Hashstack Launches a Highly Competitive Under-Collateralized Loans Solution

Sophia Cruz•Tuesday, February 8, 2022•1 min read

Over the past few years, there have been significant changes in the lending and borrowing landscape. Unbanked and underbanked individuals are often subject to exorbitant interest rates or they are required to make a copious upfront payment, simply because they lack a credit score. Therefore, a great solution that is intrusive to the current traditional system is needed – one that does not place restrictions on the borrower’s social status.

On Monday, Hashstack announced the release of a closed beta test net for its DeFi-based lending protocol, Open. Built on the Hashstack blockchain, the Open protocol promises to enable under-collateralized loans. This means a borrower could take out a $300 loan with only $100 as collateral, or even none at all, in some cases.

The company claims that this is not only more convenient for borrowers, but it’s also cheaper and more secure for lenders, who can get better returns if they decide to lend their capital against the bad debt of another party. DeFi lending has been criticized for being over-collateralized and inefficient in the past, with the average loan requiring excess collateral of 42% above the loan itself. Open aims to change that by introducing a decentralized protocol that enables under-collateralization, which is both cheaper and more secure.

Hashstack is open-sourced and utilizes a decentralized governance model with HASH, which takes the place of any native token on the platform. The team and community can unlock more collateral types and primary tokens by controlling and voting on the network. The content economy fosters new business models that are difficult to execute in traditional centralized operations.

As planned, Open protocol will be supporting major liquid coins, such as [[BTC]], BNB, USDT, USDC and HASH on its launch.

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ABOUT THE AUTHOR See More

Sophia Cruz

Financial Writer - Asian & European Desks

Sophia is an experienced writer, reporter and newsdesk member, mostly on the financial sectors. For the past 5 years Sophia has covered a wide variety of topics such as the financial markets, economics, technology, fin-tech and trading. Sophia has been a part of the FX Leaders team since 2017 and works on producing valuable content and information for traders of all levels of experience.