Earn the best from crypto • Hubble protocol

10 min readJan 17, 2022

Have you ever felt the need to buy another token or NFT that you like but you have other crypto assets(like BTC, SOL, ETH) and you are hodling them for the long term. At that time you need liquidity to purchase another token or NFT. Using Hubble you can unlock that liquidity without having to sell the tokens you have. If you want to know more about and become more capital-efficient along with taking advantage of many other features, then this is for you.

Here we will discuss how you can do that, How Hubble works, the tokenomics, and the key features of the Hubble protocol.

(Fun Fact🤫: Hubble started as a Hackathon project in May 2021)

The Solana ecosystem has grown tremendously in the last year. Solana being ultra-fast, secure, and scalable gets an edge over Ethereum and other layer 1 blockchains. Solana’s high speed combined with its low fees has attracted dozens of decentralized applications, which hold billions of dollars and it will continue to grow as more people onboard themselves for these exclusive features of Solana.

Hubble’s goal is to provide a one-stop-shop for essential DeFi services powered by the speed and efficiency of Solana’s network.

What is Hubble

Hubble is a DeFi protocol built on Solana. Beginning with the Phase 1 main focus of the Hubble protocol is going to be on Borrowing and minting USDH(Hubbles’s native dollar-pegged stable coin). In simple terms, users can deposit multiple kinds of crypto assets like SOL, BTC. ETH and others to borrow up to 90.09% of value their collateral in USDH with 0% interest rate, no maturity time, and also you can earn a yield on your collateral locked. It is going to offer Multiple Defi services in 3 phases of its lunch roadmap.

With that USDH that users will get, they can deploy it whichever way possible in the Solana ecosystem. The even more interesting and attractive thing is the decreasing liquidation risk and earning yield on the collateral being active which gives users both the upsides of their tokens and the yield that they receive on their collateral. This makes it a self-paying debt and the Multi-asset nature of collateral offers better protection against liquidation if the tokens drop in value.

As you have got an overview of what the Protocol does, now let’s dive into the key features of Hubble and how users can use Hubble and get the most out of it. 🚀🚀

Key features

Multi-asset collateral
Zero cost borrowing and earning yield for deposited collateral
Up to 110% collateral ratio and up to 11x leverage
HBB stakers earn 85% of fees generated by the protocol
Zero cost potential

Multi-Asset Collateral

As we discussed earlier we wanted to unlock the liquidity on the tokens that we have. Let’s say you have 1 BTC, 2 ETH, 50 SOL(or any supported crypto) and you want liquidity to purchase another token or NFT.

Instead of selling your tokens, you can deposit them as collateral and get the interest-free loan of USDH and use that USDH to invest in a variety of other assets. You can deposit collateral such as SOL, BTC, RAY, SRM, and FTT or any combination of those assets to get your loan in USDH upon its total market price. Now you can keep your crypto stack intact and take the advantage of the opportunities in the market.

You can get a maximum loan up to a 110% collateral ratio(Collateral value / LoanValue). If your collateral value drops below 110% that means if the value of the coins drops you will get liquidated. You don’t have to pay back your debt anymore but you will lose your collateral. To put the collateral ratio in the simplest way, for every 110 worth of collateral you deposit, you can get up to 100 worth of the loan.

Zero cost borrowing and Earning yield for deposited collateral

Hubble’s phase 1 focuses on offering low-cost and capital-efficient borrowing bringing the most value to established Solana tokens and HBB(Hubble’s native token) holders.

There will be just a one-off fee of 0.5% of the loan issued, no continuously compounding interest or fixed maturity. Debt owners can pay back their debt whenever they wish, unlock their holdings, and close out their debt position.

Hubble will start out accepting deposits of six assets as collateral: SOL, ETH, BTC, FTT, RAY, and SRM. The protocol intends to expand our multi-asset deposits to other major cryptocurrencies in the future.

Example — Taking out a loan against your SOL

One user takes out a 3000 USDH loan by adding 100 SOL as collateral. A fee of 0.5% is distributed among HBB holders and added to the debt.

There are two times when users experience fees-

At the time of borrowing USDH
At the time of redeeming USDH(not the same as repaying a loan)

1. While borrowing, this fee is calculated based on the borrowed amount and is added on top of the user’s debt. if a user borrows 100 USDH and the fee rate is 0.5%, then

Hubble mints 100 USDH into the borrower’s wallet
Hubble mints 0.5 USDH into the HBB Stakers’ pool
The borrower’s Hubble account records a debt of 100.5.

2. While redeeming, the fee is charged from the redeemed collateral. If a user wants to redeem 100 USDH which is worth 1 SOL, then

Redeemer burns 100 USDH, gets 0.95 SOL
Stakers get 0.04 SOL
Bots that are needed for the redemption process get 0.01 SOL
The user being redeemed against wipes out 1000 USDH from their debt, and 1 SOL is removed from their collateral.

USDH

USDH is Hubble’s 100% decentralized stable coin on Solana. It s backed by a basket of decentralized crypto assets including SOL, mSOL, BTC, ETH, RAY, SRM, and FTT. It can be used for anything stablecoins are used for in DeFi: pairing for liquidity on AMMs, bonding for tokens, or being held as a store of value.

Users can deposit USDH in Hubble’s Stability Pool to earn a share of liquidation during market downturns. To help cover bad debt and to keep the system healthy, stability Pool providers gain access to bluechip tokens at a steep discount through liquidations.

How USDH maintains its Peg

When USDH falls below 1.0, any arbitrageur(an investor who attempts to profit from market inefficiencies) can buy USDH from the market and redeem it for underlying collateral. For example, if USDH trades at $0.70, anyone can buy 142 USDH for 100 USDT and redeem USDH for $142 worth of SOL, BTC, ETH, etc. on Hubble.

And when USDH rises above 1.0, anyone can buy SOL, BTC, ETH, etc. from the market, deposit these assets on Hubble, and mint USDH at that is priced at a higher value. Higher valued USDH can then be traded for USDT at a profit.

Doing this with Solana’s speed makes USDH tightly pegged. The incentive for gains makes arbitrageurs keep USDH successfully pegged to a 1:1 value with USD.

Redemptions

Users can redeem USDH at a face value of $1.00 whenever it falls below peg. And when USDH costs less than 1 USD, it can be redeemed for $1 of another asset deposited on Hubble.

For example, if USDH falls to 0.97 USD in market value, any user can purchase 97 USDH from the market and redeem that USDH for $100 worth of SOL, BTC, ETH, etc. on Hubble.

Also, the point to consider is that Redemptions can only occur when USDH falls below 1:1 with USD. The 0.5% fee for redeeming USDH means that there is no economic incentive to arbitrage when USDH is valued between .995-.999 USD.

Recovery Mode 🚨

Recovery Mode ensures that USDH will remain backed by collateral assets. Recovery Mode is a system state when the total collateral deposited on Hubble falls below 150% of the total borrowed. When this happens, positions that are collateralized at a ratio below 150% can be liquidated, and borrowing actions that would further lower the systems collateral ratio are blocked. The protocol recommends that users to maintain a collateral ratio of at least 150% to avoid liquidations during Recovery Mode.

$HBB token and Governance

HBB is Hubble’s governance token.

Earning fees generated by the protocol

HBB can be staked on Hubble to earn fees from the protocol. By staking HBB, users earn 85% of the revenue Hubble protocol generates from its revenue. This revenue comes from the 0.5% fee for minting USDH and the 0.5% fee for redeeming USDH for collateral.

Governance by voting and proposing changes

In the future, HBB will be used to vote on improvement proposals as Hubble DAO’s governance token. As the protocol expands, HBB speakers will be exposed to additional streams of revenue.

Earning Yield

The users earn the yield on their collateral deposited. Which is an upside to their collateral when borrowing.

The example below shows how one user can earn 6% (current yield) on their SOL after 1 year of staking.

Borrowers with high enough collateral ratios can benefit not only from SOL price appreciation but also from the Solana PoS yield.

Other collateral, such as BC and ETH will earn yield from lending protocols in the ecosystem, and users will be able to choose which strategy to pursue in order to yield.

Liquidation

In normal operation time(not in recovery mode), users can borrow up to 90.9% of the value of their multi-asset collateral (110% Collateral Ratio). If a user’s borrowed USDH rises to a value above the loan-to-value (LTV) ratio of 90.9% (collateral ratio at or below 110%), then their position can be liquidated.

Anyone can trigger liquidations for loans that fall below a 110% collateral ratio. Triggering liquidations will most likely be performed by bots, and Hubble releases an open-source bot that anyone can set up to help participate.

Users who trigger liquidations receive 0.5% of the assets liquidated. The rest of these assets are distributed to users who deposit USDH in the Stability Pool.

Stability pool

The stability pool helps guarantee this collateral backing and at the same time democratizes the liquidation process. The stability pool providers ensure the repayment of USDH when the collateral ratios fall below an acceptable level.

To incentivize to keep the protocol healthy, the guarantors who deposit USDH into the Stability Pool receive a proportional share of collateral from liquidated accounts.

As an added incentive for depositing USDH and maintaining system health, Stability Pool providers also receive HBB token rewards for their participation.

Product roadmap and updates

Hubble’s development team has set a Mainnet launch date for January 28th, 2022. Do check out the Devenet which has launched prior to IDO.

Hubble begins its DeFi journey in Phase 1 with a focus on borrowing and minting USDH. In the next phases of Hubble’s planned roadmap, it will launch additional services to increase the utility of the protocol. In Phase 2, estimated to lunch in Q2 2022, Hubble will launch structured products, and in Phase 3 it will begin offering undercollateralized loans.

As more users start their DeFi journey on Hubble, and as Hubble continues developing into a stable protocol, it will one day fully decentralize into a DAO with community governance, making the protocol 100% democratically organized.

$HBB Launch

$HBB will launch on three different platforms.

SolRazr:

Whitelist: January 18th-20th
IDO: January 20th-23rd

Solanium:

Whitelist: January 19th-21st
IDO: January 21st-23rd

DAO Maker:

Public: January 19th-26th
Community: January 25th-26th

Community and Backers

Hubble’s community is growing rapidly with more than 8000+ members on their Discord server. The community is super supportive, they give feedback on the newly launched features, and are very excited for the HBB token launch as well as the protocol’s launch on the mainnet.

Hubble is also backed by prominent investors in the ecosystem including Mechanism capital, Solana ventures, DeFinance capital, and many more.

Conclusion

DeFi is a relatively new financial system, and as DeFi evolves and users start to adapt, Not only Hubble but many more projects will adapt to the changing market and provide the products that will make DeFi a source of financial services for the whole world.

The pictures and references are from Hubble protocol’s sources. If you want to know more check out their docs, Blog, and Website.

Disclaimer: I’m not an expert. Do your own research before jumping into it.

For any queries, DM me on Twitter @inSitesh