What is HBD: Simply think of it like a digital dollar on the hive Blockchain.
HBD makes a compelling case for one of the most decentralized stablecoins distinguished from the many claims of decentralization in the rapidly evolving crypto space. Unlike others, HBD has a unique design and also has a great underlying architecture of the hive Blockchain.
This confidence of HBD being the most decentralized stablecoin comes from its algorithms, on-chain pegging mechanism, reliance on decentralized witness network for price feeds and its community driven governance. These I'll be explaining in more detailed words.
Why is HBD more decentralized?
1.No centralized issuer: Fiat backed stable coins like USDT and USDC are managed by real-world reserves backed by banks, these stablecoins depend totally on the issuer's transparency and solvency, and must trust that these reserves are true, but for HBD, no company, or individual holds these reserves. By the market dynamics, HBD is minted and burned algorithmically by the hive Blockchain. This eliminates the need for centralized custodians, and also removes risk of censorship associated with centralized issuers and single points of failure.
2.Code in charge: Many blogs and YouTube had named it the "the haircut rule" , a fancy name for "safety switch" as I came to realize. This is how it works- If too much HBD is created compared to hive, it kicks it to stop creating more HBD, this is great right? It's just making sure things don't go out of control. This code runs automatically so that everyone can see it.
3.Decentralized governance and pricing feeds: On the hive chains are groups of people known as witnesses, they're elected by hive holders, these witnesses publish price feeds for the conversion mechanism between hive and HBD and reserve. This prevents a single entry from manipulating the price.
4.Transparency and Auditability: All HBD mechanisms are entirely online, the conversion, the transactions, etc. and they're auditable publicly on the hive Blockchain, this transparency stands in contrast to Fiat backed stablecoins where the actual reserves may not be truly transparent.
In conclusion: HBD is considered very decentralized because it's run by a smart computer program on the Blockchain without needing a central control or holding real money for it. Unlike other Fiat backed stablecoins, HBD is all about trust in the code and its community, and not on a company, individual or centralized body.