Most of the Hive users are aware of the HBD conversions. You convert HBD and get HIVE. However, since the last Hardfork in October 2020 we now have an opposite conversions happening on the chain, from HIVE to HBD. Although these are not available for everyone 😊.


![01.png](https://images.hive.blog/DQmSN6epqcyygi5GP1AJkZbmM5ZyYxerroLp1AiFPxin751/01.png)


When the Hardfork that created Hive happened back in March 2020 the Steemit Inc funds with few others accounts were moved into the @hive.fund account as a dev fund. From here proposals can be made and those funds used for developing the chain.

The thing is most of the funds were in HIVE. The proposals are paid in HBD. A conversion is need for these funds to be usable. More than **80M** HIVE was moved in this account.

As mentioned, starting from **October 2020** these funds are now converted into HBD so they can be used for proposals payment. 

If we check the @hive.fund account on the Hive block explorer https://hiveblocks.com/@hive.fund, and look for the *sps_convert* operation we will see this.

![02.png](https://images.hive.blog/DQmZDAgR5886eqZxXzShJD8sPXbA4JXuqoNoVNSSgAuyUeG/02.png)
 

This operation is from January 17, 2021.

A total of **39,743 HIVE** has been converted for just above **5k HBD**. These conversions are happening once per day. From the numbers above and from the total HIVE into the DHF account it looks like **0.05%** from the funds is being converted each day. 
This means that at this rate it will take 2000 days to convert all the HIVE into HBD, or approximately **5.5 years.** 


#### More than 80 million HIVE put in conversion to HBD, 0.05% per day, for a period of 5.5 years.
</br>

Obviously, this is a long term conversion period, more than 5 years, and its done for a good reason to because of the price fluctuations and the overall size of the stake. 

# How will this impact the HIVE economy and tokenomics?

The size of this stake is approximately 20% of the Hive supply. It is a big chunk of tokens to manage. What does this mean for the Hive tokenomics?

Some of the questions are:
-	Will these tokens flood the market?
-	How will this impact the debt ratio of the chain?
-	How much HBD will be printed?
-	How it is even possible for conversions like, this to happen?

To start with the bottom one, the fact that these conversions are active and happening at the moment obviously speak for itself that these types of conversions are possible. You just need to program them and the witnesses to accept them trough a HardFork that already happened in October 2020. Although these are virtual operations and most of the frontends don’t show them at all. If you want to check them you need to go trough the block explorer. 

**How will this impact the debt ratio of the chain?** This was one of the first thing that came to my mind. I asked @howo and he explained to me that the HBD in the dev fund, the @hive.fund account is not taken into account when calculating the debt of the chain.

For those who don’t know, the HBD to HIVE supply determines the debt ratio. When the marketcap of the HBD is more than 10% higher than the HIVE marketcap, HBD is stopped being printed and only HIVE is rewarded as authors reward. When the ratio is below 10%, HBD is printed again. At the moment the HIVE marketcap is above 50M and the HBD is around 4.4M, so its lower than the 10% mark. But if we exclude the hive.fund HBD (around 900k) the HBD supply that is taken into calculation will be around 3.5M. 

If these tokens are not taken into calculation for the debt, then they will have no impact at the mechanics above. **But** if I understand well the moment when this HBD leave the @hive.fund account they are impacting the debt. Whenever HBD payouts are made to the proposal workers this increases the debt. Meaning that although the HBD in the dev account is not impacting directly the debt ratio, the moment it exited that account it is debt. All the proposal payments create debt.


**Will these tokens flood the market?** Well not immediately and not directly. As we have seen the conversion is set for a 5.5 years period and this is a good thing IMO. This gives times for these funds to be absorbed slowly. Also, they are in a way **locked** in the development fund. However, this gives the whales more stake to handle at their disposal. 


**How much HBD will be printed?** At the moment of writing this, if all 80M HIVE were converted to HBD at instant there will be approximately **10M HBD** created. A dev fund worth of 10M. 
This is for a HIVE price of 13 cents. If the price of HIVE went up to 1$ tomorrow, than this fund will be worth 80M HBD. Again, at instant conversion. The long 5.5 years period for conversions is mitigating the price impact here as well. In the next 5 years the price of the token will probably go up and down and some average of this price will be used for the overall conversion. 

The interesting thing is that at these low HIVE prices less HBD is created. In a sense if we want smaller stake in the dev fund low prices are good. But this has more damage than good overall. At the end if we want to lower the amount of funds in the dev fund, the network can agree on this and lower them with a HardFork. Anyway, the funds in the dev account keep growing now. Three months ago, there was around 450k HBD in the dev fund and now it is almost 900k closing on the 1M HBD mark. At these prices around 40k HIVE is being converted to just above 5k HBD per day, or around 150k per month. With higher prices even more HBD will be created. 

One thing is sure, there will be no shortage of dev funds in this network 😊. But this puts the whales in a position to distribute large amount of stake through the proposal system. Especially in a year or two time when there will be millions in the fund. Hope this doesn’t create another attack vector for the chain. At this moment the funds are still not as high, but as time progress and more HBD is added into the dev fund things can get interesting. If the HIVE price increases, even more interesting. Anyways it is a stake based system so hope those with the largest stake and the most to loose will act in their own benefit.


All the best
@dalz

Posted Using [LeoFinance <sup>Beta</sup>](https://leofinance.io/@dalz/hive-to-hbd-conversions-or-yes-they-are-happening-in-the-dhf-dao-fund-or-lets-take-a-look)