From the one side I absolutely agree that Hive is a more mature project and we can feel more secure about it's future, however there is one more factor to consider. Price of HIVE seems to be heavily correlated with other crypto assets, hence, we cannot rule out another crushing bear market and price ranges we all waited through for a long time.
In this case higher haircut creates potential attack vector. Somebody could potentially buy a lot of HBD and convert these to HIVE for a relatively low cost. It would costs somebody leg and arm to buy HIVE off the market, but HBD with stable price makes this opportunity possible. The higher haircut the easier it gets if I have it right, or don't I?
Thank you for your effort and this post!
Interesting point!
Still not sure where those big amounts of HBD will come from without moving the price of HBD. HBD on the open market is not pegged. Its is pegged only on the blockchain when making conversions.
For example the biggest external HBD liquidity is now on Upbit with around 4M HBD. On bittrex there is around 400k, and there is a few pool on Hive Engine with 50k to 100k HBD in them.
Usually in a bear market there is a tendency to reduce the HBD supply, just look at the chart above, from 16M HBD in July 2018 to 3M in Feb 2020. Meaning if the bear market comes, this 4M HBD on Upbit will be at least less then 2M HBD. Even if some manage to buy all of this for a $1 (theoretically not possible), at a $0.1 per HIVE this will be 20M HIVE if converted.
Now in a case when the debt limit is higher, all the numbers above can go x3, so a 60M HIVE. This is a super extreme and theoretically not possible, because cant buy all the HBD from external markets, without pushing the price of HBD and then HIVE.
I see a small added risk here when combine HBD buying with buying HIVE. HBD just to be a helper in the case. In that case HIVE price goes up, and the rest is history :)