Port Finance partners with Hubble Protocol to bolster capital efficiency and increase the usage of USDH within the Solana ecosystem.
It’s been 2 weeks since we launched Hubble Innovation Zone, the article below will elaborate more on why Port Finance launched Innovation Zone, how users can take advantage of this and what to expect in the coming weeks!
The Hubble Innovation Zone is an isolated lending pool, separate from the main Port pool, which aims to boost the usage of USDH in the Solana ecosystem. By having isolated lending pools, lenders of main pools will be exposed to limited risk.
What is USDH?
USDH is Stable coin issued by Hubble Protocol and is overcollateralized by crypto assets (mentioned below). This should reduce the risk of bank run due to the stability pool.
Where can you get USDH?
1. You can deposit your SOL/BTC/ETH/FTT/RAY/SRM/MSOL as collateral here and mint USDH interest free with only a minting fee of 0.5%, you can find more details here, however there is risk of liquidation if you are minting.
2. Swap your token for USDH from Jup.ag, this method will not involve any liquidation at all.
Here is how you can make full use of Hubble Innovation Hub:
1. Visit https://mainnet.port.finance/
2. You will see a glowing button as shown below
3. You will enter the “Hubble Innovation Zone” if you press on it.
4. The UI would be very similar to Port Finance Main Market where you would be able to find the main lending borrowing market.
A refresher on how you can take advantage of the Hubble Innovation Zone.
1. Obtain some USDH, deposit USDH into Hubble Innovation Zone and earn the APY on the deposit. You can do this a couple of times folding it. If you are overfolding it, you might have a hard time unwinding the position if you don’t have spare currency, thus please proceed only if you are aware of such risk.
2. You can also deposit mSOL/stSOL/BTC, and proceed to borrow USDH. Once you borrow USDH, you will be able to claim $HBB and $POL rewards from @png_fi. **You will need to take note of the risk factor, once the risk factor hits 100, the collaterals that you put up will get liquidated.**
3. You can also liquidate others who have reached 100% risk factor from the liquidate tab, to earn liquidation bonus which you can find the details from here.
Significance of Innovation Zone
Hubble Innovation Zone is the first of many innovation zones that Port Finance will introduce.
Currently most money market protocols allow users to supply different sets of assets and borrow another set of assets (some examples are AAVE, CREAM, COMPOUND). The disadvantages of these DEFI 1.0 would be:
1. If liquidators are not able to react in time as the asset price drops, every lender and borrower and the assets on the platform would be affected by this. Risk of the platform increases as more assets are added to the platform, this makes it very hard for the protocols to scale up accordingly.
2. Entire platform is subjected to the risk should there be any weak point such as manipulation of oracle price (e.g. Cream Finance Exploit)
Advantages of Innovation Zones
So, what is an innovation zone and what are the advantages of an innovation zone? Innovation zone is an alternative from shared pool lending. The advantages of innovation zones would be:
- Port Finance would be able to aggressively list new assets on the platform easily, mainly due to the risks of listing new assets would be nullified considering that an exploit/depeg will not result in the loss of the protocol’s entire TVL but only that zone.
- Interest rate would reflect the risk. Higher risk pools will attract less lenders, pushing up the interest rate.
- Recent wUST depegging, would show a good example why innovation zones are much needed. if wUST was in an innovation pool, during the depeg, other assets in the main lending pool and other innovation zones will not be affected. There will not be a cascading liquidation due to the depeg.
- Solana chain TPS usually drop when it’s under heavy load, this usually means liquidators might not work properly and might miss the moment to liquidate a position, with innovation zones this risk can be managed better. The higher risk assets will be in their zones separated from the main pool (assuming main pool has lower risk and higher liquidation threshold comparing to innovation zone)
- Current shared pool lending sets a fixed minimum and maximum rate, this is not optimised towards an ideal utilisation as during very low or very high (e.g.,100% utilisation) the protocol will need to adjust manually the rate, otherwise during 100% utilisation, withdrawals are no longer possible. This is fine if it’s only for a period, but what if it’s overextended to weeks? By introducing Innovation zones, each zone will have the opportunity to optimise the interest rate to get the ideal utilisation. If the pool is underutilised, the interest rate will drop, if the utilisation is too high, interest rate will go up to ideal rate. The parameters can be configured for each pool.
Another use case for Innovation Zone
Other than better risk management, Innovation zones will also enable “margin shorting on any token. For example, there is a new token launched that has absurd emissions called token XYZ. There is an isolated pool for SOL and XYZ on Port Finance with CR 80%. If any users wanted to margin short it, they can supply SOL and borrow XYZ, they can do this 2–4x depending on the risk profile. This will lead to higher volume on Port Finance and enable users to “short” XYZ which have not been listed anywhere, thus will be generating lots of volume and fees on Port Finance.
About Hubble Protocol
Hubble is a decentralized finance (DeFi) protocol built on Solana. Hubble will offer multiple DeFi services as the protocol and DeFi continue to mature and expand.
Website: https://hubbleprotocol.io/
Twitter: https://twitter.com/hubbleprotocol
Telegram: https://t.me/hubbleprotocol
Discord: https://discord.com/invite/C4jzzFfVRZ
Gitbook: https://hubble-markets.gitbook.io/hubble-protocol-official-docs
About Port Finance
Port Finance is a non-custodial money market protocol on Solana. Its goals are to bring a whole suite of interest rate product including variable rate lending, fixed rate lending and interest rate swap to the Solana blockchain.
Website: https://port.finance/
Twitter: https://twitter.com/port_finance
Telegram: https://t.me/port_finance
Discord: https://discord.com/invite/nAMXAYhTb2
Github: https://github.com/port-finance/
