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Hashstack Finance Launches Its Open Protocol Thanks To Harmony Fund

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To give context to the situation, Harmony Protocol is a secure blockchain famous for its goal of focusing on the scalability of its projects and earning the trust of its users. With this in mind, the Harmony protocol team has provided an ecosystem fund for promising projects and DAOs with an estimated $300 million to spare. 

Harmony Funds Hashstack Finance for Improving DeFi Lending And Other Solutions

Hashstack Finance is one of the chosen few to receive this large-scale funding to improve their DeFi lending problems.  The reason for this is that the lending and borrowing market has significantly grown in volume and scale this past couple of years. Most likely due to lending protocols being created. This new protocol tends to attract a lot of capital especially when it comes to NFT loans since they have become more popular recently. 

An assessment by Dune Analytics shows that the top three platforms right now are AAVE, MKR, and COMP. In terms of market capitalization, these three stand at the top but that doesn’t mean they are free of problems. These platforms face a lot of issues thanks to the volatility of digital assets and collateral requirements.

Hashstack Finance’s idea of improving DeFi lending is on the right track. For those who don’t know, Hashstack Finance is a DeFi platform that aims to solve the collateral requirement problem by using its lending protocol named Open. Open Protocol is said to be able to help users take large loans up to 1:3 collateral to loan ratio.  The platform recently announced on its closed beta testnet that Open protocol will be able to solve a lot of these lending problems. 

Open Protocol designed to improve lending

According to Hashstack Finance, this allows their users to borrow $300 and they only need to use $100 as collateral which is a big step up from other protocols. Users can withdraw 70% of this collateral and in our example, this would mean $70. The remaining $230 is in the user’s hands and they can use it as trading capital within the platform. As A DeFi lending platform, Hashstack Finance claims that DeFi lending is over collateralized leaving the average borrower with an excess of collateral against their loan. 

Hashstack Finance founder stated that if you borrow $100 on Aave or Compound you need to provide at least $142 as collateral which defeats the whole point of lending in the first place!

Conclusion

With how DeFi loans work it’s no wonder that Hashstack Finance is looking for a better solution. It also explains why the Harmony Ecosystem Fund is backing up Open protocol thanks to its potential to change how DeFi loans would affect its users. Now whether or not Open protocol will live up to its expectation is still a mystery since it’s still in its experimental phase on Testnet.

We hope this information will help you in your investment process, but this is not investment advice. Every investment carries risk, especially in this industry, so DYOR before making a decision.

ABOUT THE AUTHOR

Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.

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