Helio Protocol Review: The revolutionary USD Destablecoin backed by BNB

Helio Protocol

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The recent collapse of some of the biggest stablecoins have shaken the faith of crypto investors who use such tokens to keep their assets safe. While there are several theories about failures of such stablecoins, the primary reasons that have hindered the development of stablecoins are lack of decentralization, capital efficiency, and stability.

Amid the increasing exploitation of the innocent crypto investors in the name of Stablecoins, Helio Protocol brings a novel concept of “destablecoins.”

Destablecoin is a brand-new asset class in the cryptocurrency industry that aims to better explain the stablecoin market as it currently stands. While many confuse destablecoins with “unstable,” the prefix “de-” stands for decentralized, which does not signify price volatility as that witnessed by assets like Bitcoin. 

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Destablecoins don’t aim to attain complete price stability using fiat-based currencies such as the US Dollar; instead, they use decentralized, liquid-staked crypto assets only as collateral. Destablecoins don’t have a high level of volatility, but they do show some price movements, just like traditional fiat currencies would under different reference rates and interest rate parities set by the open market.

What is Helio Protocol?​

Helio Protocol, which is developed on Binance’s BNB Chain, is an open-source liquidity protocol for borrowing and earning yield on its native destablecoin HAY. 

What is Helio 1

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Destablecoin is a new asset type that has overly liquid staked assets as collateral. Basically, HAY is a destablecoin that is over-collateralized by BNB and always redeemable for $1 of cryptocurrency. HAY users can mint and borrow HAY by offering BNB or BUSD as collateral, which can then be staked for yield, liquidity mining, and value transfer.

Upon the launch of its governance token, HELIO, Helio Protocol will function as a decentralized autonomous organization (DAO), with its community governing the treasury, revenue pool, and protocol’s future. To provide an overview, the Helio Protocol can be summed up in three components:

What is Helio 2

Why choose Helio Protocol?

The rise of numerous decentralized stablecoin projects over the past few years has driven strong competition among them in an effort to capture market share. Many stablecoin protocols have gone too far or are too reliant on one model (fully collateralized or entirely algorithmic with no backing).

Collaerized Stablecoins come with custodial risk or demand on-chain over-collateralization. Compared to purely algorithmic solutions, these models offer a reasonably tight peg with a higher degree of assurance.

Purely algorithmic models that reflect the original Bitcoin idea of decentralized money, such as Basis, Empty Set Dollar, and Seigniorage Shares, seem trustless and scalable but fall short in terms of stability.

By enabling users to leverage their funds with a collateral debt position, the Helio Protocol seeks to address the capital efficiency issue associated with over-collateralized stablecoins (CDP). Liquid Staking, MakerDAO model capabilities, and increased liquidity from LPs on decentralized exchanges would help Helio Protocol avoid problems like frozen funds (backed by fiat) or held value lost (algorithmic) owing to price instability.

Using Proof-of-Stake (PoS) rewards, BNB Liquid Staking, and yield-bearing assets, a team of professional DeFi experts and smart contract developers created Helio Protocol to place the world-class revolutionary HAY destablecoin as the most widely used one.

Core Components

To summarize the functioning of the Helio Protocol, it is a set of smart contracts which is capable of interacting with other blockchain and smart contracts as well.

The smart contracts that implement Helio are:

  • MakerDAO set — the Maker Protocol, also known as the Multi-Collateral Dai (MCD) system, allowing users to generate HAY by leveraging collateralized assets. HAY is a decentralized, unbiased, collateral-backed cryptocurrency soft-pegged to the US Dollar.
    • ABACI — price decrease function for Dutch auctions during the liquidation process of user’s assets.
    • CLIP — liquidation v2.0 mechanics.
    • DOG — starts Dutch auctions during the liquidation process of user’s assets.
    • JUG — collects Helio’s borrowing interest for lending HAY to the user.
    • JAR — stakes and unstakes HAY, mints and burn hHAY token (token–deposit receipt for staked HAY).
    • JOIN — BEP-20 token adapters:
      • HayJoin — adapter between MakerDAO and HAY via which adapter which withdraws internal HAY from the system into a standard ERC20 token when user borrows HAY tokens or burns ERC20 when user repays their HAY loan to Helio.
      • ceaBNBcJoin — adapter between MakerDAO and HelioProvider that allows user assets to be deposited in the system for collateralization.
    • SPOT — oracle that fetches the price of ankrBNB, which is an intermediate token used during the process of collateralizing user’s assets.
    • VAT — сore vault for collateralized debt positions (CDP).
    • VOW — vault balance sheet. Keeps track of debt or surplus of HAY.
  • CurveProxyForDeposit — add liquidity to the StableSwap pool, get LP tokens, deposit LP tokens for Farming smart contract.
  • Farming — deposit or withdraw farmed tokens, distribute rewards in HAY to the depositors.
  • IncentiveVoting — distribute rewards among the internat pools (in the Farming contract) or external pools (e.g. Ellipsis, Wombat, and so on), depending on the votes, which depend on the staked HELIO governance tokens (future functionality).
  • StableCoinStrategyCurve — swap PancakeSwap farming rewards (CAKE) into HAY and BUSD, add them to the StableSwap liquidity pool, get LP tokens, add these LP tokens to the user share in the pool.
  • HelioRewards — rewards distribution, in the HELIO rewards token.
  • HelioToken — BEP-20 compatible rewards token given to the user for borrowing HAY.
  • HelioOracle — oracle for the HELIO rewards token.
  • HelioProvider — wraps BNB into ceABNBc via cerosRouter.
  • cerosRouter — finds the best way to obtain ankrBNB, which is an intermediate token used during the process of collateralizing user’s assets.
  • CeToken — ceABNBc, which is the underlying collateral token inside MakerDAO.
  • CeVault — stores obtained ankrBNB, which is an intermediate token used during the process of collateralizing user’s assets.
  • Interaction — proxy for the MakerDAO contracts. Provides deposit, withdraw, borrow, payback, and liquidation functions to the end users.
  • AuctionProxy — entrypoint for Dutch auction methods, which is part of the liquidation process of user’s assets. Allow users to start and participate in auctions.
  • ankrBNB — liquid yield-bearing token used during the process of collateralizing user’s assets.
  • hBNB — token minted for the user as a deposit receipt for their collateral.

It is also crucial to note that the Helio Protocol interacts with smart contracts to extract the yield from the reward bearing tokens along with PancakeSwap and other stableswap DEXes.

Helio Protocol Features

Collateral Assets

A user will receive HAY for the collateral which he deposits in the Helio ecosystem. The accepted collateral will be the BNB token. The HAY can be staked to gain yield from it and the rewards will be paid out in HELIO which is the governance token of the Protocol. Furthermore, the rewards are calculated dynamically and depend upon the rewards rate and total user’s debt in HAY. 

Additionally, users can also receive a flat fee (tip) and a dynamic percentage (chip) for starting a Dutch auction. 

Liquid Staking 

Described as “an enhanced version of staking on the BNB Chain,” Liquid Staking allows users to take advantage of the BNB Chain which is a Proof-of-Stake (PoS) network. The whitepaper confirms that this feature indicates the need for users to lock their assets up with a central node. Additionally, users don’t have to wait for a long time to get their rewards for staking their tokens as they are provided with a token representing their rewards which is free for usage. 

“BNB Liquid Staking will not be using preferred validator nodes to stake the BNB from users. In selecting several suitable and reliable BNB Chain validators, the protocol will make BNB Liquid Staking more decentralized one validator at a time,” states the whitepaper of Helio Protocol.

Yield-bearing Tokens 

Helio Protocol uses the concept of yield bearing tokens to allow users to generate more money from their interest-bearing position by borrowing against it. Interestingly, when staking the BNB that has been collateralized, an automatic conversion of BNB to AnkrBNB (yield-bearing tokens) takes place. The latter will continue to grow with time, i.e., the value of 1 AnkrBNB will rise when compared to BNB.

Furthermore, all the accumulated staking rewards along with the borrowing interest will go back to the Helio Revenue Pool where the DAO will decide the next step. 

Improved Capital Efficiency 

As explained before, the Protocol automatically converts the BNB to AnkrBNB and gradually accumulates the staking rewards. The whitepaper confirms that during this period, the Protocol “will act as will offer a compelling alternative to existing protocols and serve as a digital system for a wide variety of decentralized financial operations.”

Users with BNB as collateral can take out a loan via the Helio Protocol payable in HAY destablecoins. The interest along with staking rewards are all collected in the Helio Reward Pool where the DAO decides what to do with it. 

It is crucial to note that the Protocol provides for greater capital efficiency since HAY is a fully redeemable destablecoin with a strategy to generate yield against BNB collateral while minimizing risk via liquid staking. 

Furthermore, while the AnkrBNB token can be withdrawn at any point of time, the withdrawal of BNB takes about 7-13 days. 

Interacting with Helio Protocol 

Here are the steps to use Helio Protocol:

Step 1: Provide collateral

  1. Visit the borrow page and click Connect wallet.
  2. Select MetaMask from the list of wallets.

Note: Here we are using MetaMask as the example wallet due to its wide adoption.

3. By selecting Switch network and approving the action in MetaMask, connect to your wallet and switch to BNB Chain (Testnet).

4. For providing collateral, click the + button on the borrow page under My Collateral tab to deposit BNB or BUSD.

5. On the next page, enter the amount you want to provide as collateral and click Proceed.

6. Confirm the transaction on MetaMask.

7. After the successful completion transaction, click Okay to go back to the borrow page where you can see your deposit.

Step 2: Borrowing HAY against the Collateralized BNB

  1. To borrow HAY destablecoin, go to the borrow page and click Borrow under My Borrowed Funds.

2. After this, enter the amount of HAY you want to borrow and click Proceed.

3. Confirm the transaction on MetaMask.

Helio Protocol

4. After the successful completion transaction, click Okay to add the borrowed HAY to MetaMask. For this, click Add HAY to MetaMask or simply go back to the borrow page and see your borrowed HAY.

Helio Protocol

Step 3: Staking HAY

  1. To stake HAY, visit the farming page.

2. In the Staking section, click Stake.

3. After this, enter the amount of HAY you want to stake, click confirm, and confirm the transaction in MetaMask.

Helio Protocol

Step 4: Repaying Debt and the Accumulated Interest

  1. To repay back the HAY loan, go to borrow page and click Repay under My Borrowed Funds.
  2. After this, enter the amount of HAY you intend to repay back, click Approve, and confirm the action in MetaMask.
  3. Now, click Proceed to submit the repaying transaction.
  4. Once the transaction completes successfully, click Okay.

Step 5: Withdrawing Collateral

  1. To withdraw your BNB or BUSD, go to borrow page and click the – button under My Collateral.
  2. Enter the amount you want to withdraw, choose the option: BNB or BUSD, and click Proceed.
  3. After this, confirm the transaction in MetaMask to collect the withdrawn assets at the associated MetaMask wallet address.
  4. Once the transaction completes successfully, click Okay.

Tokenomics 

Helio Protocol features a dual token model, a destablecoin (HAY) and a governance token (HELIO).

HAY Destablecoin

HAY is an overcollateralized destablecoin backed by liquid staked BNB and is redeemable for $1 USD value of crypto currency. The Helio Protocol is able to ensure HAY’s price stability at $1 value with respect to USD in following scenarios:

  • When HAY > $1, the supply of HAY needs to be increased
  • When HAY < $1, the supply of HAY needs to be decreased

Upon launch, HAY will be issued as a BEP-20 compatible token with following use cases:

  • Borrowing HAY: Users who deposit BNB on the Helio Protocol (CeVault) can borrow HAY. A set of smart contracts govern the complete process of HAY borrow, loan repayment, and original collateral withdrawals.
  • Liquidity Mining: Via 3rd party liquidity pools on decentralized exchanges.

HELIO Governance Token 

The HELIO governance token is used by the Helio DAO and the Helio Protocol. HELIO will be released as a BEP-20 compliant token upon launch. Here are some of its use cases:

  • Governance
  • Borrowing Incentives
  • Liquidity Mining

The exact date of the token generation event (TGE) is to be announced at a later time.

Token Allocation

The maximum supply for Helio Protocol’s governance token (HELIO) is 1,000,000,000 with following token allocation:

Helio Protocol

Conclusion

Helio Protocol introduces a new destablecoin asset class along with the open source liquidity protocol. The goal of the project is to give users a novel way to generate long-term yield and unlock liquidity for their crypto assets.

Helio Protocol aims to significantly contribute to the democratization of financial services by producing an improved version of already successful stablecoin solutions with further focus on safety and capital efficiency.

The Helio team helps promote blockchain technologies into mainstream adoption by encouraging stakers and borrowers to become a part of a new decentralized economy of scale.

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