Solana came into the picture back in March 2020. Since then, it has skyrocketed both in usage and in price. Despite the network outages that many incorrectly assumed to be the death of Solana, the network has continued to soar higher and stronger. Solana’s native token (SOL) has risen significantly since January 2021, signalling a huge interest in the Solana network by the market.
As of September 2021, the total value locked in Solana DeFi crypto protocols amounted to $12 billion. While this is nowhere near the humongous $120 billion locked in Ethereum, it is a start and good progress in the right direction. One of the most recent developments in the network is the Hubble Protocol. This project will help bring DeFi crypto to Solana in a massive way.
What is the Hubble Protocol?
Hubble is a decentralised finance protocol on the Solana blockchain. Users can use their assets as collateral in taking loans. These loans are made in USDH, a censorship-resistant and crypto-backed stablecoin built for the Solana DeFi ecosystem. If you look at the trajectory of success for MakerDAO’s crypto-backed DAI, a stablecoin with similarities to USDH but built on Ethereum, the room for USDH’s growth is enormous as Solana DeFi matures.
In fact, a strength of USDH is that the Hubble team has taken into account the history of DeFi when developing a stablecoin. USDH takes a lot of inspiration from two stablecoins, DAI and LUSD, that are responsible for nearly $20 billion in total value locked (TVL) on Ethereum. Hubble has taken these proven designs and improved them to bring a decentralized, collateralized, and strong stablecoin to Solana.
One of the most interesting aspects of the Hubble Protocol is that users can take out loans using several varieties of assets as their collateral. This multi-asset collateral helps to reduce the risk of liquidations. For example, if you have 2 BTC 100 SOL and 3 ETH, suppose you need some liquidity to purchase a different token, or NFT; with Hubble, instead of selling any of your tokens, you can deposit them as collateral and use the loan, which is interest-free, to invest in several different assets that you are eyeing.
As of today, Hubble is supporting SOL, BTC, ETH, RAY, SRM and FTT as some of the first tokens to be used as collateral. You will be able to take out a USDH loan, depending on the value of your assets at the time of taking the loan. The maximum loan you can get is up to 90.9% loan-to-value (LTV). This means that if the value of the collateral drops due to market fluctuations, your LTV might rise above the set percentage, and if this happens, you will get liquidated. You shall lose your collateral but then you will not have to pay back your debts anymore.
Key Features of the Platform
Hubble Protocol has several key features that make it one of the best DeFi crypto platforms on Solana.
Because of this feature, users can deposit a wide range of tokens to be used as collateral against their loans. As of today, Hubble only accepts Solana (SOL), FTT, Ethereum (ETH), Bitcoin (BTC), RAY and Serum, or any combination of those assets. It is expected that in the future, Hubble will add to this list so that many more users can use the protocol to borrow assets for DeFi crypto use.
Zero Interest Borrowing
In the Hubble Protocol, users can borrow USDH at zero interest fee. This means that if you borrow 10,000 USDH, you return 10,000 USDH without any interest. However, there is another key feature that the Hubble Protocol has put in place to complement the zero interest in borrowing. There is a one-time fee of 0.5% of the borrowed amount – charged when borrowing.
90.9% Loan-to-Value Ratio (LTV)
With this feature, if the value of your collateral drops due to the normal market fluctuations, your collateral will be liquidated. This means that if you put up 2 ETH as collateral, then if the value of Ethereum drops, the LTV goes up above 90.9%. The higher the loan-to-value percentage rises, the larger the liquidation of your collateral. If your entire collateral is liquidated due to market fluctuations, you will not have to pay the loan because it will have been paid by your collateral. This ensures you that users don’t have to be loaned twice while the market is bearish.
Generating Yield on Deposits
When users deposit assets on the Hubble Protocol, they are providing those assets for other users to come and borrow (borrowers). Therefore, all users who deposit on the Hubble Protocol get a set annual percentage yield (APY) in proportion to their assets. Also, the Hubble Protocol has their own native token. The name of the token is Hubble (HBB) and holders of the token can participate in HBB staking to earn rewards. This makes the Hubble Protocol a great place for passive income.
On Hubble, users can borrow to leverage their positions on their long-term assets. For example, a user can deposit $100 in ETH or any other crypto of their choice and take a loan against that collateral. They can then use the loan to buy more ETH and afterwards, deposit it again on the protocol. Repeating this process enough times allows a user to increase their collateral and exposure up to 11x. All this can be done without incurring additional costs. The entire process is only charged once during the minting process by Hubble Protocol and hence, there are no continuous borrowing fees.
Additionally, the collateral that you have deposited on the Hubble Protocol does not sit idle. The Hubble Protocol dev team has partnered with several DeFi crypto protocols across the Solana network to put your deposited assets to work. This means your collateral can earn yield for you. In in short, Hubble Protocol enables you to take self-paying loans at zero cost and zero interest.
Why use the Hubble Protocol?
Hubble Protocol provides an easy way for DeFi users to get more from the Solana ecosystem. Currently, the Solana ecosystem is rapidly growing and there are many opportunities for users to explore other protocols. The lending aspect of the Hubble Protocol will help Solana users to make maximum use of the other protocols. Here are some of the benefits of using the Hubble Protocol if you are an avid user of the Solana blockchain:
- Hubble Protocol brings to the table an efficient way to take loans and repay them, because if a user is unable to repay the loan, the liquidation aspects of the 90.9% loan-to-value ratio allows the loan to repay itself.
- Additionally, the protocol makes it very easy to manage borrowing. Hence, a user can track their collateral ratio and also increase their collateral without incurring extra costs due to the continuous application fees. Withdrawal and deposits of collateral are fairly easy and efficient.
- Moreover, the Hubble Protocol allows users to stake their HBB tokens to earn rewards. When users add USDH to the stability pool, they are awarded HBB tokens. Additionally, staking the HBB earns the user nice rewards.
- Users can also redeem their USDH for other tokens of their choice when an arbitrage opportunity arises. When the USDH price falls below the 1:1 USD-peg ratio, then it can be redeemed on the Hubble Protocol for $1 worth of another token. Hence, users can make money off of market fluctuations. This is revolutionary as it has not been used or applied in other DeFi crypto protocols across the blockchain.
- Users who are not able to repay their loans can opt to trigger liquidations and still be rewarded with 0.5% of the value of liquidated assets. Therefore, not only does Hubble Protocol allow you to repay a loan with liquidation, it rewards you with a portion of your liquidated assets. For instance, if you would borrow $10,000 of Bitcoin, you will be rewarded $50 in Bitcoin.
USDH and HBB tokens
The Hubble Protocol has two tokens working in the system; USDH and HBB.
The first token is the USDH. This is a stable coin, which means that it is pegged to the US dollar at a ratio of 1:1. The USDH can never stray too far from the $1 peg of the United States dollar. USDH is minted every time a user deposits targets as collateral in the habit of recording with the intention of borrowing.
This is the native token of the Hubble Protocol. It can be staked to earn the user rewards from the protocol. This utility is already inherent in the DeFi universe across multiple blockchains. There are many other projects where users deposit the native token to secure the network and earn rewards. Hubble Protocol aims to become a decentralised, autonomous organisation (DAO) in which the Hubble token (HBB) will be used for governance rights and voting.
Sweet Deals on Solana with Hubble Protocol
On February 5 2022, Hubble Protocol struck a partnership with Saber. The partnership will enable users to join the USDH/USDC pool on the Saber platform. Saber is an automated market-maker platform that allows for trading of crypto assets on the Solana network. Saber boasts of low slippage, high liquidity and trade execution at lightning-fast speeds. The AMM has integrated several DeFi crypto protocols across the Solana network. Users who provide liquidity through the Saber platform earn yield generated from the transaction fees and liquidity incentives.
Enjoy almost 29% APY on Saber
As of February 5 2022, the Hubble Protocol had been live for just a week. However, it had already crossed over $30 million in total value locked (TVL). The USDC/USDH pool in the Saber platform currently has over 210,000 USDH and over 1.7 million USDC. The pool is currently doing a volume of over $400,000 in the last 24 hours, with a 3.09% APY. Users who are currently supplying liquidity to the USDC/USDH are enjoying a 3% annual percentage yield on their deposits.
Enjoy Dual Rewards in MER and HBB on Mercurial Finance
Mercurial Finance is a platform that is building the liquidity platform for stable coins. This means that users can supply liquidity for supported stablecoins on Mercurial. Mercurial will in turn supply the liquidity to the appropriate DeFi crypto protocol. In their latest partnership, Hubble partnered with Mercurial Finance on February 7 to launch the USDH-3Pool. This pool contains three stable assets; USDH, USDC and USDT. Users who add USDH to this pool will be rewarded dually with MER (native token of the Mercurial Finance) and HBB tokens.
According to Saber, the total value (TVL) of this pool skyrocketed immediately after launch, around January 31 2022. The TVL hit an all-time high of $5.7 million on February 8. Since then, the TVL has been stabilising and is currently sitting at $3.6 million. The pool volume reached an all-time high of $940,000 on February 7, then gradually went down and stabilised at around $400,000 as of the time of writing.
Hubble Protocol began as a project in the Solana hackathon. However, over time, the project has grown and is now supported by some of the top projects and investors in Solana. Some of these investors are large venture capital firms, managing billions of dollars in funds. They include the Jump Capital, Three Arrows Capital, the Spartan Group. Solana Ventures and Delphi Digital, among many others. Hubble Protocol boasts of zero cost possibilities, multi-collaterals, yield on deposits. These are just a few of the features that set Hubble Protocol apart from other DeFi crypto lending and borrowing platforms. It is clear that in the future, this project will become a top tier blue chip project.
The team also aims to become a decentralised, autonomous organisation (DAO) so that the community can be more involved and use the power of the HBB token to lead the way for the Hubble Protocol. Additionally, users of the system can share fees and gain rewards on liquidations. These are just part of the reasons that have led to top investors investing in the Hubble Protocol. It is unique from other platforms. In the first funding round, Hubble Protocol managed to raise $10 million, which enabled the project to go live. In just over one week, the protocol grew to over $30 million in total value locked in. This is an indication that the project is delivering more than expected, which shows that the Hubble Protocol is massively an undervalued project.
Hopefully, you have enjoyed today’s article. Thanks for reading! Have a fantastic day! Live from the Platinum Crypto Trading Floor.
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