I think that increasing supply will likely lead to more trading activity and liquidity, especially on external markets. And that in turn should lead to a better peg to USD.

Even more importantly, whenever we get close to the haircut ratio, it creates a loss of confidence in HBD that actively detracts from the appeal of HBD as an investment vehicle.

As to the potential risks, even a 30% haircut rule puts a strong limit on just how much Hive can be created via the conversion mechanism, regardless of how far Hive price might fall in a severe crypto winter scenario. After giving it a lot of though, I think we could easily go to even a 50% ratio without significant risk to long term Hive pricing, but in the end I decided it would be best to demonstrate that a 30% haircut ratio poses no real threat instead of proposing an immediate move to a more aggressive ratio.

With an increased haircut ratio, I think we should also consider adding more leeway between when the print rate decreases and when the haircut ratio hits. Ending HBD printing further away from the haircut ratio should encourage confidence in the peg of HBD (because it decreases the chance of the haircut ratio being hit). And the dramatic reduction in HBD inflation at that point is a supply rate change that works in favor of a rise in HBD price, which can have virtuous effects on the price of Hive itself due to the Hive->HBD conversion mechanism.

For example, with a 30% haircut ratio, we could set the print rate to stop around 20%. In this way, we should only expect to see the haircut ratio hit under one of two circumstances: 1) hive price drops significantly on its own after the print rate hits 0 or 2) HBD price is above $1 and therefore encourages conversions of Hive to HBD.

And in this latter case, where large amounts of HBD are created by decreasing the supply of Hive, the rules of the conversion mechanism will make Hive more valuable and place upward pressure on the price of Hive (and therefore decrease the risk of ever hitting the haircut ratio despite the increased supply of HBD).