A couple of lines here had me scratching my head. I'm sure I must be confused. Help me understand.
Namely, the couple of head scratcher lines were in the section titled "HBD interest doesn't affect inflation" and follow:
HBD Interest is completely separated from Hive inflation...HBD Interest is printed out of thin air.
...please don't forget that for every HBD there has to be HIVE in the background "backing it" since HBD is "Hive-backed Dollar" after all.
Line 1, regarding HBD interest not affecting Hive inflation
Minting new HBD has no impact on Hive inflation? How can this be true?
Based on the explanation of "...posting rewards, curation rewards, DHF, passive Hive Power inflation, witness rewards etc...", I understand that those things have a prescribed emission rate and therefore impact Hive's inflation at a prescribed rate.
HBD, as I understand, works differently. It does not follow a prescribed emission rate. Rather, it is minted based on how much people have moved into HBD or into HBD savings. That quantity, of course, is adjustable to the whims of HIVE holders.
Thus, "minting" HBD in the form of interest seems as though it would certainly impact HIVE emissions...if users converted that HBD to HIVE. There is a 3.5 day delay in this, but that seems minimal to me and really is only a time delay to impacting HIVE inflation. Of course, if the new HBD is not moved to HIVE, then HBD interest is indeed separate from Hive inflation.
Some maths.
Suppose the market cap of Hive was 100 HIVE. Suppose I have 10 HBD. After one year, I have 120 HBD thanks to the 20% APR. I decide to convert, say, 40 of HBD into HIVE. Three and a half days later, the market cap of Hive is now 140, a 40% increase in just a few days. How is that not affecting the HIVE inflation rate?
Line 2, regarding "for every HBD there has to be HIVE in the background"..
...two things come to mind. First, doesn't this mean that HBD actually does affect HIVE inflation? If the two are essentially able to be flipped and flopped back and forth at any time, doesn't newly minted HBD effectively increase the HIVE supply (and thus impact the inflation of the token)? Secondly, the notion that HBD is "printed out of thin air" has a couple of results, in my mind. It definitely impacts inflation of both HBD and HIVE in its thin air printing. And, this statement seems to directly contradict the idea that "...there has to be HIVE in the background 'backing it'." If printed out of thin air, almost by definition, there would be nothing backing it.
I'm sure...
...that I'm not understanding or seeing something here. What am I missing?