
Edit- actually the HBD burned are already in the DAO, so I think I'm wrong about that