With its Open Protocol, HashStack has created a solution to alleviate the industry’s high collateralization requirements. Users must now put up 150 percent (or more) of the loan amount. Regrettably, this makes crypto loans significantly less tempting than they might otherwise be.
It’s not easy to solve this problem because financing in crypto involves dealing with volatile assets. There must be a safety net in place in case prices plummet dramatically. Although Open Protocol uses a different approach, stablecoins offer a viable solution. It’s the first non-custodial DeFi lending protocol to deliver under-collateralized loans. As a result, when borrowing, consumers can maximise the value of their collateral, making DeFi a more appealing category.
It may appear surprising because, until now, under-collateralized loans were not available without custodial solutions. Under-collateralization necessitates a departure from typical lending and borrowing practises. Open Protocol takes it a step further by offering a $300 loan with a 1:3 collateral-to-loan ratio, with $100 as collateral. Furthermore, users can withdraw up to 70% of their collateral and use the remaining loaned cash as trading capital on the site.
Hashstack, the company behind Open Protocol, has developed a new technique that allows for infinite scaling of logic and smart contract storage. It’s an improvement above the EIP-2535 industry standard, and Hashstack will submit it as EIP-9000 to help the industry expand even further. Another advantage of this technique is Hashstack’s ability to integrate any dApp with Open Protocol without requiring smart contract modifications.
Hashstack’s approach has the potential to transform decentralised finance for the better. The protocol, on the other hand, must be put through rigorous public testing. To address this issue, the protocol is currently available on an open testnet, allowing the Hashstack team to fine-tune it. An upgraded interface, a hybrid access paradigm, and increased transparency are all available to users.
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