HashStack Addresses DeFi Loan Collateralization Inefficiences And Improves Asset Utilization

Hashstack aims to disrupt and improve the appeal of decentralized borrowing and lending. Users can access under-collateralized loans through its Open Protocol at a 1:3 collateral-to-loan ratio. It is a welcome change for the broader DeFi industry, as current collateralization rates remain too high. Adjusting Loan Collateralization In DeFi In traditional finance, one can obtain a loan if they have a fraction of the borrowed amount to put up as collateral. One would expect the same to apply to decentralized finance, yet that is not the case. Instead, users often put up 150% – or more – of the amount they want to borrow. If one has more liquidity than is needed to borrow, it doesn’t make much sense to take out a loan. Unfortunately, the high loan collateralization rates are a standard in decentralized finance. The use of volatile crypto assets warrants a “buffer” of sorts. Markets can turn around on a dime and will often turn bearish when people least expect it. That process devalues the collateral and loan ratio, forcing protocols to adopt a very cautious approach. Thankfully, things will improve soon through Open Protocol. The new DeFi protocol, designed by the Hashstack team, will introduce new loan collateralization opportunities. Users have to put up one-third of the amount they want to borrow, introducing undercollateralized loans to a global audience. Moreover, users can withdraw 70% of their ...