Lending Products Are Crucial to Crypto—Why We Are Building hLend

‍We recently wrote about hPerps, our perpetual trading product, in a post that started with a definition, so let’s start there again with hLend, our lending protocol.

Lending products are decentralized finance (DeFi) protocols that allow users to lend and borrow assets without intermediaries. These include collateralized lending, flash loans, and stablecoin-based credit markets. 

Thanks to smart contracts, we can build trustless and permissionless lending which means no meetings with a bank manager; instead, you are assessed based on your activity and assets—the loan arrives faster than with any bank.

Why is hLend an essential product for Haven1?

1. Liquidity and Capital Efficiency

Lending protocols help increase liquidity by enabling idle assets to be put to productive use. Instead of assets sitting in wallets doing nothing, token holders can deposit them into lending platforms to make their assets available for onchain borrowing and lending , ensuring a more dynamic and efficient capital flow within the network. 

Borrowers, in turn, can access capital without needing to sell their holdings, allowing them to access liquidity without needing to liquidate their existing positions.

‍2. Attracting Users and Builders

A thriving lending ecosystem attracts developers and users who need financial primitives to build applications, and that’s exactly our goal.

We already have more than 50 teams building on Haven1, we’re attracting institutional capital and we have well-known validators on our network including Sygnum Bank, AWS, Worldpay and Nansen. Onchain credit and lending are key to building the type of ecosystem which incentivizes our ecosystem partners to build all manner of services.

Socialfi, memecoins, prediction markets, NFTs and beyond aren’t possible without this key piece of the puzzle.

3. Enabling Onchain Leverage and Yield Strategies

Related to that last point, lending protocols attract traders and investors because they enable them to access capital for onchain strategies such as staking, liquidity provisioning, or arbitrage.

These activities enhance market efficiency and drive further engagement with the network, increasing transaction volume and fee generation that supports the protocol’s long-term sustainability and operations.

4. Strengthening Network Utility and H1 Token

Lending products enhance the utility of our native H1 token by integrating it into borrowing and lending markets. 

H1 can be used as collateral within the lending protocol, expanding its role and integration within the Haven1 network.. Unlike other ecosystems where lending may be hosted on a layer-two chain, via a third-party or on exchanges, hLend sits on the Haven1 network so all fees generated contribute to the operation and sustainability of the Haven1 protocol.

Since products like hPerp and hLend operate directly on the Haven1 network, they help drive protocol-level activity and sustainability. This encourages long-term participation from builders and users who benefit from greater access to infrastructure and tools.

We believe this will appeal to the best protocols and help bring them to the Haven1 network.

5. Real World Asset Lending

We intend to develop a version of hLend that’s focused on real world assets (RWA). hLend will inherently have the ability to support real world assets (RWA). One of our primary focuses is money market funds, which account for the vast majority of tokenized RWA today, according to RWA.xyz.

Through Haven1, asset managers will be able to tap into traditional equities and liquidity but with the opportunity to explore strategies that would be difficult to execute in traditional markets, thanks to composability and automation onchain.. That involves the use of products including staking and hLend but with the added security that the assets are available through regulated, off-chain audited partners, and verified through KYB processes. 

We offer the flexibility for asset managers to deploy strategies that remain wholly on the Haven1 network, thereby enabling more transparent and auditable onchain strategies within a trusted framework.. However, other strategies could involve more complication with cross-chain approaches for higher yield but with greater risk.

Outside of funds, our RWA partners include the likes of Sygnum, Republic Crypto, Digifi, Nexade and Diamore. For a deeper understanding of the industry, we recently held a X Spaces with Blocksquare and Nomad Fulcrum—two additional RWA partners—to discuss what is needed to accelerate RWA moving on-chain. You can read a detailed summary of the conversation here.

RWAs could be supplied and used as collateral for borrowing, just like cryptocurrency assets, with opportunities for borrowing or collateralization using tokens or NFTs.. Such an integration could unlock even more DeFi services around RWA, which is surging, having just crossed $8 billion in total assets tokenized.

A Key Piece of the Haven1 Network Coming Soon

Lending products form a cornerstone of a thriving blockchain economy. For a new layer-one chain, establishing a robust lending ecosystem isn’t just an option—it’s a necessity for long-term success. 

In conjunction with hPerps, we see hLend as a key piece of our ecosystem which will enable us to broaden the scope of DeFi services and increase the utility of the Haven1 network.