Strategic Partnerships for Yield-Bearing Collateral

Proposal: The Hubble Protocol should pursue strategic partnerships with Solana-based leveraged yield farming protocols as a means to generate yield on deposited collateral.

Overview: Leveraged yield farming protocols like Tulip and Francium historically have some of the highest lending APYs in the Solana DeFi ecosystem. The reason for this is simple: Their lending apparatus has built in utility from their leveraged yield farming operation, which results in higher utilization rates and therefore higher lending APYs. At the time of writing, the lending APY for Sol and Ethereum on Francium are 16.9% and 4.95% respectively compared to 1.34% and 1.26% on Solend.

The higher lending APY comes with a catch, though. For a variety of reasons, Tulip and Francium do not allow borrowing outside of the protocol. For a lender, this means that any funds deposited into the protocol are at a dead-end from a DeFi strategy perspective. There is no ability to borrow against the deposited funds (aside from on-platform leveraged yield farming) or create a loop.

A Strategic Partnership: The Hubble Protocol has been actively seeking strategies to earn yield on deposited collateral. Tulip and Francium offer some of the most attractive yields in the ecosystem and do so without the complexity of something like an exotic LP farm or the risks of a derivatives platform. By forming a strategic partnership with Tulip and/or Francium, Hubble can bring these yields to its own investors while simultaneously decreasing the borrowing costs for leveraged yield farmers.

This move would also eliminate the “dead-end” problem, allowing investors to create more complex DeFi strategies that take advantage of the unique characteristics of Tulip/Francium and Hubble.