When you convert Hive to HBD, you get 50% of your Hive instantly converted to HBD at the current Hive price. The other 50% is held. Then after 3.5 days, you get back your Hive (not HBD), but how much you get back is determined by the median Hive price during those 3.5 days. So this is the actual price that is used for the conversion, not the current price at the moment you decide to convert. In my understanding, this prevents a kind of attack where someone might manipulate the price (e.g. do a short Hive pump in order to get more HBD) and then make a conversion at that moment. It would be easy to do this. But since the price is staggered over 3.5 days, you can't really manipulate the price like that.
I questioned the 5% conversion fee too, but it does seem to have its function, and the whole conversion operation is a starting point and it is intended that we keep improving upon it. You can read a more in-depth discussion here.
if the fee should be there for protection, I would be more in favor of a 7 days median price. last 3,5 days + future 3,5 days.
This makes manipulation super difficult and expensive. The 5% looks to me like a random number. Why not 3% or 1% or 0,3%?
1000$ = 50$ fee
10k = 500$ fee
100k = 5000$ fee
IMO this fee is not competitive with any other stable coin in crypto or regular fiat money.
No value here
Value = Benefit - cost.