Hashstack Brings Under Collateralized Loans to Crypto Lending

Hashstacks launches its Open Protocol on testnet, which provides a better collateralization model for crypto borrowers.

Bishal Kumar Chanda3 min read
Hashstack Brings Under Collateralized Loans to Crypto Lending

When we think of lending, it often involves putting up a specific amount of collateral. Most of the time, in decentralized finance, the collateral amount is more than the borrowed sum. However, Hashstaks is set to challenge the high collaterals in crypto lending with its Open Protocol. The Open Protocol was released on the test net, and the results appealed to millions of potential users.

In 2022, decentralized lending has become one of the most prominent parts of DeFi. The availability of liquidity instantly just by interacting with smart contracts appeals to many borrowers. On top of that, it is a lucrative option to leverage crypto for more liquidity and earning potential. Even though a straightforward process, the current implementation has a steep caveat.

Despite being a $48 billion industry, the current lending protocols leave users desiring better options. Although the existing protocols provide substantial liquidity, the collateralization requirements remain sky-high. It's high time for platforms to introduce uncollateralized loans, a new concept becoming increasingly accessible. Hashstack Finance's test net launch of the Open Protocol reinforces the idea of uncollateralized loans, not only catering to existing crypto holders but also onboarding new users.

The Open Protocol uses a 1:3 collateral-to-loan ratio, meaning users can borrow three times the capital they already own. Not long ago, Nexo also enabled users to have 3x leverage on their digital assets. For example, you can borrow up to $300 by putting up only $100 as collateral. Moreover, users can also withdraw up to 70% of the initial collateral, and the remainder of it serves as the platform's trading capital. According to Hashstacks data, borrowers generally provide a minimum of 42% extra collateral. With Open Protocol's streamlines process, users will have more liquidity for their assets.

Hashstacks also claims that the Open Protocol will help users get 4.28 times more loans on their assets than most popular lending platforms like MakerDAO, Compound, and Aave. Although the difference is quite extensive, collateralization is still required for DeFi. The Open Protocol supports the primary markets of BTC, BNB, HASH, USDC, and USDT and has custom deposit plans that are made as per individual needs.

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