Hubble Protocol’s Monthly Community Forum Report

Hubble Protocol held a Community Forum* on March 10, 2022, at 6 PM UTC. Over 30 community members joined the live forum held on Discord.

The forum's goal was to start a dialogue about and promote transparency around the changes Hubble will make in the near future. Anyone who joined the forum was invited to participate, and a few brave souls put forth questions, shared their opinions, and offered some ideas that Hubble might integrate sooner than later.

*The Community Forum has been renamed the Community Town Hall to reduce confusion with the Hubble Forum.

New Methods for Maintaining USDH Value at One Dollar

Marius, Hubble’s project lead, began the forum by asserting USDH needed two things to scale: a tight peg to USD and a predictable loan experience. He went on to explain that Hubble is going to address these needs by implementing a few ideas MakerDAO found useful for pegging their DAI stablecoin.

Hubble will implement a Peg Stability Module (PSM) to help arbitrage USDH back 1:1 with USD through swaps with another stablecoin. When USDH trades higher than $1, users can deposit 1 UST** to mint 1 USDH that can be swapped on the market for profit (this lowers USDH’s price). Conversely, when USDH trades low, users can swap USDH for stables in the PSM.

If the PSM is empty and USDH is under $1, then a Stability Fee will kick with a rate that shouldn’t be higher than 3% per annum (encouraging users to get USDH from the market and repay loans, raising USDH’s price). This fee will be distributed to USDH depositors as a native yield that doesn’t require HBB.

**UST will no longer be used in Hubble's PSM (Update: May 18, 2022)

Increasing System Stability Without Recovery Mode is Possible

This system will replace the redemptions mechanism Hubble originally planned on using to lift USDH’s price. While redemptions work, “They’re just not cool,” according to Marius, because they take collateral from users in order to fill redemption orders.

Hubble can no longer say that users can always borrow for zero interest, but the goal will be to increase demand for UDSH so much that its price rarely falls below $1. Working with other young protocols as they grow is a big part of this plan.

Another big change will be setting new loan-to-value ratios (LTV) for different assets instead of an across-the-board 90.9% LTV for all borrowers. Currently, one user’s large loan with a high LTV could put the system close to Recovery Mode, so Hubble will ditch Recovery Mode along with this change.

After some questioning from the community, it was clarified that the new liquidation threshold would be measured as an average of all the LTVs for collateral types borrowed against within one loan.

Community Members Shared Some Great Ideas

The Community Forum wasn’t just Marius talking straight for an hour. Instead, we took breaks after every few minutes to ask if anyone had any questions or anything they wanted to discuss.

A few ideas that came from this input included showing how much the Stability Fee added to one’s debt by the minute and using the interest from yields to repay loans. Another member of the community suggested adding HBB to the deposits for minting USDH, which would increase the demand for HBB.

It was suggested that Hubble could introduce a way to protect users from liquidation, and Marius thought that was a great idea, adding that positions could be unwound whenever they got near 5% of their liquidation threshold, for a fee.

Final Takeaway from First Monthly Community Forum

As the Community Forum concluded, it was agreed that the success of USDH hinged on increasing its use cases. On Hubble’s part, we will drive partnership growth over the next quarters to make sure USDH increases in use.

The timeline for implementing the changes mentioned during the forum would most likely take three weeks. Soon, some other features to look forward to will include auto-compounding and auto-staking USDH from Stability Pool gains.  

If you missed the community forum this month, make sure to join us in April when we do it again. Everyone is invited to share their opinion, and we will make sure anyone who wants to participate gets some time to have their voice heard.

You can find more detailed notes taken from the forum minutes below.

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