Helio Protocol is an open-source liquidity protocol for borrowing and earning yield on HAY — a new BNB backed destablecoin. The protocol aims to position HAY as not just the pioneering but also leading destablecoin protocol on the BNB chain.
Helio Protocol is a decentralized over-collateralized lending and liquid staking platform on the BNB chain. HAY is the protocol’s native destablecoin over-collateralized by BNB. Its use cases include borrowing HAY at a collateral ratio ~152% (~66% LTV) by depositing BNB as collateral on the protocol, liquidity mining on LP DEXes, a means of payment to transfer value for goods & services. The protocol aims to be completely decentralized, and will be launching its DAO once the TGE of its governance token, HELIO, is completed.
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. 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 defined by the open market.
In addition, HAY is unique as it is backed by BNB, which is amongst the top L1 tokens by market capitalization in crypto.
For a start, the maximum mint cap of HAY will be at ~5% of the total market capitalization of BNB. However this maximum mint cap may be changed in the future depending on subsequent DAO proposals and votes.
To ensure a smooth and sustainable growth, the initial mint cap upon mainnet launch will be much lower than maximum mint cap, and will be raised slowly up to ~5% of the total market capitalization of BNB maximum mint cap as the adoption increases .
Risk management and user protection is a core focus at Helio Protocol, and thus, multiple risk management procedures are in place. Firstly, a LTV ratio of 66% is used to ensure that there is sufficient over-collateralization of BNB to tide over a black swan event. The LTV ratio of 66% is also referenced from what is used at MakerDAO, which suggests that it is an optimal, battle-tested LTV ratio.
Secondly, users can opt to subscribe to Helio’s personalized Liquidation Alert System (LAS), which allows users to be notified via telegram when the liquidation threshold is approaching, allowing them sufficient time to react accordingly. Users who subscribe will also be notified when the collateral price is experiencing abnormal levels of volatility, and is approaching liquidation price.
Lastly, Helio Protocol has 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 prevent attackers from attacking Helio Protocol’s blockchain infrastructure.