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How Is HBD Different Then UST? by dalz.shorts

View this thread on: hive.blogpeakd.comecency.com
· @dalz.shorts · (edited)
$15.66
How Is HBD Different Then UST?
This is a reply to @finguru, who asked about some details for HBD and UST, the comment turned quite long, so I believe it deserves a short post :)



> I go in details about HBD, while only rough overview about UST.
> The basic mechanics for HBD are the conversions HIVE <-> HBD, where the blockchain gives you a price for HBD at $1, as long as the debt limit is not reached.
> The debt limit is very important parameter, because unlike most of the other stablecoins, HBD by design is set to brake the peg of 1$ in case of emergency. While this might be seen as a bad thing it is actually a good thing because the protocol gives upfront information about the state of HBD and everyone can adjust their positions upfront, and this is a protective mechanics that allows HBD to be priced lower then 1$, but never goes to zero :).
> Another very important parameter is the internal DEX and the hbdstabilizer. HBD conversions are not instant (3.5 days conversions), and because of this there is market risk in the process of conversions. Because of this the conversions by themselves keep the peg loosely, but there is better security, because of a better price oracle of 3.5 days.
This is where the stabilizer comes in place. It basically provides instant conversions for HIVE to HBD and keeps the peg in a tighter range. The stabilizer has around 130k HBD per day in liquidity to keep the balance. It is a type of incentivized internal market from where all the external markets for HBD can arbitrage and keep the peg on the external markets.

> In short
> - debt limit that controls the HBD supply preventing overexpansion
> - 3.5 days conversions preventing price oracle risks
> - incentivized internal DEX providing instant liquidity

> While for UST I know they have instant conversions LUNA-UST and they have some type of tax system (fees) as incentives for conversions.
> I have posted about the debt limit and the haircut rule, and will post again details soon :)

https://leofinance.io/@dalz/the-haircut-rule-the-biggest-risk-for-the-hbd-price-or-historical-data-on-hive-debt-and-hbd-price

Another important thing to add is that HBD is battletested. It has been around for a longer period of time then UST and has survived. 

![image.png](https://files.peakd.com/file/peakd-hive/dalz.shorts/48HeNuCz2zV5FTHLDyH21txgT7kzKpL7r5aLZNmpZKibLbvbaAFoZJ1qfwWLv9LXvg.png)
👍  , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and 62 others
👎  
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vote details (127)
@chekohler ·
$0.08
The only saving grace for HBD is that no one is using it with any scale 
👍  
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vote details (1)
@dalz ·
Scales are relative ;)
10M stablecoin MC would be amazing for say project like LEO
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@chekohler ·
Not exactly, Leo isn't an issuer of a SC, its only rehypothecating the value earned from swaps though, 10 mill for example means nothing if its 1 or 2 Liquidity providers, so disruption is also a factor
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@chronocrypto ·
$0.08
Excellent info Daz
👍  
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vote details (1)
@dalz ·
$0.91
Tnx!
👍  ,
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vote details (2)
@chronocrypto ·
welcome! 

Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@chronocrypto/re-dalz-659dcg)
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@ecency ·
Your content has been **voted** as a part of [Encouragement program](https://ecency.com/ecency/@good-karma/encouragement-program-continues-82eafcd10a299). Keep up the good work! <br><br>Use Ecency daily to boost your growth on platform! <br><br><b>Support Ecency</b><br>[Vote for new Proposal](https://hivesigner.com/sign/update-proposal-votes?proposal_ids=%5B197%5D&approve=true)<br>[Delegate HP and earn more](https://ecency.com/hive-125125/@ecency/daily-100-curation-rewards)
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@emeka4 ·
$0.08
Thanks for enlighten us on this an really impressed with it and keep up the good work moving.
👍  
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vote details (1)
@fijimermaid ·
Very informative, @dalz.shorts.
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@hivebuzz ·
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@india-leo ·
Indiaunited Curation 1652193166834
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@mypathtofire ·
$0.10
Great info. What is the current debt limit? are we far from a haircut if Hive falls further?
👍  
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vote details (1)
@dalz ·
Current debt limit is 10%, it will be raised to 30% with the next hardfork somewhere in June.
With the current price of HIVE, 0.66, the debt is around 3%. 

Live info here
https://hive.ausbit.dev/hbd
👍  
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vote details (1)
@mypathtofire ·
thanks!
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@olympicdragon ·
$0.12
It's very detailed. The stabilizer is an important part of HBD, and has 130k in liquidity per day. I didn't know until now !
👍  
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vote details (1)
@dalz ·
Check the proposal... its should be more actually, just looked at it now.... the proposal asks for 240k HBD per day, but the DHF budget is around 160k daily (1% of the 16M HBD in the @hive.fund), minus the other proposals, so it somewhere above 150k. As the budget of the DHF grows so does the budget for the stabilizer.


![image.png](https://images.hive.blog/DQmQixPgkS2iUnfvDBL9TktKUvVuEEDS8vTDWULHGnuvxah/image.png)
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@valorbeats ·
I think the biggest thing difference is it didn't crash to $0.60 lol
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