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As the blockchain industry continues to evolve, a growing number of financial products and services once exclusive to traditional finance (TradFi) have started finding their way into the digital currency realm. The rise of decentralized finance (DeFi) has unlocked new opportunities for capital allocation and innovative forms of earning passive income on otherwise idle crypto assets.
Hubble Protocol is a DeFi lending protocol built on Solana, one of the most efficient blockchain networks in the sector. It aims to democratize access to decentralized financial services and provides users with an opportunity to expand their exposure to crypto markets via multi-asset collateralized crypto loans. Hubble allows users to deposit various digital assets, including Solana, Bitcoin, and Ethereum, to borrow up to 90.9% of the value of their deposits in freshly minted USDH stablecoins.
Before we continue, let’s quickly check out the main advantages and disadvantages of the Hubble Protocol:
Hubble Protocol pros:
- Zero-interest borrowing
- 110% collateral ratio on loans, with up to 11x leverage
- One-time 0.5% USDH minting fee
- 85% of fees generated by the protocol go to HBB stakers
- A 10% share of liquidated crypto assets goes to users who stake their USDH in the stability pool
Hubble Protocol cons:
- A relatively small selection of supported crypto assets compared to some centralized counterparts
- Loans are issued in USDH exclusively
How does Hubble borrowing work?
Hubble utilizes the power of the Proof-of-Stake (PoS) Solana blockchain, which can process up to 65,000 transactions per second while retaining low transaction costs, allowing users to stake their crypto assets in exchange for USDH loans. Users can earn yield on their deposited crypto assets while enjoying the potential upside of their deposited tokens rising in value in the spot markets at the same time.
Hubble’s ‘Borrow & Earn’ dashboard. Image source: Hubble Protocol
Collateral can be withdrawn at any time with no additional fees attached. For the duration of time that your deposited assets are locked in Hubble’s vaults, your crypto continues to generate competitive yield rates.
In short, Hubble Protocol provides an opportunity to retain upside on your collateral, while allowing you to invest USDH in stablecoin yield products. Once USDH is repaid, collateral and any gains that might have accrued during the loan period are returned to the user.
What is USDH?
USDH is the Hubble-issued fully decentralized algorithmic stablecoin pegged to the value of USD and backed by a basket of digital currencies, including SOL, mSOL, BTC, ETH, RAY, SRM, and FTT. Once users decide to deposit their digital assets as collateral using Hubble, they can borrow up to 90.9% LTV in USDH. Hubble charges a one-time 0.5% minting fee, with no daily compounding interests, loan overdue payments, or liquidation fees that most borrowing protocols charge for their service.
USDH can be utilized for a multitude of DeFi use cases, such as transferring value across the Solana ecosystem, liquidity-providing options on decentralized exchanges (DEXs), or simply as secure a store of value. To learn more about how USDH maintains its US Dollar peg, click here.
A diagram showing how USDH’s price stability is ensured. Image source: Hubble Protocol
Additionally, USDH holdings can be deposited in Hubble’s Stability Pool to provide liquidity to the protocol and cover any bad debts. In return, users who deposit their USDH into the Stability Pool can earn a 10% share on liquidated assets and HBB, the protocol’s native governance token.
What is HBB?
HBB is a governance token for the Hubble platform, designed to provide several lucrative perks to its holders.
Hubble intends to distribute 85% of fees generated by the protocol to HBB stakers. HBB token holders can also look forward to customized yield rates and an optimized fee structure. Hubble has extra products and services in the pipeline that will provide additional passive income-generating opportunities for HBB stakers.
Hubble’s ecosystem overview. Image source: Hubble Protocol
Initial decentralized exchange offering (IDO) of HBB will go live on January 14th at 2 p.m. UTC on SolRazr, a Solana-powered Launchpad platform. Click here for more information about the upcoming HBB launch.
Leverage loan options and democratized liquidations
Hubble Protocol users can take a loan up to 110% of the value of their deposited crypto assets. Not only that, Hubble gives you the option of taking out new loans up to 11x leverage on your collateral. As is always the case when using leveraged products, we advise you to practice caution and not increase your exposure beyond your financial limits.
Liquidations are an integral part of crypto borrowing and are necessary to keep the sector healthy and as liquid as possible. While centralized lending services, such as Nexo or Binance’s Loan program, pocket the whole collateral when liquidating their users’ loans, DeFi seeks to involve community members in the process. Hubble is taking this approach to the next level by distributing crypto assets obtained from bad loans among its user.
Hubble Protocol provides users who have deposited their USDH into Stability Pool with an opportunity to earn ~10% difference from liquidated loans, while simultaneously earning HBB rewards.
Roadmap and best ways to follow Hubble Protocol’s development
The Hubble team has outlined a broad rollout plan for its upcoming DeFi services and products portfolio. In Phase 1, a number of features will be implemented to increase the platform’s utility. Phase 2 will bring structured products, while the final phase will introduce undercollateralized loans.
Stay up to date with the latest updates and product announcements: Website, Blog, Twitter, Telegram, Discord.
Final thoughts
A fixed percentage fee with no hidden costs, the ability to earn yield on deposited crypto assets, and a multi-use case USDH stablecoin make Hubble Protocol one of the best lending platforms in the DeFi space. Enticing staking rewards and perks for HBB holders along with democratized liquidation mechanism allow Hubble Protocol users to effortlessly generate passive income streams while retaining exposure to spot market action.
Stay tuned for the upcoming launch of HBB and the full rollout of structured lending products later in the year.
