RE: HBD is 11% above the peg! Turn the printers on!

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RE: HBD is 11% above the peg! Turn the printers on!

igormuba in LeoFinance • 4 years ago

There is an onchain conversion tool, but the way it is supposed to work is:

I am using fictional numbers to make it easier to exemplify:

If HBD is below $1 it is supposed to be profitable to convert HBD to Hive
Example, Hive is $0.5 and HBD is $1, if you convert HBD to hive you get 2
hive, but if HBD is $0.5 instead of getting 1 Hive (as they were the same price) you get 2 Hive as the blockchain always assumes HBD to be worth $1
If HBD is above $1 it is supposed to be profitable to convert Hive to HBD
Example, Hive is $0.5 and HBD is $1, you convert Hive to HBD you get 0.5HBD as it is half the rice,
but if HBD is $2, if you just exchange you would get 0.25HBD as it is 1/4 the price, but if you convert on-chain you are supposed to get 0.5HBD, and the network always assume HBD to be $1

So, the on-chain conversion tools are supposed to be used to arbitrate the price differences when HBD is away from $1

4 years ago in LeoFinance by igormuba

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sorin.cristescu 4 years ago

In the past the "conversion" smart contract only worked one way: from HBD to Hive (to maintain the peg on the downside). Now I see it works both ways and there is a 5% burn fee which was introduced ... didn't keep pace, thanks for pointing to the changes

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stefano.massari 4 years ago

Thanks for replay and for this clarification on HBD

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amblors 4 years ago

simple and clear explanation. thanks.

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