RE: RE: Hive Backed Dollars (HBD) FAQ

No, the death spiral that spelt the end of UST, CANNOT happen to HBD.

The two algorithmic stablecoins are actually designed completely differently and as such, the comparison is not a like for like.

The biggest difference between the two is that HBD uses a 3.5 day average price when doing conversions.

This makes arbing in this manner a little harder, but is much more secure.

The second major difference preventing what happened to UST happening to HBD is the “haircut” rule.

Remember, HBD remains stable by being redeemable for $1 worth of HIVE - Essentially hard coded ‘debt’ creation.

But to prevent the blockchain taking on an unsustainable level of debt, the blockchain has a level where it stops creating new HBD.

Once the haircut level has been hit, the amount of HBD generated is halted until the ratio falls back underneath.

Where does the 20% HBD interest come from?

I still need a little help answering this one.

Bear with me! ;)