The Solana ecosystem has grown rapidly and is beginning to stand out from the crowd with huge advantages over Ethereum and other layer-1 blockchains. Truly, it is the first web-scale protocol — owing to an ultra-fast, secure, and scalable network.
Solana’s native token (SOL) grew over 300% since the start of August and is up over 10,000% since the start of the year — a signal of huge market interest. The Solana DeFi sector has also expanded rapidly from 1 billion USD total value locked in July 2021 to 12 billion total value locked in September 2021 with even more massive growth potential on the horizon.
Introducing Hubble: DeFi on Solana.
Hubble launches borrowing protocol, later evolving into a more utility-rich platform for structured products and under-collateralised lending.
Our introduction today details ‘Phase 1’, the borrowing protocol, which is designed to allow long term hodlers of crypto assets to unlock liquidity, increase capital efficiency and earn yield at the same time.
Users will achieve this by taking out a zero-interest loan against their multi-asset collateral, with no recurrent interest payments, or maturity. There will be only an upfront 0.5% fee and, in turn, users will receive USDH, Hubble’s native dollar-pegged stablecoin.
With their USDH in their hand, users are free to deploy it in any way they wish around the Solana ecosystem or wider market. What makes Hubble even more attractive is the ability to deposit multiple assets as collateral, decreasing liquidation risk and earning yield on this collateral while the loan is active — this means users keep both the upside of their tokens and the yield they bears!
That’s right, while your collateral is securing your loan, it’s earning yield and paying the debt off. The multi-asset nature of collateral offers better protection against liquidations, in the events when tokens drop in an uncorrelated fashion.
Our key features are:
- Multi-asset collateral
- Zero-interest borrowing
- Up to 90.9% loan-to-value (LTV) and up to 11x leverage
- Generate yield on deposits
- Hubble (HBB) stakers earn rewards
- Zero-cost potential
The Hubble borrowing protocol is designed to unlock your liquidity. Let’s suppose you have 2 BTC, 100 SOL, 3 ETH (or any supported crypto) you are hodling long term, but need some liquidity to purchase another token or NFT you have found — what can you do?
With Hubble, instead of selling any of your tokens — you can deposit them as collateral, and use your interest-free loan of USDH to invest in a variety of other assets. It’s perfect for those that want to keep their main crypto stack intact, but wish to take advantage of other exciting opportunities in the market.
Due to our multi-asset engine you can deposit collateral such as SOL, BTC, ETH, RAY, SRM, and FTT or any combination of those assets and get your loan in USDH, depending upon its total market price.
The maximum loan you can get is up to a 90.9% LTV. If your deposited tokens drop in value, your LTV might rise above 90.9%, in which case you will get liquidated. You lose your collateral, but you don’t have to pay back your debt anymore.
The HBB Token
The HBB token will become the tool allowing Hubble's community to participate in DAO governance. In the future, Hubble will fully decentralize and hand power to the community to decide what improvements the organization makes.
The ability to participate in the governance of a top Solana DeFi project is just one part of why users will want to hold HBB. Staking HBB earns rewards from the protocol as well.
So, HBB is the ultimate tool for participating in Hubble and reaping the rewards of the project's success.
USDH is pegged 1:1 with the US Dollar, and we can achieve a peg within 1.005 and 0.995 at all times — explained below, largely possible thanks to Solana’s scaling. USDH is always backed and over-collateralised by crypto assets. It’s designed to be used anywhere in the Solana ecosystem.
To keep our stablecoin pegged to the dollar, we allow for `face value redemption` of the USDH token (which trades on stable-swap platforms like Mercurial or Saber). That means, any `arbitrageur` can buy USDH from the market and redeem it for underlying collateral.
For example, if you start with 100$ USDT, and USDH trades at 0.7, then you can make an instant ~42% profit, by buying 142 USDH and coming to Hubble and redeeming it for the face value of $142 worth of collateral from the platform (SOL, ETH, BTC, etc).
The reverse side of the peg, when USDH becomes more expensive, is to start with USDT, buy SOL from the market, deposit it on the protocol, mint USDH for the entire value and sell it for USDT at a premium (since USDH is more expensive, you get more USDT), then convert back to SOL and then USDT, having completed the loop with a higher USDT value. To be eligible for this opportunity, you need to start from an existing loan position that is slightly overcollateralized such that you can mint 100% of your newly deposited collateral (minus the `0.5%` minting fee).
The arbitrage on both ends is possible on Solana due to high txn speed, low gas costs and low slippage of the stableswap platforms. The `0.5%` fee for borrowing and redemption will keep the peg within 0.995 and 1.005. Arbitrages within this range are not profitable.
Arbitrage guides will be published soon.
Hubble: a Borrowing Protocol
Furthermore, It’s only a 0.5% one-off fee to take a loan, plus you can get yield on your collateral — so when your collateral is bonded with Hubble, you have the option to delegate it to earn PoS yield in other vaults so it doesn’t sit idle.
Hubble acts as a zero-cost borrowing protocol because, for example, you can earn up to 7% interest on your SOL — meaning after one month your 0.5% fee for the loan is paid off, resulting in profit going forward.
Zero-Cost and Earning yield
In order to illustrate how Hubble can function as a zero-cost borrowing protocol, let’s take an example.
Let’s say you want to increase your exposure or leverage in the market; what you can do is deposit $1,000 in SOL or other cryptos and then take a loan. With the loan, you can buy some more SOL and deposit them and rinse and repeat. You can increase your collateral (SOL, ETH, etc.) exposure and gain up to 11x leverage, without incurring continuous borowing costs. We only charge once, as a one off, during the minting process.
Equaly, while your much loved crypto stack is backing your USDH loan, we don’t want it to sit idle. For this reason, we have been partnering with protocols across Solana to deploy your collateral and earn yield for you. Partnerships will be announced shortly.
Combine these features together and you have a zero-cost, self-paying loan.
Building on top of the borrowing protocol, Hubble will offer structured products and under-collateralized lending to its community. Moreover, this will allow for customized yield and fees for Hubble token holders, effectively wrapping up phase one.
To say the least, the focus will be on leveraging the advances made on the Solana blockchain to provide lending products that are innovative. We plan on launching these products very soon. Keep up to date by subscribing to our newsletters.
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