Yeah but HBD can destabilize also. I see no difference only some different parameters.
( i only look at quality at the stablecoin)
If on Haircut limit and market drop 50%, HBD token loss 50% in value.
will someone convert here? probably not.
Hold?
market drop more? Who bails out? Nobody. A same result like luna with the difference it doesn't damage that much underlining asset.
The underlying asset ( hive) gets shredded on a slow and long drop
Our Attack vector is hive price. If we have for example 1 Billion HBD and Hive is at 10$ + ( increased HC limit to 25%).
Or 40$, what you like more. If price drop 50% at this point HBD is dead. Trust is gone. And a death spiral because of lost trust would also start.
Where is here any difference?
It is completely different from LUNA, it's not a matter of parameters.
With a 30% haircut ratio, it is only possible to add 30% to the supply of Hive, no matter what price Hive drops too, because the haircut causes the peg to break. So you can't generate a death spiral.
We predicted and patched the flaw that crushed Luna many years ago.
In super short, if hive price falls who pays the debt?
The HBD holder.
How can this scale in the volatile crypto tech space?
The HBD holder assumes the risk of a peg break in the event of a catastrophic fall in the price of Hive, assuming they don't exit their position before the haircut rule kicks in. But investors in HBD can monitor the risk level (i.e. how close HBD is to the haircut ratio and how much they think Hive may drop in price) and make an informed investment decision.
And it's not like a collateral-based system doesn't imply the exact same risk, unless the collateral is the same as the underlying stable coin.
And even if it is, then you have third party risk. For example, say someone is promising to back to a USD stable coin with real dollars (ala Tether). What happens if those dollars disappear?
All investments have risks of one sort or another. Personally, in the crypto space, I think HBD is one of the safer places to invest for predictable returns and I've taken advantage of it several times in the past (currently I think Hive is more attractive at current price, however).
For now 20% are sustainable.
For now haircut is fine.
For now everything is ok.
Is only the scaling problem that adds an unpredictable factor in. At some Scale Reputation risk will become the same as HBD would drop to zero.
Social and finance need a as much as the possible secure backbone. Because Social alone is a big topic.
And Stablecoin alone too.
One can break the other in many ways and open a death spiral caused of other reasons ( bad press).
That are problems on bigger scale.
For now 1M HBD would be absorbed. I think even 10M in a medium to bad market with time if someone would go full degen.
But 100M to Billions?
Maybe you get downvoted for calling people satanic pedophiles x)
Well, also downvoting people who answers your questions doesn't seem like very produtive way of going around things xD @world-travel-pro