Developed on the BNB Chain, Helio Protocol is an open-source liquidity protocol for borrowing and earning yield on HAY, which is a “destablecoin”
Destablecoin a new asset class that is over-collateralized with liquid staked assets. In other words, HAY is an over-collateralized destablecoin, where 1 HAY is always redeemable at $1 of cryptocurrency, and over-collateralized by BNB. Users can mint and borrow HAY by providing BNB or BUSD as collateral, which can then be used to stake for yield, liquidity mining and as a means to transfer value.
Following the launch of our governance token, HELIO, Helio Protocol will operate as a DAO, where the community will govern the protocol’s treasury, revenue pool and future direction.
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, they will allow for some price fluctuations as regular fiat currencies would experience with varying reference rates and interest rate parities defined by the open market.
Destablecoins differ from the conventional 4 stablecoin types currently in the market. 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 overcollateralized 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 as collateral. Additionally, destablecoins will also leverage liquid-staked assets.
- Secondly, 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.
Many stablecoin protocols have become too dependent on one model (entirely collateralized) or gone to another extreme (entirely algorithmic with no backing).
Collateralized stablecoins either carry custodial risk or require on-chain over-collateralization. These models provide a fairly tight peg with higher confidence than purely algorithmic designs.
Purely algorithmic designs such as Basis, Empty Set Dollar, and Seigniorage Shares provide a highly trustless and scalable model that captures the early Bitcoin vision of decentralized money but is lacking in terms of stability.
Unfortunately, the decentralized crypto-lending model we saw in the past decade did little to democratize financial services. 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.
- 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.