Helio Protocol has now re-branded into a destablecoin lending and liquid staking protocol, the new mainnet launch would take place on 19th August
TL;DR:
- From now on, HAY will be classed as a destablecoin that is over-collateralized by BNB, instead of a stablecoin; with the new mainnet launch set for 19th August
- Destablecoin essentially stands for “decentralized stablecoin”, that does not guarantee absolute peg with fiat currencies (unlike stablecoins), and instead will embrace slight price fluctuations as fiat currencies would with changing interest rate parity and reference rates in the open market
- The use cases of HAY, which includes borrowing, liquid mining on DEXes and as a medium for payments and transactions, will remain unchanged
- A list of potential FAQs have been answered here to bring light to the community
In our previous post, we announced that HAY was undergoing a last minute rebranding and thus we would have to delay the mainnet launch date. We are extremely heartened to have received our community’s kind understanding and support. The team would never put anything out that is less than perfect, and thus we are now very excited to reveal the changes we have made.
We are proud to share that the team has made the decision that HAY will no longer be a stablecoin, but rather, a destablecoin. Our destablecoin lending and liquid staking protocol will be launched on the 19th of August.
We believe that the term “destablecoin” (in which “de” stands for decentralized) more perfectly and more accurately mirrors what the team had envisioned for HAY. Destablecoins will be a brand new asset class of digital tokens, and represent a new type of stablecoins in the market. Understandably, the arrival of a new asset class and terminology may confuse some people. Therefore, we have put together this FAQ.
What is destablecoin?
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. The prefix “de-” stands for decentralized — it does not signify price volatility the way assets such as BTC experience. 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 parities as defined by the open market.
What’s the difference between destablecoin and stablecoin?
Destablecoins differ from the conventional 4 stablecoin types that currently exist in the market. Currently, there are four main types of stablecoins, Fiat-backed (BUSD), Crypto-backed (DAI), Algorithmic (USDD), Commodity-backed (PAXG). Like other crypto-backed stablecoins, destablecoins will utilize the over-collateralized model backed by crypto assets such as DAI. However, the key differences are:
Destablecoins are fully decentralized. Crypto-backed stablecoins such as DAI leverage on centralized crypto assets such as USDC, while destablecoins such as HAY will use decentralized assets such as BNB. as collateral.
Furthermore, 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 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.
Why the term destablecoin?
The term “destablecoins” helps to achieve two 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, the term “stablecoin” or even “algorithmic stablecoin” is generally a misnomer, as all stablecoins, including fiat-backed ones, have potential to de-peg and become volatile, 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.
Furthermore, products such as HAY do not use an “algorithm” to regulate its value, but rather through the use of over-collateralized assets. Therefore, “algorithmic stablecoins” is also not an appropriate representation of HAY.
What about the uses cases of HAY? Will they be the same as before?
Rest assured that the use cases of HAY will proceed as planned! Users may interact with HAY the exact same way as the team has marketed it previously. Users will still be able to borrow HAY at a collateral ratio ~152% (~66% LTV) by depositing BNB as collateral on the protocol, undergo liquidity mining on LP DEXes, and use HAY as a means of payment to transfer value for goods & services.
Moving forward…
We understand that these are big changes, but at Helio Protocol, we seek to disrupt and innovate, even if it means making unconventional choices. Transparency to our community is absolutely key to the team and we hope that these FAQs have been helpful in allowing the community to understand our thought process.
Our whitepaper is also being re-written as we speak, and we will provide updates to the community when it is done so more details about the technicalities of our new destablecoin can be provided.
We hope you’re as excited about our changes as we are, and we strongly believe that with these changes, we are able to take Helio Protocol to even greater heights, beyond the limitations of stablecoins. We will be releasing more updates, alongside all the fun activities we have planned as part of our mainnet launch, so feel free to stay tuned to our social media pages!
