Witness feed is USD. It just shows up as HBD on some sites because the Hive software doesn't have a symbol for USD, but that is misleading.

To clarify how the conversion works, the amount of collateral is determined based on the lowest witness feed price over the last 3.5 days divided by two, with the 5% fee deducted. Then at the end of the 3.5 days, the conversion amount is calculated using the median witness feed over the past 3.5 days with the 5% fee deducted, which is then subtracted from the collateral and the excess is returned.