Risks
Possible risks users may face when using Hubble
Last updated
Possible risks users may face when using Hubble
Last updated
There are inherent risks associated with participating in DeFi. Some of these risks include but are not limited to:
Smart Contract Risk: Hubble operates on lines of code known as a smart contract. If a hacker can find a way to exploit a smart contract, they can steal funds.
Hubble mitigates the risk of an exploit by regularly engaging with third-party security firms that our smart contracts. Hubble has also launched a program to reward whitehat hackers for reporting any issues.
De-pegging Events: Stablecoin prices fluctuate naturally with market movements, usually within a very narrow range above or below $1.000. Major events can cause the price of a stablecoin to move beyond this narrow range making USDH worth less than $1.
Hubble mitigates the risk of de-pegging events in several ways. USDH is backed by at least $1.20 in crypto assets at all times, and USDH is always worth $1 on Hubble. In the event USDH de-pegs, users can repay their loans and retrieve their collateral.
If USDH falls below $1 on the market, users can cheaply repay their loans to retrieve their collateral. Conversely, if USDH rises above $1, users can mint more USDH with their collateral in order to capture a profit. Both of these actions help bring USDH back to $1.
Additionally, Hubble has developed mechanisms such as the Peg Stability Module (PSM) and the Stability Fee to further defend USDH's peg.