Lending and borrowing are two core elements that build up finance and allow cash to flow more effectively. In the cryptocurrency world, the market is linked to the traditional financial market through reserve-backed stablecoins. It also offers a great lending/borrowing system where users can easily make transactions with low fees.
What is Hedge?
Hedge is a lending protocol built on Solana. With Hedge, users can access 0% interest loans by depositing collateral for stablecoin USH. The maximum loan-to-value that Hedge offers are up to 90.9%, which means that borrowers only need to deposit 9.1% collateral to receive the loan.
Users are encouraged to maintain a collateral-to-debt ratio greater than 110% to prevent liquidation. When an undercollateralized vault is liquidated, users who deposited USH in a stability pool are rewarded with discounted collateral.
Hedge Protocol has been audited by Kudelski, OtterSec, and Sec3 (formerly Soteria).
How does Hedge work?
Hedge enables users to mint USH, a stablecoin soft-pegged to the USD, on flexible terms. USH ceiling price is $1.10 and is always redeemable. If USH is traded above $1.10, users can make a profit by selling USH on the market.
To start using Hedge, users can deposit their collaterals in a Hedge vault and pay a one-time fee of 0.5% of the loan amount to take a loan. Hedge provides vaults with a collateral ratio as low as 110%, allowing for up to 11x leverage. Currently, Hedge accepts SOL, mSOL, and cUSDC as collaterals. The loan users receive is issued in USH.
Once borrowed, users do not have a deadline of when they need to repay their loan as long as they maintain a positive collateral ratio for their vault. They can use USH to exchange for other stablecoins, buy more SOL with USH and add these tokens to the collateral vault to leverage their SOL exposure, or deposit USH in the stability pool and be rewarded in SOL and HDG tokens.
As an example, users create a Hedge vault with 1,000 SOL (worth $35,000 if the SOL price is $35). They take out a loan of 5000 USH, which is pegged to USD, and make a purchase of $5000 as they wish.
In a scenario where SOL price goes up to $100 a year later, their collateral is then worth $100,000 while, their debt is still $5,000, and their vault is now $95,000. They made a profit of $65,000 and can withdraw it or keep it in the vault until they want to close it.
However, if the price of SOL goes down, they might have to face liquidation. For instance, if the vault was opened when SOL was at $150/SOL and the collateral (SOL) price has fallen to $136.25. This will make the vault fall below the 110% min collateral ratio. The vault is now subject to liquidation as below.
Hedge Token Use Cases
The Hedge Protocol issues 2 protocol tokens: HDG and USH.
- HDG: It is a revenue share and governance token. It’s used to reward market makers for providing liquidity to the system by capturing a proportional share of the protocol revenues when staked.
- USH: It is a USD-pegged stablecoin. Each $1 equivalent of USH is backed by at least $1.10 equivalent of collateral.
At launch, users may stake HDG to earn a portion of protocol fees, which are taken during the loan initiation. This model may change as the protocol matures and HDG is used for governance.
Team, Investors, and Partners
Hedge Protocol is led by:
- Co-Founder – Sebastian Grubb: Former Product Manager at Google.
- Co-Founder and CTO – Chris Coudron: Co-Founded ChoicePass, a startup that was acquired by Salesforce and then folded into Work.com.
Recently, Hedge Protocol has announced $3.7 million in a seed funding round with the participation of many famous investment funds such as:
- Race Capital: Lead the investment round. The firm invests, builds, and partners with the projects at a very early stage.
- Pantera Capital: An investment firm that focuses exclusively on ventures, tokens, and projects related to blockchain tech, and digital currency.
Along with many other investment funds such as Solana Ventures, Big Brain Holdings, Shima Capital, and DCM.
This fund will be used to expand the company and make its liquidity vaults available to the general public this quarter.
Roadmaps & Updates
More collaterals are expected to be accepted going forward and more vaults with different parameters will be added over time.
Along with this, a thriving ecosystem built on top of USH will be made available, including yield and leverage products.
Detailed information about Hedge Token
Hedge Key Metrics
- Token Name: Hedge
- Ticker: HDG
- Blockchain: Solana
- Token Standard: SPL
- Contract: 5PmpMzWjraf3kSsGEKtqdUsCoLhptg4yriZ17LKKdBBy
- Token type: Utility, Governance.
- Total Supply: 10,000,000 HDG
- Circulating Supply: Updating…
Hedge Token Allocation
- Team & Advisors: 25%
- Liquidity Incentives: 25%
- Stability Pool: 20%
- Treasury: 10%
- Seed Investors: 10%
- Community Rewards: 5%
- Future Fundraising: 5%
Hedge Token Sale
Hedge Protocol intends to go public in the second quarter of 2022 after the TVL of DeFi on Solana surpasses $6.7B.
Hedge Token Release Schedule
How to get Hedge Token
- HDG Token: Users can get HDG by depositing USH in the stability pool and get rewarded with HDG, or stake HDG on the Hedge platform to collect a percentage of the platform fees.
- USH Token: Users can get USH by depositing collaterals in a Hedge vault to take a loan in USH.
How to store Hedge Token
You can store the HDG tokens on Coin98 Wallet with these steps:
Step 1: Open Coin98 Wallet & click Receive on the home screen.
Step 2: Search HDG Token.
Step 3: Click on the correct result, copy the wallet address, and send HDG to this address.
You can store the USH tokens on Coin98 Wallet with these steps:
Step 1: Open Coin98 Wallet & click Receive on the home screen.
Step 2: Search USH Token.
Step 3: Click on the correct result, copy the wallet address, and send USH to this address.
How to buy Hedge Token
- HDG Token: You can buy HDG Token through these exchanges: Orca, Raydium, and Jupiter.
- USH Token: You can buy USH Token through the Orca exchange.
- Solend (SLND): Solend enables users to use their capital more efficiently by lending to earn interest, borrowing, and leveraging long and short positions.
- Party Parrot (PRT, PAI): Lending platform on Solana allows users to borrow stablecoin (PAI).
“Liquidity is a common pain point for Web3 users, but Hedge is simplifying access to liquidity, lowering barriers for both new and veteran users,” said Pantera partner Paul Veradittakit.
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