Half of the HIVE amount is converted immediately into HBD (using the minimum witnesses price feed for the last 3.5 days) and sent to the owner.
The remaining HIVE amount (the collateral) is put on hold till the actual conversion takes place 3.5 days later.
The HIVE/HBD price variation risk is cushioned by an extra 5% HIVE fee that will be applied to the collateral.
When the actual conversion takes place (3.5 days later), HBD is printed out of thin air, the equivalent HIVE amount (using the median witness price feed for the last 3.5 days) and the collateral fee is burned, and the remaining amount is returned to the owner.