Here's a post written for SBD, but it also mostly applies to HBD: @timcliff/sbd-explained

One thing that was added later, so it is not described in the article above, is that HBD is also created from Hive that is transferred to the Decentralized Hive Fund (DHF). The DHF only pays out to proposals using HBD, so this auto-conversion of Hive to HBD mechanism was added to allow for people to donate Hive as well as HBD to the fund. This mechanism is now being used by the hdbstabilizer bot to create more HBD (increase the HBD supply) and push the price of HBD down to its peg price.