HBD is a native stablecoin on the Hive blockchain. HBD is built to hold $1USD value in the most decentralized ways. It benefits from the fee-less and fast transactions of the Hive blockchain.
How does it maintain the $1USD peg?
There are two decentralized conversion operations designed to achieve this goal. HIVE to HBD conversion and HBD to HIVE conversion. These two operations keep the price at $1USD with a tight margin.
HBD to HIVE conversion
This operation converts set amounts of HBD to $1USD worth of HIVE with no extra fees. It takes 3.5 days for the conversion to finalize. The price in this conversion is the median price of the coming 3.5 days to prevent market manipulations.
HIVE to HBD conversion
This operation is a collateral-based conversion. After initialazing the conversion of the X amount of HIVE to HBD, the user gets Y amount of HBD immediately. The Y is equivilent of the value of X/2 of the HIVE. The cost for Y amount of HBD is calculated after 3.5 days and the remaining HIVE is returned to the user. The price is the median price of the 3.5 days. This conversion has a 5% fee which is burned in the process.
Savings account APR
Placing your HBD savings in a Savings Account on Hive will generate returns. Saving is an action that locks the HBD with a unlock time of only 3 days. The interest rate is voted by the witnesses and is variable. It is currently at 20% APR.
Risks
HBD has a security mechanism built into it called haircut rule. The haircut rule makes sure that debt ratio of HBD to HIVE is always less than 30%. Haircut rule gets activated when the debt ratio is greater or equal to 30%. It stops printing HBD and breaks the $1 peg. The HBD to HIVE conversion will return slightly lower value than $1.
The haircut rule has happened a few times in the past and is proven to be effective in preventing over debt while maintaining a healthy price for both HIVE and HBD tokens.
Statistics, market cap, and more