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RE: Almost 10 million HIVE withdrawn from the exchanges in just one week!

in Hive Statistics3 years ago (edited)

Presumably, the people who convert HBD to Hive in a bear market are those who believe in the long-term success of Hive, that's why they may take the risk of converting their stable-ish HBD to Hive during a bear market.

The motive to convert is to make profit from the mispricing of HBD compared to the value that can be extracted from the conversion contract, and you don't need to believe in long term success of Hive to make profit doing conversions. The issue with conversions during a bear market is that the network pays in the form of a high rate of Hive per HBD. In combination with the bias for conversions during a bear market, as existed in the past, the result is substantially higher inflation than the intended schedule.

I've written about it in old posts, though today the dynamics have substantially changed with the hbdstabilizer and collateralised convert contract, so I don't think we will see the same problem again.