What is Hubble Protocol (HBB) and How Does it Work?|KuCoin Crypto Gem Observer
As the cryptocurrency market continues to grow in popularity, investors are continuously looking for new ways to make a profit. Popular options include borrowing, staking and investing in the next big moonshot ( if investors are lucky enough to predict it). Hubble is a DeFi protocol looking to provide investors with more options to profit from cryptocurrency. It started as a project in the Solana Hackathon and has gained support from top Solana ecosystem investors. It’s a fee-sharing decentralized finance protocol that offers several DeFi services for its users. Here’s what the project has to offer.
What is Hubble Protocol?
The Hubble protocol is helping supercharge liquidity on Solana. Built on the Solana Blockchain, it currently focuses on borrowing and minting USDH. The project is in phase 1 of its journey, in which users can deposit a range of crypto assets such as BTC, ETH, SOL and several other cryptocurrencies. In return they can borrow up to 99.9% LTV in USDH. When borrowing cryptocurrency, investors can then earn a yield on their deposits. To ensure funds are continuously available for borrowers, a Stability Pool of USDH has been created by Stability Pool Providers. These providers are then able to pay off loans and earn a 10% difference in liquidated assets. Providers are also rewarded with HBB, Hubble’s governance token. They can then stake their HBB to earn 85% of the protocol's fees.
Over the next two phases, Hubble plans to increase the utility of its platform by launching additional DeFi services. In their second phase, Hubble will launch a range of structured products. This will be followed by Phase 3, in which Hubble will offer undercollateralized loans. With DeFi being a relatively new financial system, it has a lot of potential but at the same time a lot of confusion and risk. Hubble plans to adapt to this changing market, providing its users with a seamless experience no matter how the industry fluctuates, thus reducing risk while increasing returns.
Hubble has a key focus on empowering its community. It shares the fees generated by the system with all HBB holders, allowing them to impact the governance with their tokens. As the project becomes more popular, the rewards will increase for those staking their HBB tokens.
What is HBB and What is it used for?
The HBB Token has a total supply of 100,000,000 HBB. It's given to stability pool providers who can stake their USDH to earn additional rewards. The token can be traded and plays a key role in the governance of the platform. Those staking their HBB can vote on a range of proposed changes, allowing them to tailor the future of Hubble based on their preferences.
Staking HBB will provide users with 85% of the revenue generated on the protocol, which will come from a 0.5% fee charged for users minting USDH and a 0.5% fee for redeeming USDH for collateral. Future plans are also in place for HBB stakers, who will have the chance to earn additional streams of revenue.
How does Hubble Protocol Work?
Hubble allows users to take out a loan in USDH and then invest the currency into other protocols for a return. Once an investor has finished with their investment, they can simply return their loan back on the protocol. When finalizing the process, investors will have their collateral paid back with the profit made from their stablecoin. If the collateral increases in price, the return will also be higher.
Due to the composable nature of Solana, users can take a loan against yield bearing collateral. This means that users can deposit SOL and take out a USDH loan. When an investor deposits SOL, Hubble will delegate the cryptocurrency to an external PoS staking protocol so an investor can earn yield. Alternatively for BTC and ETH Hubble will delegate to alternative lending platforms. This is all completed on the back-end, without investors having to take any action. The yield is then earned hourly, with Hubble not taking any cuts.
The Liquidity Pool of Hubble plays an important part in the protocol, with users having the opportunity to earn from democratizing liquidations. When users deposit USDH into Hubble’s Liquidity Pool they will earn the 10% difference from liquidated accounts. They will also earn a consistent amount of HBB based on the amount they’ve staked.
Who created Hubble Protocol?
There will be a team section on the Hubble homepage soon. Right now, you can check the Hubble LinkedIn to find some of the current team members.
Hubble has partnered with some of the top Solana ecosystem investors to kickstart their project. Originally starting out as a Solana Hackathon project, investors recognised its potential and have since jumped on board to help support its growth.
What Makes Hubble Protocol Unique?
One of the key benefits of Hubble is that it makes borrowing cryptocurrency cheap and easy. Holders can borrow USDH with a wide range of currencies and earn yield elsewhere. They can take a loan of up to 110% of their collateral whilst keeping their crypto safe with Hubble. When it comes to paying back their loan, they’ll then gain access to their collateral for a small one-off fee of 0.5%. No continuous interest or fixed maturity is involved. This makes the process a win-win for everyone involved.
Another unique feature of Hubble is that investors can earn yield on their collateral. Investors on the platform will have the chance to opt-in to have their collateral allocated to partner protocols. Here, they can choose from a range of strategies and start earning yield straight away. This provides investors with a greater income potential than most alternatives.
The platform itself is completely decentralized. Instead of having a governing body, the most active community members will have a voice in future policies. Users are incentivised to participate in several models that have worked in the past. These include general directive proposals where development is dictated by the community and group proposals in which the community can unite to make a proposal to the dev team.
Not only does it have lower fees than most other protocols, but the potential yield from investments is also far greater than most alternatives. With a roadmap already in place for a second and third phase, the success of the project will be determined by the dev team's ability to meet market demands and stay one step ahead of changes to the cryptocurrency market.
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