Many new Decentralized Finance products are being launched weekly on the Solana network. With so many new projects, it’s common to discover new mechanisms in DeFi that haven’t been explored in traditional finance.
Hubble Protocol was launched as a multi-phase project with different products offered in these phases. In Phase 1, Hubble lets you borrow USDH against many of the available assets.
USDH Stable Coin
The USDH Stablecoin is a Solana native token created by Hubble Protocol which is pegged directly to the exact value of 1USD. This is the asset that Hubble lets you borrow with your assets so as to help promote easy access to liquidity on Solana.
If you have cryptocurrency assets you are hoping to hold for the long term, you can deposit them in the Protocol. Whenever you have a need for liquidity (so as to able to buy some other things), you can take out some loan in the USDH offered.
One of the major benefits of borrowing USDH is that it has 0% interest on it. A user is only required to return the exact amount of USDH borrowed. Cool.
Another interesting feature from Hubble Protocol is that as users make their deposits, their assets in the deposit pool earns passively for them in the form of yield.
Hubble Protocol makes it easy for you to quickly deposit your collateral and receive the amount of USDH you want to borrow.
One major thing to understand about borrowing USDH with your collateral is the Loan-To-Value ratio.
The Loan-to-value ratio (LTV) is the worth of the USDH you are borrowing with respect to the value of your collateral deposited in the Protocol.
A quick way to calculate this is:
(Value of USDH Borrowed / Collateral Value) * 100% = LTV%
If your collateral deposit is worth $1000 in SOL for example and you borrow 600 USDH,
Your LTV = (600 / 1000) * 100
The lower your LTV is from the 90.9% peak possible, the lower your chances are that your position will be liquidated.
Let’s say Solana is at $100 and you deposit 500 SOL to your Hubble account.
If you take a $10,000 USDH loan against your 500 SOL, your LTV will be 20%
500 SOL @ $100 ea = $50,000
$10k = 20% of $50,000
Most people would consider that to be a pretty safe Loan-to-Value. If SOL falls 50%, you’re still well in the clear. SOL would have to go from $100 to ~$25 before your position gets liquidated.
Make sure you understand the risks of liquidation before you take a loan against your assets.
$HBB Native Token
Hubble Protocol has a stability pool that is made up of USDH deposits. The purpose of the USDH pool is to maintain the stability of the loans given to people. In case some issues that can cause a loss to the protocol, the pool of USDH is used to pay off the loss. The benefit of this to the depositors is that they get to earn the native Hubble Protocol token. The token is known as $HBB. This serves as the governance token for the protocol.
To access the loan feature, users are required to pay a one-time 0.5% fee. These fees are regularly distributed to the community in the form of $HBB token.
$HBB Token has a total supply of 100,000,000 HBB and the current circulating supply is 7,712,572 HBB. The token has the following allocation process:
- 15% is for the Team and Advisors
- 5% is allocated for the Ecosystem
- 15% is allocated for Business Development
- 10% is for the Treasury
- 25% is for liquidity incentives
- 30% is for the Token Sale
Summary of the Benefits of using Hubble Protocol
For users looking to deposit their assets for long-term purpose and to also earn passively from their deposits, Hubble Protocol is a good option. Another benefit is that users can utilize the stability pool to earn the $HBB governance token. More products are also in the pipeline from Hubble in the months to come, and we will continue following this project.