Mint Hubble's censorship-resistant stablecoin on Solana.
USDH is backed at least 120% by a basket crypto assets including SOL, mSOL, BTC, ETH, RAY, SRM, and FTT. Additional tokens will be whitelisted for borrowing in the future after passing a rigorous vetting process.
USDH is a Solana-native SPL token that can be used for anything stablecoins are used for in DeFi: pairing for liquidity on AMMs, borrowing and lending, or held as a store of value.
Users can deposit USDH in Hubble's Stability Vault (formerly Stability Pool) to earn a share of liquidations during market downturns. By helping liquidate bad debt and keeping the system healthy, Stability Vault providers watch their USDH balance decrease as their balance of bluechip tokens increases at a ~10% discount through liquidations.
How USDH Maintains Its Peg
There are a few ways USDH maintains its peg. By increasing the liquidity of USDH on stableswap AMMs, the effect of swapping USDH on its price is reduced, and arbitrage opportunities are increased.
Whenever USDH rises above peg, it can be minted and swapped for profit. Whenever USDH falls below peg, it can be cheaply acquired from a stableswap and used to repay debt.
To keep USDH tightly pegged to the dollar, we will be deploying a Peg Stability Module (PSM) and Stability Fees when USDH goes below peg.
The Peg Stability Module will allow for USDH to be swapped 1:1 with USDC with zero slippage and zero market risk. This will allow for risk-free arbitrage between USDH and USDC that will allow arbitrageurs to capitalize on the differences in market price. Giving users an efficient way to arbitrage USDH when it is both above and below brings USDH's price back to where it should be, $1.
Peg Stability Module
If USDH is above peg:
If USDH = $1.05 & USDC = $1
An arbitrageur can buy 10,000 USDC and swap it 1:1 for 10,000 USDH via the PSM. They can then take this USDH to the market and swap it back for 10,500 USDC.
This process can be repeated, and the increasing supply of USDH on the market will eventually drop USDH back to its $1 peg.
If USDH is below peg:
If USDH = $0.95 & USDC = $1
An arbitrageur can buy 10,000 USDH at the discounted price of $9,500 and swap it 1:1 for 10,000 USDC via the PSM.
This process can be repeated, and the decreasing supply of USDH on the market will eventually lift USDH back to its $1 peg.
Stability Fees will act as an interest rate on USDH, but only when USDH drops below peg. When USDH is below peg, Stability Fees will activate, and the interest on loans will drive users to repay their loans.
Loans can only be repaid with USDH, so the demand for USDH will temporarily increase as users acquire USDH to repay their loans.
Users who stake USDH will receive a portion of these fees as a native savings rate on Hubble.
Note that the infrastructure for the PSM is now complete but has not yet been activated. More info will follow regarding the official release.