Here's another attempt at describing a death spiral that may help (I just read that one, before reading this one): https://hive.blog/hive-167922/@lordbutterfly/luna-ust-shitshow-you-should-probably-avoid-buying-the-dip
The good news is, Hive community has long been aware of the potential threat of a death spiral and therefore there are strong safeguards to prevent it.
I've been having this discussion with quite a few others on HIVE.
What exactly are the safeguards that HIVE has?
Is it the fact that HBD is limited to 10% of HIVE?
Could you point me to an article if possible? Thanks! 😊
Yes, this is the big one. Currently the proposal is to increase it to 30% with the next hard fork, but that's still a very conservative value.
This is a good starting point, and I've added some comments to attempt to clarify the key protection:
https://hive.blog/hive-167922/@taskmaster4450/hbd-defenses-how-hbd-is-different-from-ust