20% is what's being offered, I suppose the DAO could try to negotiate more favorable terms if it would like to do so. Keep in mind after 20% there's a 50/50 rev split so assuming we're repaid it would likely be more than 20% due to that.
HBD also has its own counterparty risk. Witnesses can change that interest rate at any time and keeping HBD at peg requires constant downward pressure on the HIVE price. Every HBD printed is debt against HIVE. There's also the fact that HBD is not as liquid as other stables and trying to get in and out of large positions can be problematic. It took us multiple days of buys to even accumulate 6 figures of HBD without losing more than 3-5% on slippage. Even if we could somehow buy $4m worth of HBD at cost right now, I think it would require at best several months to ever leave that position and we'd have to assume the risk the interest rate doesn't change or HBD doesn't depeg if HIVE price gets too low.
As far as the calculation, it's simplified. We provide 4m (over a 2 year period) and we are owed 4.8m (also over a 2 year period). There would be ongoing sales to return the funds and daily accounting to keep track of what is spent and returned.
Part of the problem the team has is tied to the nature of their sporadic sales and lack of diversified revenue streams, which are things currently being worked on. They may do a core set and pull in 1.5m in a month and then spend 9 months making another 500k. I sort of look at this as the DAO annualizing their income and assuming the risk that they may default if market conditions worsen and the community stops buying sets. That said, we'd be in trouble either way at that point whether we did this deal or not.
Thank you for your clear and detailed reply! That makes a lot if sense.