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Senselessly Inflating HBD Could Backfire

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@reonarudo
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This is the price chart of LUNA, the cryptocurrency backing up the TUSD stablecoin.

HBD stands for Hive Backed Dollar. If the market cap of HBD should far exceed that of HIVE one day, the peg couldn't possibly hold if there is a disturbance on the market like the alleged attack by Citadel.

Another thing, some people have been saying that HBD is too unstable and that it should track the USD much more closely to be a proper stablecoin.

I disagree. It is desirable that the HBD fluctuates more easily than most of the so-called stablecoins on the market. It helps keep it real for the market participants.

DAI is holding up remarkably well. This is because of its overcollateralization. If the market cap of HBD is allowed to grow indiscriminately, the risk of catastrophic failure goes up exponentially.

Posted Using LeoFinance Beta