With BNB-backed stablecoin HAY, Helio Protocol aims to disrupt the entire stablecoin landscape.
Immediate mainnet launch
We are very excited to announce that the mainnet launch of the Helio protocol will take place on August 17th. This article dives deep into the Helio protocol, our BNB-backed stablecoin HAY, and how we intend to disrupt the entire stablecoin landscape.
Introduction of the Helio protocol
The emergence of stablecoins was a significant step forward in the development of the broader cryptocurrency market. We initially welcomed the launch of fiat-backed stablecoins like USDC, BUSD, and USDT, which brought a non-volatile, digital form of currency. Since then, the community has viewed stablecoins as an integral part of mass cryptocurrency adoption, as existing coins like BTC or ETH were not quite suitable to be used as a means of payment for transactions due to their volatility. However, significant downsides prevented full adoption of these stablecoins. Opponents have called the lack of capital efficiency and the inherent required centralization at odds with the DeFi ethos and refused to accept that these stablecoins were the best the community had to settle for.
To overcome these hurdles, decentralized stablecoins were then invented. As the name suggests, decentralized stablecoins did not have a central custodian. They offered a greater propensity for greater capital efficiency, as investors could typically earn higher returns from further DeFi activities such as liquid staking. Unfortunately, recent setbacks and challenges within the decentralized stablecoin industry have challenged the entire premise of decentralized stablecoins. Can we really have a decentralized stablecoin that guarantees stability yet sustainable returns?
After extensive research, the team recognized the challenges and identified a way to solve the stablecoin trilemma of stability, capital efficiency and decentralization that has persisted since inception. Our ambition culminates in Helio Protocol, a soon-to-be leading stablecoin provider in the BNB chain.
Helio protocol
The Helio protocol is an open-source liquidity protocol for lending and earning returns on HAY – a new BNB-backed, over-collateralized stablecoin. Built on the BNB chain, the Helio protocol consists of a dual token model and mechanisms supporting instant conversions, asset collateralization, borrowing, yield farming and stablecoin staking. Helio Protocol aims to deliver an improved version of already successful stablecoin projects by further optimizing security and capital efficiency. The protocol aims to achieve this by leveraging Proof-of-Stake (PoS) rewards, liquid staking, and high-yield assets. Following the launch of our governance token HELIO, the Helio protocol will also act as a DAO where the community will manage the treasury, revenue pool and future direction of the protocol.
HAY stablecoin
The HAY stablecoin is a non-custodial and over-collateralized stablecoin, also known as Collateral Debt Position (CDP), backed by liquid BNB. To borrow or receive HAY, users must provide BNB in the form of collateral by interacting with Helio’s protocols. At launch, HAY is issued as a BEP-20 compatible token. Its use cases include the following:
1. Loan from HAY
- Users who have deposited BNB on the Helio log (CeVault) are eligible to borrow HAY.
- Borrowing HAY, repaying the loan (with interest) and withdrawing the original collateral are all governed by a series of smart contracts.
2. Liquidity Mining: Via 3rd Party LPs on DEXes (To Be Announced Soon!)
3. Payment: As a means of transferring value and purchasing goods and services.
Loan-to-Value Ratio & Liquidation Process
The initial maximum LTV (loan-to-value) ratio is 66% (collateral ratio of 152%), which means users can borrow HAY up to an equivalent of 66% of the value of their collateral. The liquidation process is initiated when the price of the security falls and the LTV ratio rises above the limit.
Users can liquidate their holdings if they deem a liquidation process due as the borrowed HAY value becomes higher than the current value of the user’s margined security, and receive a flat fee (tip) and dynamic percentage (chip) simply for doing so Starting a Dutch auction, which is the core component of the liquidation process. It is an opportunity that arises in the liquidation process and every Helio user can take advantage of it. Aside from this opportunity, anyone who restarts the Dutch auction will receive the same reward (chip + tip) for doing so.
Improving capital efficiency and liquid staking
Helio Protocol will integrate the BNB liquid staking mechanism into our system, which is an improved and more efficient method compared to the traditional staking mechanisms. With BNB Liquid Staking, users no longer need to freeze their assets at a central node. This removes the disadvantage of having “illiquid” assets that cannot be used or spent elsewhere.
This is achieved by providing instant liquidity for funded assets in the form of Liquid Staking (hBNB) tokens. The hBNB tokens can be used in many ways such as: B. Liquidity reduction, further farming opportunities, etc.
Additionally, the Helio protocol will deploy the yield mechanism to allow users to leverage their interest-bearing position by borrowing against it. When staking the collateralized BNB in the Helio protocol, the BNB is automatically converted into high-yield aBNBc tokens. These tokens will increase over time to reflect staking rewards, meaning 1 aBNBc will appreciate in value compared to BNB.
Therefore, with these newly introduced mechanisms, the Helio protocol can offer greater capital efficiency as HAY is a fully redeemable stablecoin with a strategy to generate yield against BNB collateral while reducing illiquidity risk.
risk management
Security and risk management have always been top priorities for Helio Protocol, where we have several systems in place to ensure the integrity and security of our assets. This includes an initial debt cap, i.e. a maximum minting cap on HAY in terms of the security’s market capitalization (BNB). We also considered and opted for a conservative 66% LTV ratio, which allows for a ~34% buffer for price changes related to BNB collateral. In addition, we have set up a Liquidation Alert System (LAS) which borrowers can subscribe to to notify them when their positions may be liquidated. Last but not least, the Helio protocol has an emergency shutdown mechanism that acts as a last line of defense against potential attacks or exploits on our infrastructure.
To learn more about the Helio Protocol, follow our social channels to stay up to date with our latest updates! Exciting events and perks will be announced as part of our launch soon, so don’t miss out!
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