I don't know the mechanism of UST/LUNA (I don't have any investment in LUNA. So lucky I am)
I just think if LUNA/UST can swipe 15b market cap so 150m of HIVE can also be swiped.
What usually happens when the debt increases and HBD is close to the haircut limit, or above it, more HBD is starting to be converted to HIVE, as users exit it, and the HBD supply drops.
As the HBD supply drops so does the debt level. In this way, the debt limit provides a balancing for the system as it forces users to exit HBD and reduce its supply. At the end it all depends on the price of HIVE
What if the users exit HIVE because of the low HIVE price and debt level increases again, then HBD loses its pegged again, users keep exiting HBD and then exiting HIVE ... Does it look like a death spiral?
No because, the HBD supply will drop, but also the HBD price will drop as haircut kicks in, and it cannot put a lot of new HIVE in supply. That is the role of the haircut rule.
There is a cap how much HIVE can be created from HBD, even at low HIVE prices.
Plus this will not play out fast, as the UST/LUNA did, because of the 3.5 days price feed.
This is battletested and has happened in the past, as you can see from the post.