And we’ve set the both the soft range limit (the starting and ending point where post rewards begin to change from HBD to liquid Hive) at 20%. In other words, post rewards would immediately switch from paying HBD to paying only liquid Hive at 20% instead of gradually shifting between the two currencies as the debt ratio increases.
Not really a fan of this. It's never been shown this actually has any benefit since it dumps more HIVE on the market and may make matters worse. (I mean the 20% vs 30% vs not at all, the latter being what DHF does. The part about switching immediately vs the gradual mix is fine.)
It does directly create more Hive, but on the other hand it is a fixed amount of Hive, unlike HBD which could result in even more Hive being created in a market downturn via conversions. I see the intent of the soft limit as a means of reducing debt production for the chain in a falling market.
It seems like a very small factor given the amount of HBD that would already exist. 20% would exist in HBD at that point. New HBD from rewards is 50% (HBD/HP split) of 50% (author/curator split) of 75% (reward pool) of 8% (current inflation; will be less) per year. So that's something like 1.5% per year added from printing, or 0.125% per month. Doesn't seem useful/significant to me, even in a downturn.
At the same time, we've seen it happen the other way where there is high demand for HBD but printing gets cut off and HIVE given out instead, which could dampen the market and reduce a rise in the price (which would resolve the situation in a better way).
The way I see it, in terms of current supply and demand from rewards, giving out HBD is always going to be better. If people don't want the HBD right now, it'll get sold and/or converted quickly, which ends up being essentially the same as giving out HIVE instead. If people do want the HBD, it constrains the supply of new HIVE and helps the price, which in turn helps the ratio.
It is true, however, that we still have HBD potentially available from DHF (and indeed, this is what happened before when printing was cut off with high HBD demand), which can be used to satisfy HBD demand and absorb HIVE from the market, as well as HIVE->HBD conversions (w/fee), so I guess it doesn't matter that much.