The system guarantees the price of HBD with HIVE. The value of HBD comes from the fact that one can launch the convert process which will destroy the HBD and generate a dollars worth of HIVE after 3.5 days.

To protect HIVE. the system has a hard cap that says the market value of HBD must be less than 30% of HIVE. Were the market value of HBD to rise above 30%, the system would trigger a haircut.

So, HBD is not immune to bank runs. Investors in HBD need to watch the HBD to HIVE ratio. Ausbit Bank has a page which shows the current values.

The gauge is currently at 6%. It had jumped over 7% during the last market dip. HBD investors converted about $600,000 HBD during the dip.

This was bad news for HIVE as it generated a million HIVE that the market had to absorb in a down market.

So, while HBD is a great investment at 20% interest. It is not completely risk free. PS: I am not a big fan of the interest rate because it has the potential to destabilize HIVE. HBD holders will lose their money if HIVE falls to low.

!WINE