Hover Price (HOV)

What Is Hover(HOV)?

Hover is an institutional-quality lending protocol deployed on the Kava EVM. In conjunction with other leading DeFi primitives, Hover aims to become the central point around which immediate, capital-efficient liquidity can be accessed. Combining integrated tokenomics, 24/7 risk monitoring solutions, and a full-time public team, this platform is setting a new standard for building DeFi.

This platform allows users to earn yield on deposited funds by lending. Using those funds as collateral enables depositors to also borrow any asset offered on Hover, up to an algorithmically-determined amount. In the event that a borrower does not pay back their loan or the value of their loan exceeds that of their collateral, a portion of their collateral is liquidated to repay their outstanding loan amount.

How Does Hover Work?

Users have the option to make a deposit simply to earn yield, or to mark that deposit as collateral and borrow another asset against it.

Hover works by pooling depositors' assets and loaning them out to borrowers within the ecosystem. When a loan is taken out by a borrower, the value of assets that can be withdrawn is determined by the collateral factor (CF). The CF is the maximum amount that can be borrowed based on the quantity, dollar value, and volatility of the supplied collateral. For example, a user deposits $10,000-worth of WBTC into Hover as collateral. With a CF of 70% for WBTC at the time of deposit, the user can withdraw a loan of up to $7,000-worth of another asset, such as USDC or KAVA, from Hover’s markets.

Loans on Hover are overcollateralized, meaning users are not able to borrow more than they deposit. Since the values of the deposited collateral and borrowed assets can change, it's important to maintain the ratio between them so that the value of the collateral always exceeds the value of the loan. The measure used by Hover to inform depositors of the state of their overcollateralized positions is known as the health factor. As the health factor approaches 1, it indicates that the value of the loan is approaching the liquidation threshold. If the health factor drops below 1, the position is at risk of liquidation — the process of selling collateral on the open market to repay the excess value of a borrower’s loan. Borrowers can either deposit additional collateral or pay back enough of their loan to maintain a safe ratio and prevent their collateral from being liquidated.

Hover's depositors accumulate variable interest on their deposits. This comes from the interest that borrowers pay when they take out a loan. The formula that determines the percentage paid to depositors and the percentage paid by borrowers is known as the interest rate. Hover uses the Jump Rate Model, where rates are moderate until 80% of a given market is borrowed. Past 80%, the rates jump significantly to incentivize deposits and loan repayments thereby equilibrating the ecosystem. The ratio of borrowed assets to total supplied within a given market is known as the utilization ratio.

Each asset's market has a maximum number of tokens that can be borrowed in total, regardless of the number of deposited tokens. This borrow cap is based on several ecosystem-wide parameters such as decentralized exchange liquidity and bridged asset amounts. Hover takes a portion of each loan repayment to service protocol operations, retain liquid assets, and disburse to the Hover Rewards Program as determined by the reserve factor (RF).

Hover (HOV) Community

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