This proposal isn't meant to address downward failure of peg, but that hasn't been much of problem, since HBD holders tend to increase conversions to Hive as haircut is approached.

But if the concern is that this mechanism would get us to the haircut ratio too quickly, another option I've thought of is to stop allowing conversions at some point before the haircut ratio even. I'm just not sure that it's necessary. I don't think it would be advantageous for a Hive->HBD converter to approach the haircut limit, because it increases the chance that the HBD they are creating for themself would lose value due to the haircut taking effect.