The Hubble Forum has been live for two months. It's an important addition to the protocol, as the forum is our first gradual step towards a fully autonomous DAO governance model.
As it exists now, the forum serves as a central point of discussion. The team introduces proposed changes to the protocol, and the community shares their feedback and suggestions on these proposals. First and foremost then, the forum is a focal point of protocol transparency.
Since the forum’s introduction, no single change has been made to the protocol without first being put up for discussion in the forum. Though the model for translating user feedback into actionable changes to the platform is still undefined, the input from the community has been constant and is highly valued by the team.
We hope to fuel discussions even more and drive increased feedback of even greater quality.
So far, the Forum has seen 52 total posts/comments, with ten official proposals and over 7.7k post views. Here is what the first two months of the Hubble forum had in store.
These proposals were initiated by the Hubble Protocol team. Discussions on each proposal were open to the public.
Recovery Mode Removal
The Recovery Mode Removal discussion was the first official topic on the forum. This topic introduced a fundamental change to the protocol to see Hubble transition from a more Liquity-inspired platform to a model that more closely resembles MakerDAO.
We also published a comprehensive blog post on the distinction between and the value of both models.
The removal of Recovery Mode introduced a new, system-wide 75% LTV (though a later proposal would suggest a higher maximum-LTV of 80%), which would replace the maximum 66.6% system-LTV. With Recovery Mode, any loan above 66.6% could be liquidated when the system-LTV hit 66.6%, but individual loans had a maximum LTV of 90.9%.
Having Recovery Mode meant that USDH would always be backed by a minimum of $1.5 of crypto. However, with Recovery Mode’s removal and a new 75% maximum-LTV, USDH is always backed by a minimum of $1.33 in crypto.
We believe that this was a necessary change for a better UX. However, USDH is technically less “overcollateralized,” as the recovery mode mechanic could allow a user’s actions to put other users at risk of liquidation.
Community feedback on this was overwhelmingly positive, with the main suggestion centering around the 75% LTV and whether it could be raised higher via certain user actions.
Beyond simply raising the LTV to a less conservative 80%, as would be proposed a while later, users also suggested that the scale of Stability Pool deposits could be correlated to the LTV allowed for each user.
This feedback is noted, and we are still looking into different ways to bring additional functionality to the Stability Pool.
Peg Stability Module
The next proposal would also introduce a fundamental change to the protocol mechanics directly related to the USDH peg.
Initially, USDH peg stability would have been ensured by a redemption mechanism on the protocol. As with Recovery Mode, the Redemption Mechanism was inspired by Liquity.
The Redemption mechanism would have allowed users to redeem 1 USDH for $1 of any collateral on the platform, regardless of the USDH market price. If USDH ever dropped below peg, the redemption mechanism would effectively raise USDH demand, thus bringing it back to USD parity.
However, the collateral for which USDH would be redeemed would come from user loans on the platform, starting from the users with the highest LTV. While incurring no net losses, and getting a lowered LTV, the redemption mechanism would have led to users losing their collateral assets.
Unlike the proposed Peg Stability Module (PSM), the redemption mechanism also had no effective solution for above-peg arbitrage.
The PSM proposal introduced a new mechanism via which USDH can be swapped 1:1 with another stablecoin, natively on Hubble, at all times. This process allows for below- and above-peg arbitrage.
The initial proposal would have seen USDH paired with UST in the PSM, though recent events have seen us opt for USDC instead, as is mentioned in the addendum at the bottom of the PSM proposal. Though it has a measure of centralization risk, we believe that, historically, it is the most reliable stablecoin to pair with at present.
The PSM was also well-received. Most users were on board with the idea of pairing with UST. However, after the LUNA/UST crash, there seems to be an overall positive outlook on USDC amongst the majority of the community.
The PSM has been implemented in Hubble’s back-end, and we will follow up with an announcement once the PSM launches publicly.
Ambassador Program Proposal
With the Ambassador Program, we are looking to incorporate our community in our drive for further adoption of Hubble and USDH.
There are two ways of increasing exposure to Hubble as we see it. The first method is sourcing third-party influencers and thought leaders who have, for the most part, limited interest in our protocol. The second way would be by incorporating our current users and driving new users to the platform, whom we believe would contribute value to our community and Hubble itself.
We strongly believe that the second option is more sustainable and will be more valuable in the long term.
The Ambassador Proposal outlines the structure of this program, via which community members will be rewarded for various contributions that they make to Hubble, be it outward-facing or internal to the community and the forum.
The Ambassador Proposal is the most viewed Proposal on the Forum, with over 1K views and 33 replies. The interest that has been shown in the program has been phenomenal, and we are looking to double down on finding the best structure to drive this forward.
Numerous community members have received tips for contributing to the community and discussion, and as the Ambassador Program slowly finds its feet, this will only increase.
We have not officially kicked the program and are still busy tailoring the program to serve best the needs of both the protocol and the community.
Security is a critical component of what we do. Our devs are obsessed with it. If we ship a piece of code, beyond looking over it again ten times, we submit it for a formal audit.
Our current cadence of audits is at the very least monthly, and all of them are published on our audit page once they are released. Beyond this, we also have bug bounties of up to $500K.
The Net-outflow Ceiling Proposal introduces a security parameter that would limit the net outflows from the protocol per token type. Thus, each collateral type would have a ceiling for much of that token can be taken out of the protocol within a 4-hour time frame, with six windows per 24 hours.
This would be the same for the amount of USDH that can be taken off protocol within a time frame, including the USDH minted via the PSM.
The main feedback we wanted to get on the Net-outflow Proposal was suggestions around appropriate ceiling amounts for different tokens. Naturally, lower-risk tokens like BTC could have higher ceilings than lower market cap tokens like RAY or SRM.
Thus far, user feedback has been sparse, and we encourage the community to share their thoughts.
We are determined to involve the community in what we build, so suggestions and comments are highly valued.
Increase LTV to 80%
With the removal of Recovery Mode, the maximum LTV across all assets on the protocol was decreased from 90.9% to 75%. After monitoring community feedback in the weeks after removing Recovery Mode, it grew apparent that 75% was simply too conservative. Most users with old, 90.9% LTV loans simply preferred to keep those loans active instead of migrating to the new system.
Of course, we first had to assess whether increasing the LTV would not put the protocol at risk. It’s necessary to keep in mind that raising the LTV would also decrease the over-collateralization ratio of USDH.
After looking at the overall stability of the protocol with the 75% LTV, even during the recent stress test with the SOL price dropping over 50%, it is clear that raising the LTV to 80% would not bring significant risk to the protocol.
The 80% LTV Shift was proposed after seeing that community sentiment was overwhelmingly in favour of a higher LTV. Thus, to no small extent, our learnings came before the proposal itself.
We have not yet raised the LTV, though this is not far from being executed. After implementation, we will continue to monitor stability to see if additional changes are warranted/necessary.
Collateral Onboarding Poll
Collateral is at the core of Hubble Protocol, and the more collateral we accept, the more versatile the platform becomes. In addition, different collateral types naturally assume varying risk levels, and all of these also need to be taken into account when onboarding new collaterals.
The Collateral Onboarding Poll itself was published to gauge community interest in different collateral assets, from yield-bearing assets like cTokens from Solend and LP tokens from Raydium to Layer 1 blockchain (L1) tokens like NEAR and AVAX.
The poll encompassed a wide variety of tokens and received over 132 votes. The purpose of the poll was to ascertain which assets our community was most interested in seeing onboarded first, and the results were quite conclusive.
L1s and Solend cTokens received the exact percentage of votes and were the clear favourites. Staked assets like stSOL and mSOL came in second, with the Orca mSOL/SOL LP third.
We will soon be ready to onboard new collateral tokens, and the poll gave us valuable insights into community interest.
Following the recent plummet in market prices across the board, it became clear that liquidation protection or partial liquidations would be welcomed additions to the platform.
The team has been mulling this over for a while. As presented in the Liquidation Protection Proposal, there are two ways to ease the burden of liquidations.
The first option is to implement partial liquidations. Once a loan hits its maximum LTV, a portion of the deposited collateral is sold, swapped to USDH, and some debt is repaid. This would automatically lower the LTV of the loan, but it results in the user losing a portion of their collateral.
The second option is to use a user’s Stability Pool deposit to repay a portion of their loan.
The feedback on this proposal has been very positive and well thought out. As we anticipated, Stability Pool protection is extremely well-received. However, most users seem to agree that both options should be implemented.
It will take quite a bit of development to reach the point where Hubble can implement liquidation protection services, so stay tuned for updates.
As we progress towards a more mature governance model, community proposals will become an increasingly prominent part of protocol decision-making. Thus far, there have been four official community proposals, and we are thrilled that users are investing time into building out proposals and presenting them for feedback.
We have yet to initiate the latter parts of our governance process, whereby “Proposal Ideas” will move into the formal “Hubble Improvement Proposal” process and eventually progress to on-chain voting. That being said, the structure for our official governance process has been built out on the forum and can be viewed from start to finish here.
Here are the community proposals presented in the first two months of the Hubble Forum:
NEAR Collateral Onboarding
The first community proposal on the forum was to onboard the NEAR L1 token as collateral. This post followed the release of our proposed collateral onboarding process.
The NEAR Proposal presented a strong case, though it is evident that greater NEAR liquidity is necessary on Solana if we are to onboard the token onto the platform. For any token that we onboard onto the platform, the ability to liquidate that token is an essential requirement. We require the token to have substantial liquidity natively on Solana to do so.
In the future, this may change with an increase in cross-chain activity and the prospect of cross-chain liquidations.
Hubble Uranus Vaults
The Uranus Vaults have been a community favourite since they were first proposed. We are already looking into the potential to develop a yield product that incorporates some of what was proposed here.
In essence, the Uranus Vaults Proposal raises the idea of automated strategies within vaults, where users can opt into an ongoing yield-earning strategy with a single click. The proposal introduced two vaults, a “short-orbit” and a “long-orbit” vault. Both vaults would entail a deposit of collateral, a loan of USDH, and depositing USDH into the USDH Vault (Stability Pool).
At this point, the short orbit would swap the HBB and liquidation rewards into the originally deposited collateral. In contrast, the long-orbit vault would deposit the HBB rewards into the HBB Vault to earn USDH fees and use that USDH to swap back into the deposited L1. Hubble would take a small % cut from the yield earned on the strategy.
Naturally, the community was more positive about the long-orbit, as it does not involve the dumping of HBB. So, we have taken the proposed ideas and blended them into a further development that we are currently exploring.
This proposal follows what Marinade has done with their MNDE NFTs. The primary thoughts behind the NFT Proposal are that NFTs are easier to vote with, fuel engagement, and, in the Marinade Model, get users to lock their tokens for 30-day periods.
As a team, we are very interested in NFTs, and we are looking into a wide range of possible options for how exactly NFTs could fit into the protocol.
Redemption Mechanism Returned
This proposal seeks to bring the Redemption Mechanism back, the argument being two-fold that: USDC is not the ideal token to be backing USDH and that the redemption mechanism also encourages users to lower their LTV.
The team had considered this topic even before we launched in January, and we are certain that a PSM is the best way to go. However, it’s worth keeping in mind that we can also open additional PSMs with more stablecoins paired with USDH. At present, USDC is quite clearly the most reliable option.
We are thrilled with the engagement in the forum thus far, and we look forward to its further growth as the focal point of governance when the time is right. We will continue to engage users with our proposals and encourage users to engage with community topics when they are posted.
Once again, thank you to each and every one of the community members who have grown the forum into what it is. With your help, we will continue to build.
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