This article analyzes the "Open Zero-interest Collateral ETH Loans" feature in Helio Protocol V1 and the many goals of the V2 roadmap. In addition, with the expansion of functions, Helio Protocol focuses on the growth of user volume and co-organizes the "DeFi Summer Party" with 14 partners, with a total prize pool of more than 20,000 $HAY.

Helio Protocol, an over-collateralized stablecoin protocol based on the BNB chain, received great news on August 11. Binance Labs announced an investment of US$10 million in it. He Yi, head of Binance Labs, said at the time that he supported Helio Protocol to grow into a leading LSDFi/LSDFi protocol on the BNB chain and other blockchains.

We see great potential in the field of LSDfi.

It plays a vital role in driving the overall growth of the DeFi ecosystem.

Helio Protocol is the native protocol of the BNB chain, famous for its decentralized over-collateralized stablecoin $HAY. Users can pledge BNB and BUSD to mint a certain proportion of the stablecoin $HAY. In addition, when users use BNB as collateral, the protocol will automatically convert it into LSD assets, with the aim of releasing the huge liquidity staking potential of the 24.09 million BNB in ​​circulation (market value of US$5.09 billion).

Open zero-interest collateral ETH loans

Looking back at the V1 version, Helio Protocol integrated 5 LSD assets as collateral, namely snBNB, BNBx, BNBx, wBETH, and ankrBNB. When users deposit BNB as collateral in the protocol, the protocol will automatically convert it into the LSD assets listed above, so that the protocol can obtain staking verification rewards and combine with other DeFi to earn additional income. Finally, part of the rewards will be distributed in the $HAY pool.

However, Helio Protocol recently announced another good news, that is, allowing users to use ETH as collateral to borrow the stablecoin $HAY. When users borrow $HAY with ETH as collateral, they do not need to pay any loan interest, but ETH collateral has a minimum LTV (loan-to-value ratio) ratio of 66%. When the LTV ratio of ETH drops below 66%, the protocol will execute liquidation.

Helio Protocol is targeting the situation after the Shanghai upgrade. Ethereum has eliminated the unstable factor that LSD (liquidity staking derivatives) cannot be redeemed, and the ETH staking market has become a vast blue ocean. According to Crypto Staking Explorer, the ETH staking rate is only 21.56%, compared with the average level of the other 20 major PoS chains of about 57.12%. ETH's LSD still has a lot of room to grow, which will further boost the LSDfi market.

Another point is that despite the rapid growth of LSDfi's TVL, according to Defiliama data, only 320 million of the 21.5 billion LSDs have entered the LSDfi market. In other words, the penetration rate is only 1.4%. Therefore, at the end of the V1 version, Helio Protocol opened the door worth about US$20 billion by adding ETH as collateral for users.

V2 Roadmap AMO, lending, RWA, multi-chain

Helio Protocol refers to the models of MakerDAO and Frax. Currently, the V2 roadmap is being prepared, and the AMO (Algorithmic Market Operation Mechanism) module is a key part of it, aiming to maintain the peg relationship of $HAY to $1. In the future, it will execute strategies under different market conditions through smart contracts, acting as the central bank in the protocol, enhancing the stability and efficiency of $HAY, and bringing additional sources of income to the protocol.

Helio Protocol V2 will also launch a "lending module" and a "liquidation module". The lending module introduces the concept of leveraged borrowing. Users can convert their borrowed HAY into HAY-LP tokens, and then use it again as collateral to borrow more $HAY, further improving capital utilization.

The liquidation module uses the Dutch auction model. When the borrower's loan-to-value ratio approaches the risk threshold, the liquidation module initiates an auction to sell the borrower's collateral to avoid bad debt. All community members can participate in this auction process and bid for collateral to gain opportunities to profit from the spread while ensuring that the Helio protocol has sufficient collateral.

It is worth mentioning that in the future Helio Protocol plans to include real-world assets (RWAs) such as bonds and real estate in the collateral of $HAY. This vision is similar to MakerDAO’s current “BlockTower Andromeda”. Once the above modules are completed, Helio Protocol will also cross-chain to Ethereum, and then expand to other Layer2s such as Arbitrum and Zksync.

Cooperate with 14 DeFi protocols to hold DeFi Summer Party

In addition to showing its ambition in terms of products, Helio Protocol also focused on the growth of its user base after receiving a $10 million investment from Binance Labs. It encouraged users to participate in the protocol through a bonus mechanism and co-organized the "DeFi Summer Party" with 14 partners before November 30. As long as the designated tasks are completed, users can receive bonuses and GalxeOAT NFTs sponsored by partners. In addition, as long as at least 10 of the NFTs are collected, users will be eligible to participate in Helio's final event with a total prize pool of 20,000 $HAY.

Taking the first cooperation activity with PancakeSwap, the leading decentralized exchange on the BNB chain, as an example, users only need to follow PancakeSwap's X account and retweet the activity tweets, pledge more than $5 BNB to obtain SnBNB, and provide more than $5 SnBNB /BNB liquidity to complete the task. In each activity, Helio Protocol provides complete teaching to allow users to have a smooth experience when using the DeFi protocol on the BNB chain.