but by expanding the supply of HBD more rapidly, while it is a bull market, it forces HBD conversions to happen sooner after the market turns
This is a great point, it instantly made me feel better about HBD.
It does increase the risk to Hive stakeholders overall, I agree with that. However in my view it is a well compensated risk. Essentially the network is taking some risk but generally profits at the expense of speculators, exploiting market inefficiency.
I fully agree with this view. As long as speculators are throwing so much money at it, it seems obvious to exploit it. Maybe if people trade it correctly one day then I might change my mind, but by that time, Hive won't be that volatile and there won't be a risk of blowup.
The next bear market will be the biggest risk, after that, I think it will be okay.
Another critic of HBD is that governments usually do dumb shit with debt. And hive governance is a kind of government. Everyone likes free money. 10% rates for locking it 3 days. Sounds very nice of course. At some point it can degenerate, but I trust that the current group of witnesses and stakeholders aren't going to take massive risk. Very long term, when the distribution changes hands and hive is much bigger, I don't know. It can always bite us. We will probably need to move to a system similar to Maker and DAI, which doesn't involve HIVE the token for governance and RCs.
All the other merits/demerits of Hive aside, I want to see it get big merely for the experiment in stakeholder governance. Can stakeholder governance be better than for example representative democracy? Hive, and all the other stakeholder governance networks, will be interesting case studies.