People are worried because of the laws of supply and demand.
If you have something in short supply (in this case HBD), which is very desirable (because of the 20% interest rate), the price goes up.
Suppose the Federal Reserve offered 20% on dollar deposits - the interest rate combined with the strength of the US govt would mean that money flooded in and the dollar would strengthen relative to other currencies.
These laws of supply and demand mean HBD should be strengthening against bitcoin and the USD.
But it's not supposed to. The peg is incompatible with 20% interest rates. For 1 HBD to equal 1 USD while offering 20% interest requires massive selling of Hive relative to HBD.
There are three outcomes:
The peg is abandoned
The 20% interest rate is abandoned to reduce demand for HBD
You keep the 20% interest rate and Hive is sold and it's price driven down to maintain the peg.
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You are missing the demand for HIVE. It is true in isolation, in theory, what you describe could happen. However, there are also use cases for HIVE, in particular, activity on chain. When couple with governance, we see there are reasons to hold HIVE (HP).
That said, we need to have discussions on how to increase the return for holding HP outside of inflation. This could add to the mix, making both tokens required.
HIVE is obviously more volatile and speculative. HBD is meant to be more consistent. The two can coexist.
Posted Using LeoFinance Beta
The returns of HP aren't too shabby as they stand. Also, Hive can moon but HBD (can also moon but we don't want it to) can't*
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The HBD stabilizer helps to prevent that.
So does the pHBD liquidity pool. That will also help to keep the price down as arbitrage opportunities.
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