Hashstack Disrupts DeFi From Within Through Under-Collateralized Loans Via Open Protocol
Hashstack is proud to launch its Open Protocol testnet to bring under-collateralized loans to DeFi. Disrupting decentralized finance from within will help eliminate efficiencies and make lending more accessible to a broader audience.
Under-collateralized Loans For DeFi
Hashstack.Finance is changing the game where decentralized lending is concerned. The team has been hard at work to build its Open Protocol. Through this protocol, Hashstack provides non-custodial lending through secure under-collateralized loans. Open Protocol is now in the testnet phase to give users an overview of what they can expect and unlock benefits.
Unlike other DeFi lending solutions, Open Protocol is the only service to facilitate under-collateralized loans up to a 1:3 collateral-to-loan ratio. As a result, users can borrow up to $300 by providing $100 in collateral. Moreover, users can withdraw up to 70% of their collateral while utilizing the remainder as in-platform trading capital.
Hashstack Finance founder Vinay explains the potential of Open Protocol:
“Today, if you want to borrow $100 on Compound, or Aave, or even MakerDAO, you are required to provide a collateral of at least $142. This breaks the primary intent behind loan procurement, and has restrictive use-cases for the borrower. In comparison, through Hashstack’s Open Protocol, you would be able to borrow the same $100 with collateral as little as $33.33. This 4.25x value-add against every established market player today is a remarkable milestone for the defi ecosystem in general, and will drive further adoption.”
The solution brought to the table by Hashstack Finance is a breath of fresh air for the DeFi industry. But, unfortunately, the current collateral requirements by established lending platforms make the concept of decentralized loans rather unappealing. As such, DeFi cannot fulfill its potential of bringing alternative financial solutions to those who need it the most. On the other hand, under-collateralized loans open the landscape up to millions of people.
Growing DeFi By Eliminating Shortcomings
The Open Protocol has the potential to accelerate the global adoption of DeFi lending. More specifically, the protocol introduces crucial solutions to inefficiencies in the ecosystem today, including removing over-collateralized loans, achieving effective asset utilization, and compartmentalization of APY and APR for deposits and loans.
The Hashstack solution is modular and compatible with other DeFi solutions on the market today and in the future. For example, Open Protocol can integrate with Pancakeswap to provide in-app market swaps and enhance loan utilization. Borrowers can swap borrowed tokens to other coins without leaving the ecosystem. Additionally, Open Protocol has bridging support from assets on Ethereum, Avalanche C-Chain, and others.
Initially, Open Protocol will support currencies with prevalent liquidity, including Bitcoin, USD Coin, Tether’s UST, Binance Coin, and HASH, the native governance token of Hashstack. Support for additional currencies will roll out over time.
The 1:3 collateral-to-loan ratio is a game-changer for the decentralized finance industry. Hashstacks is the first project to develop a protocol capable of providing the necessary financial solutions to those who direly need it. It doesn’t make sense for people to buy $150 worth of crypto to get a $100 loan. However, buying $50 of crypto to borrow up to $150 is a more sensible approach and a strong incentive for people to explore decentralized finance.
