In the headstrong world of cryptocurrency, there's a lot of volatility that could be anchored down by stablecoins. There are real benefits in transacting with this new technology-currency: speed, transparency, and it can be availed by everyone. It is here that the Berachain's native stablecoin, $HONEY, will be specifically meant for: being a dependable stable digital asset pegged to the US dollar.
Key Takeaways
- $HONEY is designed to maintain a stable value, pegged to the US dollar.
- Multi-Asset Backing: $HONEY is backed by a diverse basket of cryptocurrencies, not just one single asset.
- Mint or Swap $HONEY: Get $HONEY by depositing collateral into vaults, or by swapping other tokens on BeraSwap.
- Community Governance: $BGT holders can vote on important decisions about $HONEY, like adding new collateral types.
- Basket Mode for Stability: In emergencies, a "Basket Mode" protects users by allowing redemption for a mix of all backing assets.
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What is $HONEY?
$HONEY is Berachain's native stablecoin, designed for stability and usability within the ecosystem. Here's what makes it work:
- Stable Value: $HONEY aims to maintain a "soft peg" to the US dollar, meaning its value should stay close to $1, providing a reliable unit of account.
- Diverse Backing: Unlike some stablecoins, $HONEY is backed by multiple cryptocurrencies (initially USDC and BYUSD), not just one. This reduces risk.
- Community Controlled: Key parameters, like adding new collateral types, are controlled by $BGT holders through governance votes.
How Does $HONEY Maintain Stability?
Berachain uses a combination of mechanisms to keep $HONEY stable:
Vaults: To get $HONEY, users need to deposit accepted collateral assets into special smart contracts called "vaults." Each vault is dedicated to a particular type of collateral.
Minting and Redemption Rates: Each vault comes with its respective mint and redemption rate. That means how much of $HONEY you earn back on your collateral (at the moment of minting) and the amount of collateral you get back while redeeming your $HONEY. The whole thing is well-controlled by them.
Honey Factory: This is the central smart contract that connects all the vaults and handles the actual minting of new $HONEY tokens. It ensures everything is properly accounted for.
Governance: In the case of keeping $HONEY stable, $BGT holders - you, if you're earning $BGT - play an important role. They vote on proposals, including but not limited to: changes in minting parameters, adding new collateral types, and so on.
Fees: When minting or redeeming $HONEY, a small portion is taken as a fee. This goes straight to the $BGT holders for another incentivization to be a part of and supervise the community.
Basket Mode (Emergency Protocol): If any of the collateral assets lose their peg to the dollar, Berachain triggers "Basket Mode." During this mode, you receive a proportional mix of all the backing assets, not only the one which is having problems on redemption. This protects $HONEY holders from being overly exposed to one failing asset. In such extreme cases, if all assets become unstable, even minting might be switched to a basket mode.
How to Get and Use $HONEY?
You have two main options for getting $HONEY:
- Minting: Use the Honey Swap dApp to create new $HONEY by depositing accepted collateral.
- Swapping: Exchange other tokens for $HONEY on decentralized exchanges like Bera Swap.
Once you have $HONEY, you can use it throughout the Berachain ecosystem:
- Trading: Use $HONEY as a base currency for trading.
- Providing Liquidity: Use $HONEY in liquidity pools on BeraSwap to earn trading fees and $BGT rewards.
- General Transactions: Because it's designed to be stable, $HONEY is a reliable option for everyday transactions within the Berachain ecosystem.
$HONEY serves as a crucial building block for Berachain DeFi, providing a stable and reliable asset for users. Backed by multiple cryptocurrencies and managed through community governance, $HONEY is designed to be a versatile tool for trading, lending, and navigating the Berachain ecosystem.
The information provided by DAIC, including but not limited to research, analysis, data, or other content, is offered solely for informational purposes and does not constitute investment advice, financial advice, trading advice, or any other type of advice. DAIC does not recommend the purchase, sale, or holding of any cryptocurrency or other investment.
