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$HONEY

Stability is a desirable property in a medium of exchange, in contrast to transacting with volatile crypto assets. $HONEY is Berachain's native stablecoin, designed to provide a stable and reliable means of exchange within the Berachain ecosystem and beyond. $HONEY aims to maintain a peg 1 USD.

What is $HONEY?

$HONEY is a fully colalteralized stablecoin which is soft-pegged to the US Dollar. $HONEY can be backed by (and minted from) a diverse range of crypto collateral. This multi-collateral approach to $HONEY's backing enhances its stability and resilience.

How to Get $HONEY?

$HONEY can minted by depositing whitelisted collateral into the a vault, and minting $HONEY against that collateral. Different assets eligible as $HONEY collateral are stored in different vault contracts. The minting rates of $HONEY are configurable by $BGT governance for each different collateral.

Alternatively, $HONEY can be obtained by trading other assets on the Beracahin Bex.

How is $HONEY Used?

$HONEY shares the same uses as other stablecoins, such as for payments/remittances, and as a hedge against market volatility. However, $HONEY also has a number of unique use cases within the Berachain ecosystem, including:

Lending - Bend

Bend uses $HONEY by letting users add to the bend's $HONEY liquidity pool and it earns interest on it by supplying.

For users that supply their $HONEY, they receive an equivalent token as $aHONEY.

$HONEY is the only asset that Bend accepts to earn an interest on.

Perpetual Futures - Berps

Berps uses $HONEY as the base token for all trading collateral, payouts, and deposits. For example, in order to enter a levered long position in ETH, they must first deposit an appropriate amount of $HONEY.

Alternatively, $HONEY holders can passively earn by providing trading liquidity in the $bHONEY vault. $bHONEY vault depositors earn trading fees generated from Berps and serve as the counterparty to traders' positions. For example, if a trader gets liquidated, the $HONEY collateral of that position is distributed to those staking in the $bHONEY vault.

Minting $HONEY

A flow diagram of the $HONEY minting process is shown below: HONEY Minting

$HONEY Vaults

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

In the above example, the user deposits USDC to mint $HONEY. Only the USDC vault in interacted with, and not the aUSDT vault.

Vault Router

At the heart of the $HONEY minting process is the Vault Router 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 Vault Router contract to the appropriate vault. The Vault Router custodies the shares minted by the vault (corresponding to users' deposit) and mints $HONEY tokens to the user.

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 0.995 (1 USDC for 0.995 $HONEY), then a fee of 0.005 or 0.5% is collected for every 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 0.995 (99.5%)

Here's how the minting process would work:

  1. The user deposits 1,000 USDC into the VaultRouter contract
  2. The VaultRouter transfers 1,000 USDC to the USDC Vault and receives 1,000 vault shares in return
  3. The VaultRouter calculates the amount of HONEY to mint:
  • Honey to mint = Vault shares × Mint rate
  • Honey to mint = 1,000 × 0.995 = 995 HONEY
  1. The VaultRouter mints 995 HONEY to the user's address.
  2. The VaultRouter calculates and distributes the fee:
  • Fee shares = Vault shares - Honey to mint
  • Fee shares = 1,000 - 995 = 5 shares
  • The VaultRouter transfers 5 vault shares to the fee receiver.