HashStack moves closer to non-custodial sub-collateralized loans as open protocol hits testnet
Decentralized finance is a thriving industry, but there’s still a lot to do. The lending segment can greatly benefit from under-secured loans. Hashstack is bringing this option to market as its open protocol is now on the public testnet.
Open protocol is a big deal
Since lending is the most important segment of decentralized finance, any improvement in this segment deserves attention. Hash stack, thanks to its open protocol, has developed a solution to meet the high warranty requirements in this sector. Today, users often put 150% – or more – of the amount they want to borrow. Unfortunately, this makes crypto lending much less attractive than it could be.
Solving this problem is not easy, because lending in crypto means managing volatile assets. There must be a buffer in case prices drop significantly. Stablecoins offer a potential solution, although Open Protocol takes a different route. It is the first DeFi lending protocol to provide under-collateralized loans in a non-custodial manner. Thus, users can maximize the value of their collateral when borrowing, making DeFi a more attractive segment.
It may seem odd that undersecured loans have not been available without custodial solutions until today. Using sub-collateral requires a very different approach to traditional lending and borrowing protocols. Open Protocol goes one step further by using a 1:3 collateral to loan ratio, offering a $300 loan on $100 in collateral. Additionally, users can withdraw up to 70% of their collateral and use the remaining borrowed funds as trading capital on the platform.
Hashstack, the team behind Open Protocol, has come up with a new mechanism that facilitates eternal scalability of logic and storage of smart contracts. This is a step up from the industry standard EIP-2535, and Hashstack will submit as EIP-9000 to fuel industry growth. Another benefit of this mechanism is how Hashstack can integrate any dApp with Open Protocol without smart contract modification.
Under-collateralized loans hit the public testnet
Hashstack’s solution can permanently reshape decentralized finance. However, the protocol must undergo rigorous testing by the public. To respond to this aspect, the protocol is now accessible via a open test network allowing the Hashstack team to refine the solution. Users can play a trick with an improved interface, hybrid access model, and improved transparency.
Vinay Kumar, founder of Hashstack Finance, adds:
“Our public testnet attracted over US$5 million in Total Value Locked (TVL) immediately after going live. The public testnet release marks a significant achievement in the Hashstack roadmap as we prepare to launch the Open Protocol mainnet later in the second quarter of 2022.”
The ability to access under-collateralized loans will set DeFi apart from the current norm in a good way. Decentralized loans should work by removing the need to provide more collateral than is needed to borrow. Open Protocol offers a glimpse of what the future of lending and borrowing might look like.