- The New York regulator recently ordered Paxos to stop issuing Binance's BUSD stablecoins as regulators begin to crack down on stablecoin projects in addition to cryptocurrency staking.
- The solution may lie in fully decentralized stablecoin projects like HAY and DAI
- HAY is a fully decentralized BNB native stablecoin created by the Helio Protocol
New York regulator ordered Paxos to halt issuance of BUSD stablecoin
On February 13, blockchain infrastructure platform Paxos Trust Company, which is in charge of issuing Binance's BUSD stablecoin, announced that it will stop issuing new BUSD tokens It is later revealed that Paxos is being investigated by the New York Department of Financial Services for violating investor protection laws and that the firm was forced to stop issuing new BUSD by the aforementioned New York regulator. Binance has distanced itself from the matter while assuring its users that all their funds are safe as Paxos will continue to manage BUSD redemptions at the same time. However, this means that if the dispute is not resolved, the market capitalization of BUSD will decrease over time to the point where it becomes a very low liquidity stablecoin and then a deprecated token. Nor does it change the fact that Paxos could face an SEC lawsuit and that fearsome uncertainty currently lingers regarding the future of other centrally issued stablecoins in the cryptocurrency space.
Alternatives to the BUSD stablecoin on the BNB chain
To tell the truth, there are still many others stablecoins available on the BNB chain, ranging from USD Currency (USDC) and Tether (USDT) to TrueUSD (TUSD), Dollar Pax (USDP) and even the native Ethereum ICD. However, the first four suffer from the same problem as BUSD, as they are all issued by a centralized entity and can therefore easily be subject to regulatory pressure. Like Paxos, regulators could put pressure on the issuers of these stablecoins to discontinue the stablecoin product, which would result in the (temporary) destabilization of the entire ecosystem. DAI, which is the sole representative of decentralized stablecoins in the group, is not natively available on the BNB chain and requires an excess collateralized deposit from the user, contributing to significantly lower capital efficiency when used. uses IAD. The developers in helium protocol have recognized that the BNB chain lacked a decentralized stablecoin product that other blockchain ecosystems had and have therefore filled the gap by developing the USD-pegged coin HAY stablecoin.
Helio Protocol offers a decentralized and capital efficient solution to the problem of stablecoins
Helio Protocol is an open source liquidity protocol that operates on the BNB chain and seeks to revolutionize the stablecoin industry by creating a stablecoin product that achieves capital efficiency, decentralization, and security. The protocol issues HAY, which is the only decentralized stablecoin native to the BNB chain, often referred to as โdestablecoinsโ for short. HAY allows Helio Protocol users to borrow and earn returns on their HAY holdings relatively unaffected by market movements or market sentiment. While the ultimate goal of the Helio team is to expand HAY across multiple chains and become the driving force behind mass cryptocurrency adoption, the primary goal remains to make HAY the most widely used stablecoin product in the Binance Chain ecosystem. .
The beginnings of Helio Protocol and the team behind the project
Helio Protocol team members have long recognized the lack of destablecoin products on the BNB Chain, but the ultimate trigger for the accelerated development of the platform was the collapse of several large crypto projects and institutions in early summer 2022. Since then the team has developed a functional stablecoin product. The founding members of the Helio Protocol wish to remain anonymous, but the team has repeatedly stated that the protocol's team structure is very small and that team members have amassed years of valuable experience from top finance, consulting, and management and technology, including those in the cryptocurrency sector. The goal of the team members is to make the quality of Helio Protocol finally speak for itself, instead of relying solely on the reputation and experience of the project founders.
Advantages and current status of the Helium Protocol
The Helio Protocol stands out for its decentralized nature, which sets it apart from centralized stablecoins that rely on fiat currency held by a centralized custodian, such as Paxos in the case of BUSD. In the case of HAY, the collateral is BNB locked in the protocol's decentralized smart contracts. While Helio Protocol also requires excess collateral, its users can earn return on their BNB collateral through liquid staking, which is not available with many other DeFi stablecoin products. In addition, the borrowed HAY can also be staked for long-term returns or transferred to other protocols to generate additional returns. Helio has adopted a 66% LTV ratio, which means that for every $100 in BNB deposited, up to $66 in HAY can be borrowed. Said LTV ratio was tested by other DeFi projects and allows Helio to hedge any potential bad debt and maintain the peg to HAY's USD. If you are interested, you can apply for a HAY loan here.
As of this writing, more than 1,750 borrowers have obtained more than $22 million in HAY loans. The total value locked (TVL) in the protocol exceeds $63.5 million.
Conclusion
With the increasing regulatory crackdown on centralized stablecoins, stablecoins like Helio Protocol's HAY have had an opportunity to grab a bigger chunk of the stablecoin market share. The absence of a centralized collateral custodian makes volatile currencies more resistant to regulation and therefore a safer asset class as well. Finally, decentralized stablecoins are also better aligned with satoshi nakamotoThe initial cryptocurrency concept of , which heavily emphasized the need to eliminate centralized intermediaries such as banks, lenders, and other financial institutions.
