Note: This article is not financial advice. Hubble Protocol does not endorse any of the tokens or platforms mentioned in this article.
Key Takeaways
- Hubble Protocol accepts Solend's cTokens as USDH collateral.
- Solend's cTokens are yield-bearing tokens that can earn yield from lending.
- Solend's cTokens on Hubble demonstrates the extreme composability of Solana DeFi.
Hubble is excited to announce the addition of Solend’s cTokens as collateral for minting USDH. cTokens are yield-bearing tokens that earn interest from lending activities on Solend. Now, they enable users to earn yield while borrowing USDH.
Accepting cTokens as collateral solidifies the partnership between Hubble and Solend. Together, the protocols are creating new possibilities for users to optimize their yield potential while participating in DeFi on Solana.
Introducing a New Isolated Borrowing Experience
The cToken Vault ushers in a new Vault-based borrowing system, which enables Hubble to set up independent borrowing environments with distinct parameters. Ultimately, this is aimed at creating a more tailored borrowing experience.
Parameters
The initial parameters of the cToken Vault are as follows:
- LTV: 80%
- Stability Fee: 1%
- Deposit Caps: $1M per token
- Withdrawal Caps: $1M per token every 8 hours
These parameters are, of course, fully adjustable, and the protocol can evaluate them in cooperation with the community to ensure that the borrowing environment remains optimal.
Assets
The cToken Vault contains a variety of different cTokens, enabling users to deposit any combination of the following assets:
- cSOL
- cmSOL
- cstSOL
- cETH
- cBTC
- cRAY
While deposited, these yield-bearing tokens reflect yield from lending over time.
Optimize Yield on SOL with Liquid Staking and Lending
Solana allows for extreme composability in DeFi due to its high throughput and low fees. Transacting on a secure Layer 1 makes it possible for users to put together a lot of “money Legos” to optimize yield generated from staking SOL, for example.
For instance, users can stake SOL with a network validator to help secure the network. This earns staking yield, but it locks up SOL tokens for a period of around two days and makes it impossible to do anything else with SOL while it's staked.
Another option is staking SOL with Marinade or Lido to receive mSOL or stSOL, respectively. These liquid staking tokens enable users to participate in DeFi while at the same time earning staking rewards.
Once users turn their SOL into mSOL or stSOL, they can deposit these tokens on Solend to generate yield from lending. When users mint cmSOL or cstSOL, they receive a token that earns dual forms of yield: staking yield and lending yield.
Now, users can use Solend's cmSOL and cstSOL to mint USDH, with the possibility of earning yield while these tokens are deposited as collateral.
How Composability Can Optimize Rewards with cTokens and USDH
Here is a possible scenario for participating in DeFi with multiple Solana protocols:
- Start off with USDC
- Swap USDC for SOL
- Stake SOL for mSOL or stSOL (liquid staking tokens)
- Deposit liquid staking tokens for lending on Solend
- Received cTokens as a receipt
Now, the original long position in SOL is earning two forms of yield from some of the most active protocols in the Solana ecosystem.
By depositing cTokens on Hubble, users can then borrow the stablecoin USDH at up to 80% loan-to-value (LTV) against their collateral. After starting off with stablecoins, users can set up two yield-bearing positions with an asset they want to HODL, and now they can have stablecoins at their disposal, again!
From this point, users can do anything they want with the amount of USDH they feel comfortable borrowing against their collateral. That's true composability: Hubble’s USDH and Solend’s cTokens working together for an even greater variety of capital-efficient yield strategies.
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