Undercollateralized loans and an easy-to-use lending facility are the USP of the Open protocol. By employing these functions, Hashstack provides several use cases for both lenders and borrowers -
Users can earn up to 15% APR by lending their crypto assets to the Open protocol. This interest rate is much higher than the current inflation rate (January 2023) in the US i.e. 6.4% [source]. Therefore, users can lend their funds to the Open protocol and hedge their crypto assets against inflation.
Users can short an asset by using Open’s borrowing facility. For instance, assume Bob holds asset A, and he thinks asset B is going to loose value. So, Bob can borrow B from the protocol by submitting A as collateral and sell B in the open market. Unlike other platforms, Bob can borrow upto 3 times the collateral he deposits on Hashstack. If the price of B decreases, he can buy it again and repay the loan, thereby making a profit.
Borrowers can use their loan amount on integrated platforms like Jediswap and Myswap. They can also withdraw up to 70% of their collateral amount ( deducted from the loan amount ). This way, they can stay invested in an asset and get liquidity off chain by paying a nominal charge.
Users can earn lucrative incentives for lending their funds. If they're holding an asset and want to earn extra interest, they can lend it to Open protocol.
Users can use the loan to change the collateral of another loan on the same platform or another platform. Let’s say a person has already taken a loan of USDC by providing ETH as collateral. They can borrow USDC from the Open protocol and repay the loan. Now, they can easily take a new loan on the platform and submit the collateral of their choice.