I've also found implementing a BTC insurance solution for HBD an interesting idea.
I totally agree with your thinking when it comes to not using the other collateralised stablecoins as backing.
It totally defeats the purpose of using our own superior decentralised algorithmic stablecoin.
Bitcoin's own decentralisation makes it the obvious choice when you're looking for an insurance asset and in my opinion, it can work.
We've just gotta also keep in mind that these BTC insurance reserves would only ever be dipped into during a death spiral.
Not when HBD goes to 96c.
So it's not like we'd be buying and using them all of the time.
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This is a great point! Indeed, the fund would not be for regular use, as in fact the 3Speak post mentioned. It would be likely a threshold of 60-80c before this fund would even be touched, and that threshold would be settable by witnesses to adapt to different circumstances.