The catch is the risk that HIVE price fluctuations means you might get more or less than $1 at the end. You get the average (median) price over the 3.5 day period which isn't necessarily the same as the price at the end when you receive the HIVE.
Also if HIVE were to drop a lot (around 50% from current levels) there is a haircut rule where you get less than $1 for the conversion. Given crypto volatility that isn't impossible in 3.5 days, but probably still reasonably unlikely.
Yeah, that's what occurred to me also. So I guess this means that after HF25 HBD will have an upper bound of $1.05 and a lower bound of $0.95 since people will have big incentive (and the ability) to convert between Hive and HBD and correspondingly sell or buy HBD, right? It would put an upper and lower bound to the possible fluctuations. At least the upper bound will definitely be there, which will also greatly help stabilize the lower bound as well due to the reduced upward fluctuation. If I'm understanding this right.
If by lower bound you mean conversion price, it is still $1.
Convert 1 HBD into $1 worth of HIVE
Convert $1.05 worth of HIVE into 1 HBD
As far as market factors, who knows.