Vote-Escrowed HBB


Expand the role of HBB beyond governance while increasing its value proposition and empowering the holders.

If adopted, this discussion seeks to:

  1. Progress the role HBB plays in Hubble Governance through the following components
  • Vote-Escrowed HBB: introduce vote-escrowed locking of HBB (veHBB) as a replacement of HBB staking, where a longer locked duration grants a greater share of voting power and boosted HBB emissions in the form of subsidies to the borrow rate. HBB would be locked up for up to 4 years in a contract to mint veHBB.

  • Voting: veHBB will replace HBB in governance voting. Introduce gauges that dictate HBB emissions directed towards each Hubble-approved collateral type as an ongoing governance topic

  1. Improve Hubble Protocol incentive alignment by driving value accrual to the HBB token
  • Direct a portion of protocol earnings as rewards to veHBB token holders
  • Direct a higher portion of future HBB emissions to veHBB token holders in the form of subsidies to the borrow rate


  • Incentivize Long Term Supporters: veHBB holders will support the protocol over a longer-term horizon rather than speculate on price fluctuations in the short term. Those with strong conviction are rewarded the most over time.

  • Ecosystem Growth: veHBB creates a flywheel effect where emissions drive higher TVL, in turn generates more fees, and leads to greater value accrual to the HBB token. This better aligns incentives between HBB holders and the core stakeholders for the Hubble protocol.

  • Increase incentives for 3rd parties to accumulate HBB: Protocols will be incentivized to lock up HBB to vote and support the base borrow rate for their preferred collateral asset. Directing HBB emissions can often be a more efficient use of funds for 3rd parties than native incentive programs.

  • Locking Hubble Supply: Longer lockups of HBB contribute to a lower HBB supply (less is available on the open market to sell). HBB will maintain a more stable price as a result of the new design.

  • Improved Security: In its current state, Hubble is susceptible to attacks via borrowing HBB, and voting with HBB to make adverse changes to the protocol.


  • Lacking Incentives: Hubble may not generate enough fees or governance value may not be enough to motivate HBB holders to lock into veHBB.


  1. Vote-Escrowed HBB:
  • HBB can be locked up to 4 years into vote-escrow HBB. This locking mechanism will replace HBB staking
  • veHBB is non-transferrable but could be converted to a transferrable NFT in future improvements
  • Lock period will be in a range of min 1 year to a max of 4 years
  • Locking duration corresponds to linear weights, so if max duration is 4 years, voting weight for year 4 = 100% and year 1 = 25%
  • Voting weight decay as the remaining HBB lock duration decreases and can be extended back up to the maximum lock duration
  1. Rewards:
  • Borrowers that stake assets (i.e: Ray, SOL, mSOL) as collateral could get a discount ontheir minting fee with direct correlation to their amount of owned veHBB
  • USDH depositor on the USDH vault can receive boosted HBB emissions on their USDH deposits according to their veHBB holdings
  • Based on their amount of veHBB, users can boost their USDH borrow rate up to 1.5x proportional to the number of tokens locked.
  • HBB staking rewards will be redirected as rewards to veHBB holders
  • A portion of protocol earnings are directed to veHBB holders
  1. General Voting:
  • Once veHBB is introduced, only veHBB is accepted voting power in Hubble Governance
  1. Gauge Voting
  • Gauges represent each Hubble approved collateral type
  • HBB emissions are distributed to gauges based on biweekly governance votes. Each gauge can receive a different amount of HBB to emit to its respective collateral type

veHBB incentive alignment can be subdivided into economic and governance incentives:

Economic Incentives

  • veHBB rewards holders by subsidizing borrowing APRs with greater HBB emissions (higher distribution APR)
  • veHBB holders receive a portion of Hubble Protocol earnings
  • HBB staking rewards are redirected to veHBB holders given staking will be replaced with vote-escrow locking

Governance Incentives

  • veHBB holders are eligible to vote on how future HBB emissions are distributed across Hubble collateral types on a biweekly basis (every two weeks)
  • veHBB holders can vote to change borrowing parameters (asset listings, collateral parameters, liquidation parameters)
  • veHBB holders can vote to change lending parameters (market parameters)

Next Steps
Any feedback is welcome, and this aims for the community to discuss. Ideas will be incorporated as needed before a poll is introduced.


Well written and easy to follow. I disagree with VeHBB users getting discounts on borrowing rates, or fees. It’s already insanely cheap to borrow on Hubble, and thus protocol revenue will remain low, and even lower if discounting is available. Especially at these rates, it’s already inelastic if someone borrows on 0.5% or 0.4%.

Thanks for this insight. Yes, I believe you are entirely correct if the rates won’t move at all in the future. Maybe a bottom limit for those borrowing rates needs to be in place if any discount is going to be applied.

Bottom line, if borrow rates are fixed, we can remove the discounts on borrow rates from the proposal.

I believe there are still plans for an ongoing borrow rate to be introduced in the future as part of the PSM, but team has stated the goal there will be to stay as close to 0 as possible. It’s also not currently possibly to borrow HBB itself (at least not on Hubble), so the lines mentioning that are not terribly relevant. Hubble is designed around minting USDH specifically, so it is less complex than Anchor was in that regard.

I do like the idea of a higher cut of protocol revenue for the locked HBB. Currently around 85% of protocol revenue is distributed to HBB stakers as USDH rewards. I don’t think it would be inappropriate if that percentage was lowered for non-locked HBB, with the difference allocated to the locked HBB, weighted according to duration of lock. I’m not sure if a separate ve token would be necessary in that scenario though. At least not until governance goes live.

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thanks for putting this together, think overall a long term approach like ve-HBB is fundemental to the value of HBB and rewarding holders. Bringing more incentives for 3rd parties to accumulate HBB is an important topic to consider as well, so it’d be interesting to expand on that and explore it further.

Could you clarify on this a bit- What would make Ray/ mSOL depositors get a discount in correlation to their owned veHBB?

Worth noting that there is no current borrowing for HBB on Hubble, rather USDH. Borrowing rate is currently at 0 but will change with the onset of the Peg Stability Module and stability fees.

Governance for Hubble is something we’ve been thinking about in the long term but only in early stages. escrowed HBB has been on the radar as well. Great to have this insight and to start generating discussion around bringing more value to HBB and its holders.

Very well thought-out and presented proposal, thanks!

We are actively considering this concept and this will prove very helpful in shaping the discussion.

1 comment: “Borrowers that stake assets like Ray and mSOL as collateral could get a discount with correlation to their owned veHBB” A discount to what?

Also thinking about this, I like the idea of veHBB holders being able to have loans at higher LTV, perhaps if other certain conditions are met

Thanks for pointing this out. It was just a redaction mistake, I have made corrections. If you have other insights I appreciate your comments.

This is maybe just a redaction detail, I have made some changes I hope it is more understandable now.
What I meant was that whoever deposit any collateral could receive a discount on their minting fee for USDH.
If you believe this is not scalable, I think that the rest of the benefits stand well alone without this detail.

@marky I believe this answers your question too.

Thank you both for the insights. Any other comments are welcomed.