Its sort of like that but there is a big piece missing. Basically the key difference lies in the total Marketcap or in the case of HBD also the total count of HBD becoming > 10% of the total marketcap of HIVE. So if the price of HIVE tanks and HBD no longer can be exchanged at the 1:1 rate. IE 1000 HBD will not buy 2000 HIVE if HIVE is worth 0.50 it would be an exponentially reduced amount.
HBD exchange rate is equal to the lesser of 1 and 10 (ie the historic debt % limit) / the current debt limit.
For example lets say that HBD debt amount is 15% of the HIVE market cap.
We would have the following: 10/15 = .667. In this case, when you convert HBD to HIVE to you would buy at .667 the current HIVE price. Assuming you had 1000 HBD and HIVE is worth 0.50 you would convert your 1000 HBD to 1334 HIVE and not 2000.
HBD isn't a true stablecoin in this sense at is is algorithmically designed to depeg in the case of a bank run. That said, in a stable market the algorithm would keep it close to $1 so essentially, if the market collapses HBD wouldn't bring HIVE down with it to the extent that UST and LUNA crashed. We have seen HBD depeg multiple times and each time this exchange process allows it to recover.
All that said, it would be interesting to know what exactly WOULD happen in a scenario where people are willing to convert HBD to HIVE at such low exchange rates.
Assuming that most HBD investors know about the haircut, I suspect that we will see investors start pulling funds from savings and trying to divest from HBD when the market cap starts approaches 10%.
This run should recess the price of HBD, which would lead to a large number of conversions from HBD to HIVE for immediate sale.
The downward pressure will occur at a time when the price of HIVE is weak. I do not think it will destroy blockchain. I simply think that HBD will push down the price of HIVE ... which isn't that good for the people who've been investing in HIVE.
The point I want to make is that the high interest rate for HBD has a cost for the platform at large. It is benefiting just a few people. At the end of last month just 12 accounts held over 50% of the HBD savings. It really isn't a good deal for the people who use the platform.
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