Introducing Over-collateralized Destablecoin HAY by Helio Protocol
Developed on the BNB Chain, Helio Protocol is an open-source liquidity protocol for borrowing and earning yield on HAY destablecoin — a new asset class that is over-collateralized with liquid staked asset BNB.
The protocol aims to position HAY as the leading destablecoin in the BNB Chain ecosystem, by leveraging Proof-of-Stake (PoS) rewards, liquid staking and yield-bearing assets. Helio Protocol will operate as a DAO, where the community will govern the protocol’s treasury, revenue pool and future direction.
Most blockchain-based lending protocols promise low fees, fast execution, and high returns, but they continue to suffer inefficiencies in design stemming from the “Stablecoin Trilemma”. This trilemma forces stablecoin developers to focus on mechanisms that can sacrifice either decentralization, price stability, or capital efficiency.
The intent behind Helio Protocol is to propose a solution to the capital efficiency problem of over-collateralized stablecoins experience by allowing users to leverage their funds with a collateral debt position (CDP). Through a combination of Liquid Staking, the functionality of the MakerDAO model, and additional liquidity from LPs on DEXs, Helio Protocol will avoid issues such as frozen funds (fiat-backed) or held value lost (algorithmic) because of price instability.
Helio was built by experienced DeFi experts and smart contract developers to position the world-class revolutionary HAY destablecoin as the most widely used one, by leveraging Proof-of-Stake (PoS) rewards, Binance Liquid Staking, and yield-bearing assets.
The Helio team aims to help promote blockchain technologies into mainstream adoption by incentivizing borrowers and stakers to become a part of a new decentralized economy of scale.
Helio allows users to:
- 🔸Collateralize BNB or BUSD.
- 🔸Borrow HAY.
- 🔸Farm HAY.
- 🔸Repay the loan (HAY + Helio’s borrowing interest).
- 🔸Withdraw collateral.
- 🔸Claim reward in HELIO for borrowing HAY*.
- 🔸Participate in protocol governance, using HELIO.
*Please note that Helio is not yet launched. Stay tuned to be the first to use it.
HAY, an Over-collateralized Destablecoin
Helio Protocol, which is powered by the BNB chain, introduces an innovative architecture to destablecoin minting. Helio Protocol’s destablecoin is called HAY, and it is over-collateralized by BNB. To obtain HAY, the user will need to provide BNB collateral and borrow HAY against it. After that, HAY can be staked for long-term yield and transferred to other protocols to generate additional yield.
It’s the first asset of its kind ever created in the history of blockchain. Even more, it’s launching on the growing BNB chain, which is also currently the second-largest blockchain ecosystem by TVL.
The narrative is with the PAXOS-BUSD issues, the need for a decentralized stablecoin that is also capital efficient and safe is highlighted more than ever. Especially since the BNB Chain has been strongly dominated by BUSD, a decentralized frontrunner like MakerDAO’s DAI in ethereum is missing in the BNB Chain.
This is where Helio comes in, with the solution HAY which can really solve the issues as HAY aims to solve the problematic stablecoin trilemma and need for an alternative.
What is a destablecoin?
Destablecoin is a new type of asset class within the crypto space that seeks to label a more accurate term in the current stablecoin landscape. The prefix “de-” stands for decentralized — it does not signify price volatility the way assets such as BTC experience. Destablecoins utilize decentralized, liquid staked, crypto assets only as collateral and do not aim to achieve absolute price stability with fiat-based currencies such as USD. While destablecoins are not fully volatile assets, it will allow for some price fluctuations as regular fiat-currencies would experience with varying reference rates and interest rate parities as defined by the open market.
What’s the difference between destablecoin and stablecoin?
Destablecoins differ from the conventional 4 stablecoin types that currently exist in the market. Currently, there are four main types of stablecoins, Fiat-backed (BUSD), Crypto-backed (DAI), Algorithmic (USDD), Commodity-backed (PAXG). Like other crypto-backed stablecoins, destablecoins will utilize the over-collateralized model backed by crypto assets such as DAI. However, the key differences are:
Destablecoins are fully decentralized. Crypto-backed stablecoins such as DAI leverage on centralized crypto assets such as USDC, while destablecoins such as HAY will use decentralized assets such as BNB. as collateral.
Furthermore, destablecoins aims to achieve stability broadly without an absolute peg to the fiat currencies. All currencies are different and have varying reference rates, so price fluctuations should be considered a norm defined by the market instead of aiming for a sense of absolute price stability at all cost. Similarly with destablecoins, it does not aim to achieve absolute price parity with US $1 as a primary objective nor rely on fiat assets as the backed collateral.
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