As I understand the peg works as follows: The "Convert HBD to HIVE" button will destroy the HBD and produce $1.00 worth of HIVE. The system charges a 5% fee. The conversion takes 3.5 days. People should only use the "Convert" button when the price of HBD is below $0.95. (A large number of people don't know this. They press the convert button because they find the internal market confusing.

HIVE is currently trading at about $0.50. So converting 1,000 HBD would create 2,000 HIVE. Were HIVE to fall to $0.25, the conversion would create 4,000 HIVE.

The movement of HBD tends to follow HIVE. So when HIVE is weak, HBD is weak. The peg will generate large quantities of HIVE when HIVE is weak. It makes the price of HIVE drop even further.

HIVE cuts off the HBD conversion of the market value raises above the 10% price for three days. We could start seeing panic conversions and selling of HBD if there was a drop in the price of HIVE.

The mathematics of this system is really scary. It puts a huge downward pressure on HIVE.

I understand that the witnesses want to raise the haircut rate for HBD from 10% to 30% of HIVE.