Inspired by a post by @xplosive I started digging into HBD a little to figure out what to with mine, whether to stack them, put them into savings or flip them into HIVE, LEO, SURGE or maybe BTC.
This is the first real post I'm writing, and it's mostly for me to summarize what I know and hopefully get some feedback.
I have my fair share of experience with decentralized stable coins, e.g. I held a few thousand UST when LUNA crashed, so HBD is very interesting, especially seeing it work for such an extended period of time.
So HBD retains a soft peg against USD because theres (basically unlimited) liquidity against HIVE, you can swap your HIVE into HBD and back, it comes with some waiting, a bit of process and (when swapping HIVE into HBD) a 5% fee. As you always get 1 HBD for every USD worth of HIVE, there's basically an arbitrage opportunity if case the price of HBD exceeds 1 USD. Less the fee, it means it's acceptable for HBD to trade up to $1.05. Okay, I get that.
The other way isn't so obvious: when HBD goes below 1 USD, then there's an arbitrage opportunity to buy HBD, swap them into 1 USD worth of HIVE and sell the HIVE for 1 USD. Sure. But where do these HIVE come from? Do these get newly minted? (I know I didn't ask where the HIVE go when swapped into HBD).
In until here, it's possible a major depeg of HBD could cause a lot of sell pressure on HIVE, but that's where the waiting times and, even more so, the haircut rule are coming into play. The total amount of HBD isn't supposed to exceed 30% of the mcap of HIVE, and if it does, you'd get less HIVE per HBD. This way, an issue with HBD can't really spread over to HIVE. Smart.
(I wish the LUNA guys had looked at HBD)
So I guess that the main question for me is where the 15% APR are coming from. If this is just inflation of newly minted HBD (which I suppose it is) then it means this will continue to create sell pressure on HIVE if folks want to liquidate their interest, and seeing that the main way of cashing out is through HIVE, given the limited liquidity for HBD on exchanges.
It overall seems a very solid model. It also means if there's a lot of demand for HBD, this will drag the price of HIVE up long-term. If I ever get to stack a bigger pile of HBD, I might actually put them into savings because 15% on stables, if sustainable, is extremely attractive. I'll even consider flipping some of my other stables into HBD.
It also means there's merit (imho) in fostering adoption of HBD in general, as there's been a debate in terms of the value of @SpendHBD etc, so that's great! 
I hope I summarized this correctly, and that if not, someone will come and tear this apart :-)
Posted Using INLEO
I almost always use the Internal Market to buy and sell Hive for Hive Dollars (HBD).
So far I tried the swapping function only once or twice (or at least only a very few times).
I am also not a Hive blockchain expert, nor a financial expert/advisor, so my post is not financial advice.
Only my personal investing decision, my personal investing approach, and my personal experience.
Everyone should do their own research before they invest any money into anything.
I wish successful investing to everyone.
Thank you for your comment. Of course, I didn't assume you're giving investment advice (not am I), I'm just really ew to everything here so I'm trying to learn as quickly as possible.
Some people are certainly able to answer your questions about how the Hive economy/market works, including the relation between the Hive and the Hive Dollars (HBD).
And probably it is already written somewhere on the Hive blockchain by someone.
Nowadays I do not use Discord, but many people on the Hive blockchain use it.
Probably it is easier to ask and receive answers for your questions there.
Yeah I don't use Discord too often myself. Would be great if all the information available here would be indexed somehow. Sometimes when I search for info about Hive I find posts that are 7 years old, so I'm not sure I can trust them.
I sold most of my Hive in November 2021 (near the top) and bought HBD, Bitcoin, Pepe, Blurt, etc etc
Earning 20% APR for the 1st few years then 15% …
It’s been a pretty good investment so far …. but I’m up way more on my Bitcoin, and other Crypto …
I guess the key is to be diversified in case Bitcoin drops to Zero.
Well I guess if Bitcoin went to zero, HIVE would too, and therefore als HBD. But I get the gist :-D
Yeah. Good to have some land and other stuff too
The conversion between Hive and HBD is the original way to go from one to the other, and it is part of the layer 1 blockchain protocol and code. We had it on the pre-fork chain as well. I think the HIVE is created/destroyed when converted to/from, if I recall correctly.
But now we can trade/swap on hive-engine which most people know about, but also https://beeswap.dcity.io/convert which less know about. The later offers rewards rather than fees sometimes for doing a swap, so not only do you satisfy your need to swap but you make money from it.
There is a well funded proposal which gets paid hundreds of HBD per day and its purpose is to stabilize the HBD price. It does this very well! And often makes a profit in the process. https://peakd.com/@smooth/hbd-stabilizer-proposal-august-2025
The APR on HBD has been 15% for a while now, but was 20% for quite a while too. When people vote for witnesses who signal a higher HBD then the rate can go back up. The rate is the median value of the top 21 witnesses, if I recall correctly.
HBD competes against other stable coins, such as $SURGE in the LEO-verse, paying about 18% now. Also against banks paying up to 4.3% (Everbank for example https://www.everbank.com/) and government bonds and bills (around 4%) and Stock funds like SGOV (around https://finance.yahoo.com/quote/SGOV/) and now Strategy's Bitcoin backed stock paying about 9% https://www.msn.com/en-us/money/markets/strategy-s-capital-pyramid-is-stretch-the-smartest-or-riskiest-layer-yet/ar-AA1K9AQZ
One can see that we pay among the highest returns. All you have to do is trust the HIVE blockchain. :)
Best wishes in all you do!
Thanks a lot for the explanations, it really helps understanding HBD better. Do you know if there's a wrapped or bridged version of HBD on any other chains like Ethereum? I guess that could unlock a bit of its economic potential
No wrapped HBD, but @vsc.network is building a solution to unlock HBDs economic potential. @lordbutterfly gave a presentation at Aachen recently:
https://peakd.com/hivesummit/@hivesummitaachen/presentation-lordbutterfly-defi-and-the-vsc-project
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