I don't get this loan stuff tbh...
Can somebody explain to me what happens if BTC goes up 200% (in USD) and HIVE drops 50% (in USD) at the same time over the course of just two months (in the above scenario?)
Also what happens if BTC goes up 200% in USD and HIVE goes down 50% (in sats, dropping from 2000 sats to 1000 sats)
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You locked bitcoins to get hive. Its like pawnshop where you put some valuable item like gold ring, to get cash. So similarly if price of Gold goes up 200%, and cash value drops 50%, pawnbroker is happy, because value of stuff you give him to secure your loan is worth more.
Same situation in other scenario, in the article we talk about situation when we lend BTC for HIVE so what is really important for us is BTC/HIVE ratio. If the both fall or rise in dollar terms, it's not affecting the ratio of locked/borrowed goods.
Different situation happens if you lend bitcoin for DAI, and then buy HIVE for borrowed DAI, what we can do before wHIVE, but it gives extra exposure on crypto to fiat price fluctuations, and thats why wHIVE is helpful.
Thanks, that answers some of my question marks.