$HONEY

0xFCBD14DC51f0A4d49d5E53C2E0950e0bC26d0Dce

$HONEY is Berachain's native stablecoin, designed to provide a stable and reliable means of exchange within the Berachain ecosystem and beyond. $HONEY is fully collateralized and soft-pegged to the US Dollar.

How to Get $HONEY

$HONEY can be minted by depositing whitelisted collateral into a vault and minting $HONEY against that collateral through the HoneySwap dApp. The minting rates of $HONEY are configurable by $BGT governance for each different collateral asset.

Alternatively, $HONEY can be obtained by swapping from other assets on BEX or another decentralized exchange.

Collateral Assets

The initial collateral options will be $USDC and $BYUSD ($pyUSD). New assets used to mint $HONEY can be added through governance.

How is $HONEY Used?

$HONEY shares the same uses as other stablecoins, such as for payments/remittances and as a hedge against market volatility. $HONEY can also be used within the Berachain DeFi ecosystem.

$HONEY Architecture

A flow diagram of the $HONEY minting process and associated contracts is shown below:

$HONEY Vaults

$HONEY is minted by depositing eligible collateral into specialized vault contracts. Each vault is specific to a particular collateral type, with its own unique mint and redemption rate.

In the top flow of the above example, the user deposits $USDC to mint $HONEY. Only the $USDC vault is interacted with, not the $pyUSD vault.

HoneyFactory

At the heart of the $HONEY minting process is the HoneyFactory contract. This contract acts as a central hub, connecting all the different $HONEY Vaults and is responsible for minting new $HONEY tokens.

As shown in the diagram, users' deposits are routed through the HoneyFactory contract to the appropriate vault. The HoneyFactory custodies the shares minted by the vault (corresponding to users' deposits) and mints $HONEY tokens to the user.

Depegging and Basket Mode

Basket Mode is a safety mechanism that activates when collateral assets become unstable. It affects both minting and redemption of $HONEY in specific ways:

Redemption:

• When ANY collateral asset depegs, Basket Mode automatically activates
• In this mode, users can't choose which asset they redeem their $HONEY for
• Instead, users redeem for a proportional share of ALL collateral assets in the basket
• For example, if you redeem 1 $HONEY token with Basket Mode active, you'll get:
  • Some $USDC based on its relative proportion as collateral
  • Some $pyUSD based on its relative proportion as collateral

Minting:

• Basket Mode for minting is considered an edge case that only occurs if ALL collateral assets are either depegged or blacklisted. Depegged assets cannot be used to mint $HONEY
• In this situation, to mint $HONEY, users must provide proportional amounts of all collateral assets in the basket, rather than choosing a single asset
• If one asset is depegged, you can mint only with the other asset

Fees

Fees collected from minting and redeeming $HONEY are distributed to $BGT holders. Fees are determined based on the mint and redemption rates of each vault. For example, if the mint rate of the USDC vault is 0.999 (1 $USDC for 0.999 $HONEY),thenafeeof0.001or0.1$USDC` deposited.

Example

Let's consider an example with the following parameters:

• User wishes to deposit 1,000 $USDC
• Mint rate for $USDC is set at 0.999 (99.9%)

Here's how the minting process would work:

1. The user deposits 1,000 $USDC into the HoneyFactory contract
2. The HoneyFactory calculates the amount of $HONEY to mint:

• $HONEY to mint = Vault shares × Mint rate
• $HONEY to mint = 1,000 × 0.999 = 999 $HONEY

3. The HoneyFactory transfers 999 $USDC to the USDC vault and receives 999 vault shares in return

• Fee shares = Vault shares - $HONEY to mint
• Fee shares = 1,000 - 999 = 1 share
• The HoneyFactory transfers 1 vault share to the fee receiver