What HBD needs at this point is more liquidity, more market and defi pools and faster conversions so the peg is kept in even more tight range.
We've gotta keep this conversation front and centre!
One of the major risks for HBD is if the debt limit is broken and the blockchain no longer price HBD at $1 when conversions are done. This limit is now 10%, while we are under 5% debt atm.
In a future hardfork it is planned for the debt limit to be increased to 2% to 30% that will give a bit more room and a guarantee that the blockchain will do the conversions at $1.
This is extremely important aspect of HBD that people need to understand.
While our LeoFinance guide content had a go, I'd love to hear a simple explanation from you in the replies to this comment if you're down?
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Thanks!
About the HBD debt limit and the haircut.
When the debt is higher then the limit (10%, now, 20% to 30% in the future), the blockchain will no longer give a 1$ rate for a HBD to HIVE conversions.
The rate that the blockchain will apply for HBD depends on the debt level.
For example for a limit of 10% debt, if the debt level is 11%, the blockchain will give around 0.91$ HBD to HIVE, and if the debt is 20%, (double then the 10% limit) then the blockchain will value HBD to HIVE conversions for 0.5$, basically giving a 0.5$ price for HBD.