How Hubble Protocol is democratizing loan liquidations

In order to keep decentralized finance (DeFi) borrow/lend protocols solvent, liquidations are executed on unhealthy accounts. Lending in DeFi is overcollateralized due to the volatility of assets in such a young market, and since the market is so young, DeFi hasn’t figured out the best strategy for ensuring debts can be paid if something goes wrong without the need for over-collateralization.

Traditional finance (TradFi) usually accepts collateral in the form of real estate or other valuables that can be used to cover a loan amount if the borrower is unable to pay back their loan. In TradFi, banks and other lenders get to keep the collateral for themselves after a loan goes unpaid, but Hubble’s take on DeFi is transforming the paradigm of collecting collateral into a liquidation process that benefits the many over the few.

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