Helio Protocol: Revolutionary Open-Source Liquidity Protocol on BNB Chain

Imminent Mainnet Launch

We are very excited to share that the mainnet launch of Helio Protocol will take place on the 19th of August. This article dives deep into Helio Protocol, our BNB-backed destablecoin, HAY, and how we intend to disrupt the entire stablecoin landscape.

Introducing Helio Protocol

The advent of stablecoins was a significant step forward in developing the wider cryptocurrency market. We first welcomed the arrival of fiat-backed stablecoins such as USDC, BUSD, and USDT, which brought a non-volatile, digital form of currency. Since then, the community has viewed stablecoins as integral for mass cryptocurrency adoption, as existing coins such as BTC or ETH were not entirely suitable to be used as a form of currency for transactions due to their volatility. However, significant drawbacks prevented the complete acceptance of these stablecoins. Opponents have called out the lack of capital efficiency and the inherent centralization required as contradictory to the DeFi ethos and were reluctant to accept that these stablecoins were the best the community had to settle for. 

Decentralized stablecoins were then invented as means to overcome these hurdles. As the name implied, decentralized stablecoins did not have a central custodian. They offered more propensity for greater capital efficiency as investors could typically get higher yields from further DeFi activity such as liquid staking. Unfortunately, recent setbacks and challenges within the decentralized stablecoin industry have challenged the entire premise of decentralized stablecoins. Can we truly have a decentralized stablecoin that guarantees stability yet sustainable yields?

After extensive research, the team acknowledged the challenges and identified a way to solve the stablecoin trilemma of stability, capital efficiency, and decentralization, which has persisted since the beginning. Our ambition has culminated in Helio Protocol, a soon-to-be leading stablecoin provider on the BNB chain.

Helio Protocol

Helio Protocol is an open-source liquidity protocol for borrowing and earning yield on HAY - a new BNB-backed, over-collateralized destablecoin. Built on the BNB Chain, Helio Protocol consists of a dual-token model and mechanisms that support instant conversions, asset collateralization, borrowing, yield farming, and destablecoin staking. Helio Protocol aims to deliver an improved version of already successful stablecoin projects by further optimizing safety and capital efficiency. The protocol aims to achieve this by leveraging Proof-of-Stake (PoS) rewards, liquid staking, and yield-bearing assets. Following the launch of our governance token, HELIO, Helio Protocol will also operate as a DAO, where the community will govern the protocol's treasury, revenue pool, and future direction.

HAY Destablecoin

The HAY destablecoin is a non-custodial and over-collateralized destablecoin, also known as a collateral debt position (CDP) backed by liquid-staked BNB. To borrow or obtain HAY, users will have to provide BNB in the form of collateral by interacting with Helio's protocols. Upon launch, HAY will be issued as a BEP-20 compatible token. Its use cases include the following:

1. Borrowing of HAY

• Users who have deposited BNB on the Helio Protocol (CeVault) are eligible to borrow HAY.
• The operations of borrowing HAY, repaying the loan (with interest), and withdrawing the original collaterals are all governed by a set of smart contracts.

2. Liquidity Mining: Via 3rd party LPs on DEXes (to be announced soon!)

3. Payment: As means to transfer value and purchase goods & services.

Loan-To-Value Ratio & Liquidation Process

The initial maximum LTV (loan-to-value) ratio will be 66% (collateral ratio of 152%), meaning users can borrow HAY up to the equivalent of 66% of the value of their collateral. The liquidation process will kick in if the price of collateral falls and the LTV ratio rises above the limit. 

Users can liquidate their holdings if they see a liquidation process due, as the borrowed HAY value becomes higher than the current worth of user's collateral with safety margin, and receive a flat fee (tip) and a dynamic percentage (chip) simply for starting a Dutch auction, which is the core component of the liquidation process. It is an opportunity arising in the liquidation process, and any Helio user can do it. Besides this opportunity, anybody who restarts the Dutch auction receives the same reward (chip + tip) for doing it. 

Improving Capital efficiency & Liquid Staking 

Helio Protocol will be incorporating the BNB liquid staking mechanism into our system, which is an improved and more efficient method compared to the traditional staking mechanisms. With BNB liquid staking, users are no longer required to lock their assets up with a central node. This removes the disadvantage of having "illiquid" assets that can't be utilized or spent elsewhere. 

This is achieved by providing instant liquidity for staked assets in the form of Liquid Staking (hBNB) tokens. The hBNB tokens can be utilized in many ways, such as liquidity mining, further farming opportunities, etc. 

Additionally, Helio protocol will deploy the yield-bearing mechanism to allow users to take advantage of their interest-bearing position by borrowing against it. In staking the collateralized BNB in the Helio Protocol, BNB will be automatically converted into aBNBc yield-bearing tokens. These tokens will increase over time to reflect staking rewards, meaning 1 aBNBc will grow in value when compared to BNB.

Therefore, with these newly introduced mechanisms, Helio Protocol can provide greater capital efficiency due to HAY being a fully redeemable destablecoin with a strategy to generate yield against BNB collateral while reducing illiquidity risks. 

Risk Management

Safety and risk management have always been a top priority for Helio Protocol, where we have several systems in place to ensure the integrity and security of our assets. This includes an initial debt ceiling, meaning a maximum minting cap for HAY with respect to the market cap of the collateral (BNB). We have also deliberated and decided on a conservative LTV ratio of 66%, which allows a ~34% buffer for any change in price with respect to BNB collaterals. On top of that, we have a Liquidation Alert System (LAS) in place that borrowers could subscribe to so as to notify them should their positions be at risk of liquidation. Last but not least, Helio Protocol has an emergency shutdown mechanism that acts as the last line of defense against any potential attacks or exploits on our infrastructure.

To learn more about Helio Protocol, follow our social channels to keep up with our latest updates! Exciting events and perks will be announced soon as part of our launch, so don't miss out!

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