Stablecoins are an important part of the crypto space that helps traders store non-volatile value and maintain consistent purchasing power. Although they are backed by the US dollar in theory, practically the value of the dollar itself is depreciating. This means that its value today is higher than it will be tomorrow, putting stablecoins in a tough spot.
HectorDAO offers a solution to this paradox, HectorDAO is backed by a growing pool of DAI, USDC and FTM along with other assets. This would increase the value of its token over time as it accumulates liquidity.
What is HectorDAO?
HectorDAO is a decentralized asset-backed pool based on the Fantom Opera blockchain aimed at creating value for users through the development of various use cases in their ecosystem. The platform intends to position itself as a financial center on the Fantom channel to facilitate the lending/borrowing process for users while serving as a bridge between the channels and the launch of new projects.
Another major area that HectorDAO focuses on is facilitating the growth of the Fantom Opera channel through the production of high quality products. Keeping this in mind, they donated FTM tokens to new network users to help them in the first transactions.
$HEC is the native token of the platform and as it accumulates more liquidity and reserves, the support by HEC would also increase, creating a floor price that rises steadily. To maintain a stable floor price, HectorDAO uses the Algorithmic Reserve Currency algorithm.
Treasury inflows and outflows
Hector’s Treasury is a multi-signature protected vault that contains all stable and volatile coins belonging to the DAO. It has a few main functions:
- Entries: One of the main methods of generating profits by Hector is through bonding. The platform sells bonds of tokens such as DAI which are then acquired for gradual release to the linking party. Part of the trading fees generated on Hector Swap and Hector Bank also goes to the Treasury.
- Exits: During a prolonged contraction, a portion of LP tokens are used to buy back and burn tokens. The components of LP tokens are divided into two parts: HEC tokens and a stablecoin like USDC or DAI. The HEC tokens are then burned and the stablecoins are used to buy more HEC from the market which is also burned.
CAD portfolio and staking
While the Treasury is used for long-term storage of tokens, the DAO wallet is used for expenses such as marketing, redemption and burning, salary and development funds, etc. Profits from sub-projects are also stored in the DAO wallet.
Staking is an important part of the HectorDAO ecosystem. Users can stake their HEC tokens by locking them into the ecosystem and receive compound rewards generated from bond sales. During the staking process, HEC tokens are locked and users receive sHEC tokens. Opting out is also quite simple, and user-owned sHECs are burned to give them an equal balance of HECs.
What is Hector Bank?
The HectorDAO platform recently launched Banque Hector on the 27thand January 2022 as a first step towards deflation. Hector Bank is a decentralized borrowing and lending platform built on the Fantom Opera chain. Lenders can use the platform to obtain a high APY without facing any risk of HEC price volatility. Borrowers, on the other hand, can use wsHEC as collateral to borrow stablecoins and use them in various projects without the need to withdraw or unbox the tokens.
Hector Bank isolates its token pool in a range of configurations allowing for finer control of individual token offerings. This helps with risk mitigation and growth while helping to fine-tune collateral factor, liquidation factor, and other such metrics.
HectorDAO being a DAO integrates its community and its feedback on its roadmap. Token holders who have HEC, wsHEC, and sHEC have the ability to vote on important community decisions ranging from audits, listings, to fund management decisions. As mentioned earlier, Hector Bank is one of the platform’s first steps towards a more deflationary approach. Hector Stablecoin is another addition to their ecosystem that will be live soon.
The platform will also receive the Fantom Foundation Incentive Grant starting in February and is working to use the grant towards the development of its 2022 master plan. The platform currently has a TVL of 267 million dollars on DeFiLlama, while the HEC token is among the trendiest tokens in the Fantom ecosystem. Needless to say, HectorDAO has a lot planned on its 2022 roadmap for its users and token holders.
For more information on HectorDAO, please see their official site.
Disclaimer: This is a paid publication and should not be considered news or advice.