When the price goes below $1, the stabilizer will not be buying Hive, and Hive will be inflationary again (as normal). From there, there are two possibilities.

1). As it goes sufficiently below $1 enough to justify the risk of converting, private traders will start converting HBD for profit. All the profit goes to those private investors, and all the virtual Hive behind that HBD goes to the market as inflation.

2). As it goes sufficiently below $1, private traders and also the DHF start converting HBD for profit. In this case, some proportion of the profit still go to private traders, but a not insubstantial (and potentially the lion's share) of the profit goes to the DHF. A lot of the virtual Hive is still released as inflation, but a substantial portion is captured by the DHF, mitigating the inflation.

What is the reason we should choose option 1 over option 2?