Possible risks users may face when using Hubble
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.
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.