$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 following assets can be used as collateral to mint $HONEY:

• $USDC
• $BYUSD ($pyUSD)
• $USDT0
• $USDE

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. Currently, all vaults use the same conversion rates: 100% mint rate (0% mint fee) and 99.95% redeem rate (0.05% redeem fee).

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 of each collateral asset based on their relative proportion as collateral:
  • Some $USDC
  • Some $BYUSD ($pyUSD)
  • Some $USDT0
  • Some $USDE

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. The current fee structure is:

• Minting: 0% fee
• Burning/Redeeming: 0.05% fee

Example

Let's walk through minting and burning $HONEY with $USDC:

Minting:

• User deposits 1,000 $USDC
• Receives 1,000 $HONEY (0% fee)
• No fees collected

Burning:

• User burns 1,000 $HONEY
• Receives 999.5 $USDC (0.05% fee = 0.5 $USDC)
• 0.5 $USDC fee is distributed to $BGT holders