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.
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.
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.
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:
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.
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:
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.
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.
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.
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.
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.
Here are the steps to use Helio Protocol:
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.
2. After this, enter the amount of HAY you want to borrow and click Proceed.
3. Confirm the transaction on MetaMask.
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.
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 features a dual token model, a destablecoin (HAY) and a governance token (HELIO).
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:
Upon launch, HAY will be issued as a BEP-20 compatible token with following use cases:
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:
The exact date of the token generation event (TGE) is to be announced at a later time.
The maximum supply for Helio Protocol’s governance token (HELIO) is 1,000,000,000 with following token allocation:
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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