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/BUSD. Users can mint and borrow HAY by providing BNB/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, it will allow for some price fluctuations as regular fiat-currencies would experience with varying reference rates and interest rate paraties as defined by the open market.
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 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 such as BNB or BUSD as collateral. Additionally, destablecoins will also leverage on 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.
The term “destablecoins” helps to achieve two purposes.
Firstly, and more purposefully, the prefix “de” in “destablecoins” stand for decentralized, and that is to clearly distinguish products such as HAY from other legacy stablecoin products such as BUSD and USDC, which is controlled by a centralized custodian. This also helps mark the progression of stablecoins from being centralized to decentralized, and the DeFi industry as a whole
Secondly, the term “stablecoin” or even “algorithmic stablecoin” is generally a misnomer, as all stablecoins, including fiat-backed ones, have potential to de-peg and become volatile, albeit to a much lower extent. The stablecoin industry is under constant scrutiny due to many retail investors over-investing under the allure of constant stability and becoming vulnerable to significant financial loss during such an event. Using the term “destablecoins” signals the underlying risk of stablecoins and encourages users to invest more responsibly, building a far healthier and more sustainable ecosystem of users.
Furthermore, products such as HAY do not use an “algorithm” to regulate its value, but rather through the use of over-collateralized assets. Therefore, “algorithmic stablecoins” is also not an appropriate representation of HAY.
I have never heard of destablecoin before, is it just a short form for decentralized stablecoins, or is there a deeper meaning behind this new asset class?
The main idea behind rebranding HAY into a the term “destablecoin” is to really highlight the point that there is no central issuance for HAY, and all the assets that is backing HAY are also decentralized, which has not been done by anyone in the market before. For example, DAI leverages on centralized cryptocurrencies, such as USDT and USDC as collateral, and is therefore not fully decentralized. In addition, we use liquid staking assets as collateral. This means that the collateral will be generating a truly decentralized yield from BNB Liquid Staking for HAY and increase capital efficiency.
The “de” in “destablecoins” stands for decentralized, and that is to clearly distinguish products such as HAY from others like BUSD or USDT, which is controlled by centralized custodians. This also helps mark the progression of stablecoins from being centralized to decentralized, and the DeFi industry as a whole. The team does recognise that it may cause some slight confusion in the wording, but we are committed to educating our community and continue to shed more light on what it means to be a destablecoin and how it can push the ethos of decentralization in crypto.
It is important to remember that destablecoins are not more prone to de-pegging or de-stabilizing than stablecoins. All stablecoins are at risk of de-pegging, and thus the word “stablecoins” have always been a misnomer. In addition, having a “peg” with fiat currencies does not guarantee stability due to inflation. Furthermore, traditional fiat-currencies also have varying reference rates and interest rate parity. Yet, most would still consider the US Dollar a stable benchmark for global currency. The misnaming of this asset is critical as it obscures any inherent risk to holding such an asset. Every type of asset class has its potential strengths and weaknesses, and that should be clearly reflected to investors.
The purpose of destablecoins, similar to stablecoins, is to offer a decentralized form of digital currency that is suitable for everyday trading and transactions due to lowered volatility, mirroring the way fiat currencies such as USD is used. Destablecoins enjoy the privileges of what stablecoins have to offer in terms of its ability to be borderless and permissionless due to its digital nature, and the element of decentralization further creates a more seamless, and secure user experience. Therefore, the value proposition of destablecoins, and stablecoins are still very much valid.
Using the term destablecoins offer greater clarity and understanding of this asset class to not just users, but also builders; and can help achieve greater focus when building such ecosystems.
The most important thing to understand here is that the mechanisms in which UST uses to keep their 1:1 peg to the US dollar is entirely different from how HAY maintain its $1 value.
UST is a non-asset-backed algorithmic stablecoin. This indicates that UST is under-collateralized for backing its peg. To maintain its peg, UST designed an arbitrage mechanism to incentivise the market to maintain its peg. However, Under extreme volatile market conditions, the lack of asset backings caused the UST depeg and eventual crash
HAY, on the other hand, is not an algorithmic stablecoin at all. Instead, HAY falls under the new asset class dubbed as destablecoins, where HAY is over-collateralized and fully backed by reserves in BNB/BUSD. Even in the event of a blackswan event, where the collateral (BNB/BUSD) drops in value, our liquidation protocol will take place before the value of BNB drops below the value of HAY.
In layman's terms, it means the collateral provided is worth more than enough to cover potential losses in the event of default. For example, John deposits $100 USD in BNB/BUSD as collateral on the Helio Protocol. Helio Protocol allows John to borrow $66 USD in HAY stablecoin (66%). The remaining 20 USD in BNB/BUSD is locked in the Helio Protocol as over-collateral. Once his HAY loan is paid off, John can fully access the $100 USD in BNB again.
HAY is not an algorithmic stablecoin. Instead, HAY is an over-collateralized destablecoin that is backed in full by reserves in BNB/BUSD.
Amongst the various stablecoin models, over-collateralized stablecoins have been proved to be more sustainable. MakerDAO's DAI stablecoin has been the most credible example and HAY's architecture is innovating on top of MakerDAO. The key advantage that Helio brought in is that it solves the capital inefficiency of MakerDAO by enabling the collateral to be staked in the PoS network and generate rewards through BNB Liquid Staking.
Helio governance token (HELIO) holders are given the voting power to decide how the protocol's revenue (borrowing interest + rewards from collateral) will be redistributed to HAY liquidity providers and stakers. This effectively enables HAY to enable yield in a sustainable way since the collateral is mechanically larger than the staked HAY coming from borrowing due to the over-collateralization nature of Helio Protocol.
Risk management and user protection are at the heart of Helio Protocol. Therefore, we installed multiple risk management procedures.
A: A conservative LTV ratio (66%) is used to ensure that there is sufficient over-collateralization of BNB/BUSD to tide over a black swan event. 66% is referenced from MakerDAO, of which has been running steady and maintaining its peg.
B: Helio Protocol’s personalized liquidation alert system (LAS). We designed a LAS which allows users to be notified via telegram when the liquidation threshold is close. This grants the users sufficient time to react. Subscribers will also be notified when the collateral price is experiencing abnormal volatility so subscription is highly encouraged, so that users can adjust their collateral ratio accordingly to avoid any unwarranted liquidation.
C: Helio Protocol employed an emergency shutdown mechanism that is smart-contract regulated, and will be triggered in the event of a “black swan” event. The shutdown process will be used as a last resort to protect the 1 USD value of HAY, as well as prevent attacks on Helio Protocol’s blockchain infrastructure. The shutdown mechanism will therefore act as the last line of defense against any attacks to protect users’ funds and assets stored on Helio Protocol.
HAY yield comes from Helio’s revenue pool, which is derived from HAY’s borrowing interest and collateral being staked by Helio’s protocol. This effectively enables HAY to enable yield in a sustainable way since the collateral is mechanically larger than the staked HAY coming from borrowing due to the over-collateralization nature of Helio Protocol.
Initial decisions related to target borrowing rates as well as collateral ratios will be taken by our Risk Management team so as to ensure the protocol is sustainable for the long run. The borrowing interest will be set at 7% at launch.
When our governance protocol launches, the decision will be made by HELIO holders through governance voting.
To begin, there will be a maximum supply for our HELIO tokens, so indefinite and endless inflation will not take place.
Furthermore, the HELIO has the innate governance utility which empower holders to set future directions and change parameters within the protocol such as determining the rewards distribution from the revenue pool, as well as the deciding on HELIO token buybacks to name a few.
Next , we will actively be searching for new opportunities and partnerships with other DeFi protocols to create further value, utility and therefore positive price action for HELIO as well as the protocol itself.
Last, we plan to utilize the revenue or real yield generated from Helio Protocol to reward HELIO holders in the form of buybacks or airdrops in the future.
We will be constantly updating any progress on our social channels to keep the community informed as well.
Can the HELIO token only be bought and used within HELIO, or is there a possibility for exchange listings?
Upon launch, HELIO tokens will not be available , but when the token generation event (TGE) for HELIO launches, it can be obtained as rewards through borrowing HAY on our platform by providing BNB/BUSD as collateral. Both HELIO and HAY tokens will be available on BNB native DEXs as well for liquidity or swap tokens in LPs.
In the future, when Helio matures with sufficient liquidity in the market, CEX listings/partnerships may be possible.
What elements are taken into account to define the minimum collateral ratio/max borrowing limit? Can this parameter change in the future?
Several elements and considerations are taken into account when we set the initial MCR (minimum collateral ratio). We decided on setting a lower MCR of 66% for 2 reasons.
Firstly, although we acknowledge that it is partly on the user’s own responsibility to manage his or her risk tolerance, we decided on a lower MCR so as to help manage our users’ risk. By lowering the MCR, there is a direct positive implication on lowering the risk of liquidation. since there is now more room for price fluctuations in the collateral ($BNB/BUSD), therefore liquidations are less likely to occur.
Secondly, we have decided to align our MCR with that of MakerDAO’s, since they have already been in the market for a long enough period of time to be battle tested. It is always wise to learn from our predecessors.
Of course, when our governance protocol has been enacted, this parameter can be changed through community governance and voting by owning HELIO tokens in the future.
What makes Helio Protocol stand out amongst the existing lending and borrowing platforms on the BNB chain?
As of right now, there are no dominant decentralized stablecoin providers within the BNB ecosystem, and therefore we saw the opportunity, and decided to create an entirely new asset class of destablecoins to bridge this gap in the BNB market.
In terms of other advantages, by building on BNB, we enjoy a much faster and cost efficient environment as compared to those built on Ethereum, such as MakerDAO.
On top of that, we are utilizing the concept of liquid staking in our protocol, where we aim to solve the capital inefficiencies that have plagued over-collateralized stablecoins for the longest time
Liquid Staking tokens represent the value of your staked assets but the tokens are portable, accessible and thus liquid. They can now be utilized in a number of ways such as liquidity mining and farming rewards. You can learn more about liquid staking by reading through our whitepaper.
Not at the moment. However, once our governance protocols utilizing our native HELIO token has been set up and running, it will ultimately be up to the community to decide whether or not to set aside an amount from the Helio treasury for such emergencies. In addition, over-collateralization of HAY helps Helio mitigate most of the risk in the event of a “black swan” event.
If the underlying asset, BNB/BUSD, falls below minimum collateral ratio, what will happen to the value of HAY and the collateral ratio?
Should the underlying collateral fall in value to the point where it is over the minimum collateral ratio of 66%, meaning that (borrowed loans) / (value of collateral) > 66%, holders will be notified and will be allowed to either repay their debt and withdraw their collateral in full, or provide more collateral in BNB/BUSD to offset the difference.
Should the collateral fall further in value, our liquidation protocol will activate and liquidate the collateral before the value of $BNB/BUSD collateral drops below the total amount of loan, thus making sure that HAY will always be backed 1:1 in value wrt to USD.
One of the sources of income for the Helio Revenue Pool is the Stake of BNB in validators. What criteria are taken into account for the selection of the validators to be used?
There are numerous factors taken into account when deciding on which validator we are going to delegate our $BNB to, such as uptime, self-bonded ratios, and frequency updates etc. We will also look at delegating to more than one validator in order to diversify, and thus reduce our risks. All of these factors and more will be further analyzed and looked into by our risk management team.
Is there any incentives for projects to list their token in HAY pair so HAY could be more widely adopted?
The team has been in talks of partnerships and deals with other existing protocols leading up to our mainnet launch, with the aim of offering a compelling alternative to them and serve as a digital system for a wide variety of decentralized financial operations.
Of course, we will announce them accordingly on all of our social channels, so do follow our socials closely so that you don’t miss out!
Our mission is to solve the capital inefficiency in decentralized lending platforms. To put simply,the main problem that Helio strives to solve is the capital inefficiencies in over-collateralization models. When over-collateralized borrowing occurs, assets are locked up as collateral and not utilized to their fullest potential on the blockchain.
To solve this problem, Helio incorporates use of liquid staking into our protocol, which you can find out more about by reading our whitepaper.
Security and safety mechanisms within our smart contracts are the team's biggest priority at the moment. This is the reason why we have gone through 5 major audits with Certik, PeckShield, Showmist (2 audits from them), as well as Veridise, to make sure that there are no potential compromises in our protocol.
On the other hand as well, we aim to make an immediate impact on the BNB network by partnering up with various DeFi protocols currently on the BNB network, which we will soon announce.
Over the months, the team has been working endlessly to identify more measures to enhance and improve the security and safety mechanism in our smart contracts.
Firstly, we made sure that our protocol was thoroughly audited by some of the best external auditing firms out there such as Certik, Showmist, PeckShield and Veridise. We also have a bug bounty program that is currently still ongoing to make sure that there will be no exploits available in our smart contracts. (not sure if this is still ongoing).
Secondly, after much consideration, the team has also decided to lower our MCR ratio from 80% to 66% so as to reduce the risk of liquidations and therefore, the price volatility that comes with liquidations.
Thirdly, to ensure that we maintain both a safe and sustainable growth in our TVL, HAY will have a maximum minting cap of 5% of the collateral’s total market cap (BNB) for the initial launch, which will be subjected to change in the later stage once DAO governance is introduced. To maintain a sustainable growth upon launch, there will also be a smaller initial minting cap which will increase in increments until the maximum minting cap of 5% of the total BNB market cap.
Fourthly, we also plan to implement the Liquidation Alert System (LAS) where we will automatically send users a warning should any of their positions on Helio are at a critical liquidation threshold. Of course, users will have to subscribe to the LAS by providing their preferred contact details.
Last but not least, Helio Protocol will implement an emergency shutdown mechanism as a last resort to directly enforce the 1 USD value of HAY, as well as a protection against attacks on its infrastructure. This mechanism will ensure that all users, both HAY and Vault holders, receive the net value of assets they are entitled to. This mechanism has served our predecessors well in times of crisis, and therefore we intend to follow MakerDAO’s shutdown process as a benchmark for Helio.
First, over-collateralization and based on an efficient solution: Helio Protocol is very similar to MakerDAO, features a destablecoin and differs from stablecoin like Terra USD, as it is not algorithmic, but instead we are over-collateralized by BNB/BUSD which provides much higher security.
Second, minute gas fees: we chose BNB Chain, as it doesn’t have high gas fees like Ethereum; therefore we have an advantage over USDT.
The Helio Protocol is able to maintain HAY’s $1 value with respect to USD in the following scenarios:
Scenario 1: When HAY > $1, the supply of HAY needs to increase
- Since HAY is at a premium, borrowers are incentivized to borrow more HAY to sell for other assets for arbitrage opportunities.
- To reduce demand for HAY farming, Helio will reduce HAY farming rewards by decreasing HAY borrowing interest.
Scenario 2: When HAY < $1, the supply of HAY needs to decrease
- Since HAY is at a discount, borrowers are incentivized to buy HAY from the market to pay back the debt.
- To decrease HAY borrowing demand, Helio will increase HAY borrowing interest, which increases HAY farming rewards
HAY’s collateral ratio is stable. You can only borrow HAY up to 66% of the BNB amount you provided.
It is maintained by the governance that HELIO holders can participate in, effectively making the governance decentralized and secure.
The minimum deposit amount is 0.5021 BNB.
The minimum withdrawal amount is 0.5 BNB.
The minimum amount of HAY to borrow is 50 HAY.
There is not minimum repayment amount. However, your loan cannot go under 50 HAY, so you can either choose to repay it to 50 HAY or in full.
As Helio applies Binance Liquid Staking in the process of colleteralizing user assets, it gives user a new choice when withdrawing their assets.
If user decides to withdraw BNB, they must wait up to 7–15 days before their BNB are unstaked and sent to their wallet address. This is the unbonding period applied in Binance Liquid Staking.
There is a better option to choose ankrBNB, a Liquid Staking token that is received immediately, has instant liquidity and gives the user two choices:
- Immediately swap ankrBNB for BNB or any other token on DEXs.
- Hold ankrBNB that appreciates over time towards BNB. This option allows the user to get more BNB when unstaking ankrBNB than initially collateralized.
After providing BNB as collateral you will be able to borrow HAY which is Helio Protocol’s destablecoin. When you mint HAY, you also earn HELIO tokens that offset HAY’s borrowing fees.
We also plan to introduce other utilities for the HELIO token which includes a democratic governance by token holders and much more — more announcements to come regarding this in the future!
In order to ensure the HELIO token will maintain value regardless of the markets conditions, we have limited the amount of tokens and we will do buy back by governance decision which is one of HELIO’s utility, so it can be staked for reward or used for governance.
At the moment, no. Nonetheless, deposit insurance is unnecessary because HAY is over-collateralized.
Helio's smart contract was created by some of the industry's best developers, and it was audited by five of the world's leading smart contract auditing firms. Furthermore, Helio maintains a bug bounty program for any bugs discovered in its smart contracts. Despite the fact that Helio is the most inclusive, safe, and long-term DeFi destablecoin project on the market today, we recommend that any potential user assess their risk tolerance and conduct due diligence before investing in any crypto/DeFi project.
Will Helio use native tokens of other platforms? For example, to help influence its reward emission.
At the moment, we are not planning on using any specific native token from other DeFi protocols, if this happens we will announce it on our social media channels.
No for the moment. Our highest priority is to be the top provider on the BNB Chain before moving to other chains. You're welcome to follow us on Twitter for updates.
What is the decision-making process for Helio? In other words, are you going to renounce privileges for the admin team and implement a governance systems/DAO for a more decentralized administrative control of the Helio Protocol?
We will take a staggered approach.
First, we aim to enable the HELIO token holders to vote on the distribution from the Helio Revenue Pool (staking rewards from collateral captured by Helio Protocol + borrowing interest from borrowers) to HAY liquidity pools, and in a second step also HAY stakers.
Furthermore, HELIO token holders will be able to vote on the distribution of the HELIO token Reserve Pool, coming from minted HELIO. The main choices will be related to borrowing incentives and incentivizing HELIO token liquidity pools.
Decisions related to target borrowing rates and collateral ratio for every type of collateral will be taken by a Helio Risk Management Team.
Finally, the Governance System/DAO is the ultimate goal to make sure that significant decisions related to Helio strategy and future developments are taken by HELIO voters.