Introduction

Helio Protocol introduces the notion of “Destablecoins”, which is a new type of asset class within the crypto space that seek to more accurately represent a new model in the current stablecoin landscape. The term “destablecoins” helps to achieve the following purposes.

Firstly, and more purposefully, the prefix “de” in “destablecoins” stands 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, 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 open 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.

Lastly, the term “stablecoin” or even “algorithmic stablecoin” is generally a misnomer, as all stablecoins, including fiat-backed ones, have potential to de-peg, 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.

Helio Protocol

Developed on the BNB Chain, Helio Protocol is an open-source liquidity protocol, which consists of a dual token model and mechanisms that support instant conversions, asset overcollateralization, borrowing, yield farming, and staking. Helio Protocol aims to deliver an improved version of already successful destablecoin projects by further optimizing on safety and capital efficiency with a novel model.

At a high level, the Helio Protocol can be summarized in 3 components:

Collateral Assets

HAY is generated and backed, through collateral assets that are deposited into Helio Protocol (CeVault). Upon launch, the accepted collateral asset to mint HAY is BNB.

In collateralizing their BNB, users will be investing in the broader Helio ecosystem and can borrow HAY to gain yield from staking it.

In borrowing HAY from the Helio Protocol, users will receive rewards paid out in HELIO — the native governance token. Rewards are calculated dynamically, which are determined based on the rewards rate and total user’s debt in HAY. The rewards rate is determined and is fixed amount set by Helio Protocol initially, this is subject to change upon late stage once DAO governance is introduced

Users can liquidate their holdings if they see a liquidation process is 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.

Liquid Staking

The BNB Liquid Staking mechanism is an enhanced version of staking on the BNB Chain. Typically, it is the Proof-of-Stake (PoS) network that allows users to take advantage of the BNB Chain’s features. But BNB Liquid Staking eliminates the need for them to lock their assets up with a central node. This removes the risk of having assets that are now “illiquid” and can’t be spent or earned in other places. Liquid Staking solves the problem of locked up liquidity when staking assets on Proof-of-Stake networks.

Staking rewards from PoS networks can be one of the most stable streams of income available (in percentage terms). However, typically users have to wait until the end of the staking period to get your staking rewards.

Liquid Staking provides instant liquidity for staked assets in the form of Liquid Staking tokens.

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.

The main components of BNB Liquid Staking will be:

• Liquidity mining opportunities are enabled by providing liquidity for pools on decentralized exchanges. The first main liquidity pools are expected to be ankrBNB/BNB.

• Farming rewards for liquidity providers. Liquid Staking presents several yield farming strategies for users to contribute to liquidity pools and gain a share of the trading fees and governance tokens. These new LP tokens can be used to generate yet another layer of earnings.

• Staking rewards on farmed tokens. After using yield farming strategies, users can also reinvest their farmed LP tokens into more staking opportunities. This is a highly repeatable process as layers of rewards from farming and staking will quickly stack up.

• Yield aggregators/vaults can automate yield farming rewards and enable compounding returns with close to zero efforts from users. This is a great method to maximize users’ passive income.

• More trading opportunities thanks to the elastic supply nature of ankrBNB, meaning that users’ could potentially buy ankrBNB at a discount on a decentralized exchange and redeem it (unstake it) to extract its fair value back in up to 7–14 days (the BNB Liquid Staking unbonding period).

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.

The BNB to ankrBNB process

1. User sends BNB to HelioProvider

2. HelioProvider mints hBNB for the user (as a notarial receipt)

3. HelioProvider sends BNB to the yield converter router and the converter exchanges them to ankrBNB

4. The converter sends ankrBNB to CeVault for storage and accumulation of staking rewards

5. CeVault mints ceABNBc for HelioProvider

6. HelioProvider collateralizes ceABNBc through Interaction

Yield-bearing Tokens

Yield-bearing tokens are a relatively new development in DeFi. Several blockchains support composability with regard to projects building in their ecosystem. This speaks to the interoperability of teams and projects that develop protocols, platforms and products on top of each other and their capacity to exchange data across protocols and platforms. For this reason, many DeFi projects host a variety of vaults or pools where users can deposit and receive a token, called LP token, in return.

Helio Protocol deploys the principle of yield-bearing tokens to allow users to take advantage of their interest-bearing position by borrowing against it. In staking the collateralized BNB in the Helio Protocol, it automatically converts BNB to ankrBNB (yield-bearing tokens). These tokens increase in value over time to reflect staking rewards, meaning 1 ankrBNB will grow in value when compared to BNB.

The accumulated staking rewards and borrowing interest go back to the Helio Revenue Pool, where the community governance (Helio DAO) decides how it will be used such as buybackand-burns, fund 3rd party risk assessment consultancy service, held as a reserve pool for risk management, further incentivize active users who borrow and further stake HAY in the protocol, or liquidity providers in DEXes.

Improved Capital Efficiency

To benefit from Helio’s yield, the protocol converts user BNB into ankrBNB that accumulates liquid staking rewards.

During this phase, Helio Protocol will offer a compelling alternative to existing protocols and serve as a digital system for a wide variety of decentralized financial operations.

Users with a collateralized BNB position can take out a loan via the Helio Protocol payable in HAY destablecoins. The collected borrowing interest along with the liquid staking rewards from collateralized BNB will be deposited and held in the Helio Revenue Pool. The Helio Revenue Pool will be subject to community governance via the Helio DAO to redistribute its liquidity accordingly.

Helio Protocol is able to provide greater capital efficiency due to HAY being a fully redeemable destablecoin with a strategy to generate yield against BNB collateral while minimizing risk via liquid staking. At any time, the protocol allows holders to redeem their HAY for the underlying BNB collateral along with any additional yield that has been generated. The standard waiting time for withdrawal of the BNB collateral is between 7–15 days. Alternatively, users may choose to withdraw the corresponding ankrBNB at any time instead.

Tokenomics

The Helio Protocol consists of a dual token model, a destablecoin (HAY) and 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 is redeemable following the scenarios below:

SCENARIO 1: When HAY > $1, the supply of HAY will have to be increased

• 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 will have to be reduced.

• 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

Upon launch, HAY will be issued as a BEP-20 compatible token. Its use cases include the following:

 -Borrowing HAY

• Users who have deposit BNB on the Helio Protocol (CeVault) are eligible to borrow HAY

• The operations of borrowing HAY, repaying the loan and withdrawing the original collaterals are all governed by a set of smart contracts.

• Liquidity Mining: Via 3rd party LPs on DEXes.

Payment: As means to transfer value, purchase goods & services

HELIO Governance Token

HELIO is the governance token of Helio Protocol under the Helio DAO. The token generation event (TGE) is to be determined at a later date, but upon launch HELIO will be issued as a BEP-20 compatible token. Its use cases include the following:

• Governance

• Borrowing Incentives

• Liquidity Mining

Helio DAO

Helio Protocol is expected to operate as a DAO, once the HELIO token has completed its TGE and is circulating in the secondary markets. The Helio DAO will be governed by the community, where proposals can be created and collectively vote on decisions regarding the Helio Protocol, such as treasury funds, protocol revenue pool, new features and potential technical upgrades. Proposals that achieve predefined level of consensus (over ~50%) are then accepted and enforced by the rules instantiated within the smart contract.

Token Allocation

The maximum supply for Helio Protocol’s governance token (HELIO) is 1,000,000,000.

Token allocation is as follows:

• Community (60%): No cliff, 5-year vesting.

• Ecosystem (17%): No cliff, 8-year vesting.

• Treasury (10%): No cliff, 8-year vesting.

• Liquidity Provision (5%): No cliff, 8-year vesting.

• Strategic sale (6%): 1-year cliff, 7-year vesting.

• Team (1%): 1-year cliff, 7-year vesting.

• Early Adopters (1%): Airdropped to early network participants.

Liquidity Pools (LPs)

Both HAY and HELIO can be staked or swapped via liquidity pools (LPs) on DEXes. Besides earning trading fees for being a liquidity provider to LPs, the Helio Protocol intends to further incentivize LPs with either HAY or HELIO as farming rewards, the amount of rewards will vary with DEXes and the participation in LPs. Upon launch, users will be able to provide liquidity or swap tokens in LPs on BNB native DEXes.

Liquid staking tokens are automatically issued when users successfully stake assets such as HAY and BNB, becoming hHAY and hBNB respectively. For example:

1. hHAY/BNB pairs can be used to provide liquidity to hHAY/BNB liquidity pools on DEXs. As more people trade, users can earn a share of transaction fees, on top of their HAY staking rewards from hHAY

2. By providing liquidity, users may receive farming rewards on top of LP tokens, representing their share of the LPs on DEXes.

3. Once users harvest the farmed tokens, they can further stake those tokens to earn more yield, or simply sell them to buy more HAY and HELIO to generate more yield. Repeating this operation periodically will add a compounding effect on their yield.

When staking HAY and receiving Liquid Staking tokens (hHAY), the main benefit comes from the liquidity of the hHAY tokens since it is not possible to unstake HAY for the moment.

Helio Protocol will continue to increase HAY adoptions by partnering with DeFi protocols on the BNB Chain and use the native token of various DeFi protocols to influence rewards emission. The team will also actively use HELIO to incentivize HAY liquidity pools across DEXes to maintain its redeemable value of $1 USD.

DeFi composability would enable HAY liquidity providers, and at a later stage, HAY stakers as well, to further boost yield in a sustainable manner thanks to the integration with other lending platforms.

HAY and HELIO holders can combine these strategies while using the Helio Protocol to maximize their returns even further.