Hubble Protocol, a decentralized finance project (DeFi), has just closed $3.6 million in seed financing. This early support for Hubble comes from several major and influential names in the crypto industry who are key players working to expand DeFi on Solana, which is currently the world’s fastest blockchain.
Participants in Hubble’s early private round include Jump Capital, Delphi Digital, CMS, Mechanism Capital, Spartan, DeFi Alliance, Three Arrows / DeFiance Capital, Digital Strategies, and Decentral Park Capital.
These backers have all backed Hubble in its entry into the rapidly growing DeFi market, which boasts a TVL of more than $200 billion and multiple blockchains. This support for Solana as a DeFi hub should help restore DeFi’s composability. It will also allow the next one million DeFi users to access low-cost services on a single layer 1 blockchain.
Solana’s Quest for One Billion Future Users Heats Up
Many industries have seen blockchain technology as the future disruptor, such as streaming and social media. It also has potential to transform supply chains and financial services. Web3 is the new future of web. It will use distributed ledger technologies like blockchains to bring about the next generation in connectivity.
However, attempts to build a blockchain capable of scaling up the internet have failed miserably. The Ethereum Virtual Machine blockchains (EVM), have repeatedly experienced congestion periods in which transaction speeds decrease and the price of transactions increases dramatically.
As a result, the advancement of innovations made possible by blockchain tech has stalled–that is, until Solana began firing up in earnest earlier this year.
Many have taken notice of Solana’s scalability, speed, and low costs for transactions. Last month, during Solana’s Breakpoint conference, Reddit Co-Founder Alexis Ohanian pledged $100 million to build social media platforms on Solana’s network. Michael Jordan recently chose Solana to be the base for his NFT business.
In November, Solana Co-Founder Raj Gokal stated Solana’s ambition was “to see 1 billion people using the network,” and realizing this goal means a proliferation of user-friendly projects that solve major pain points for the world’s population.
Developed with mass adoption and growth in mind, Hubble hopes to be a large part of onboarding the next generation of users that add up to Gokal’s billion.
Hubble builds on Solana Tech in order to empower DeFi users
Yan Lieberman is the co-founder of Delphi Digital. “We are very excited to be investors in Hubble. Delphi continues to be a supporter of the DeFi ecosystem and its potential for impact across every vertical within finance.”
Lieberman also noted, “One of the many exciting ecosystems for DeFi innovation is Solana, and accordingly the developer activity there has boomed over the last year. The team behind Hubble is world-class and we are thrilled to work alongside them to build DeFi primitives, from borrowing to structured products and beyond.”
Hubble’s first phase of development seeks to launch a Solana-native stablecoin, USDH, and DeFi 2.0 borrowing services that “supercharge liquidity” for its users. After developing this phase of Hubble’s launch, the protocol has declared two more phases of development that will introduce structured products and undercollateralized lending, the last of which has been considered a “holy grail” in crypto for quite some time.
The combination of Hubble’s financial services and the cost and scalability of Solana could mean millions of people will gain access to finance through Solana-powered DeFi in the near future.
USDH Plugs the Stablecoin Gap of Solana Ecosystem
Stablecoins and the ability to increase one’s liquidity by borrowing against assets are two key elements of DeFi. The crypto market would fall apart if everyone sold their bitcoins, but what’s the point of holding a valuable asset if holders cannot benefit from that asset’s value?
DeFi is a platform that allows users to borrow crypto to gain the financial rewards associated with holding tokens. The practice of borrowing stablecoins overcollateralized has now become an accepted method of participating in DeFi.
Due to Solana’s low-cost transactions, Hubble’s development on the network ensures users are getting an improved user experience through maximum capital efficiency. Hubble can launch a stablecoin based on Solana. This should theoretically keep the USD value very close through constant arbitrage.
Decentral Park Capital’s recently published investment thesis asserted that, “We believe Hubble is more than just a DeFi Hub. Hubble is building a primary stablecoin for the Solana ecosystem.” The firm went on to say, “We believe USDH can also form the build[ing] block for other DeFi protocols that encompass stable assets at the core of their design.”
Hubble Protocol attempts to democraticize DeFi in the world
Much of Hubble’s borrowing platform is geared toward increasing revenue for its users. Users who stake HBB on Hubble will earn most of the protocol’s fees, and these will mostly be paid in USDH, which is collected at a 0.5% rate for minting the stablecoin.
Hubble’s liquidation of bad loans is one innovative way to share revenue. Whenever a loan reaches or falls below a 110% collateral ratio, any user can trigger liquidations and earn a small portion of the liquidated account’s leftover assets.
The rest of the assets are split between users who deposit USDH into Hubble’s stability pool. This “liquidation democratization” was first pioneered by Liquity, a borrowing protocol based on Ethereum, which has become a difficult chain to use for many due to high transaction costs, so a small portion of the DeFi community that can afford Ethereum’s gas fees have been able to benefit from this innovation.
Hubble will allow more people to receive a share of the liquidated assets. This is because the stability pool idea can be translated onto a network that everyone can use. Hubble will become a more stable protocol as it grows and users start their DeFi journeys on Hubble. As Hubble becomes a better protocol, Hubble will eventually decentralize to a DAO that has community governance. This would make the protocol completely democratically-organized.