Binance Labs, the venture arm of cryptocurrency exchange Binance, has made a substantial investment of $10 million into Helio Protocol, a move aimed at supporting Helio’s transition into a liquid staking platform. While currently operating on the proof-of-stake network BNB Chain, this funding will enable Helio to extend its presence to other blockchain networks. The platform’s ambitions include launching on Ethereum, along with notable Layer 2 networks like Arbitrum and Zksync, as confirmed by a Binance Labs representative.
Binance Labs funds Helio’s transition to liquid staking
The shift towards becoming a player in the liquid staking sector marks a recent strategic direction for Helio. Liquid staking involves staking tokens on a network and receiving a different token that represents the staked position. These liquid staking tokens (LSTs) can be utilized in the decentralized finance (DeFi) ecosystem. For instance, a prominent staking platform on Ethereum, Lido Finance, provides users with Staked Ethereum (stETH) in exchange for depositing ETH with the protocol.
Binance Labs expressed its optimism for the liquid staking landscape, highlighting the emergence of liquid staking derivative finance (LSDfi) protocols, which offer new avenues for yield-seeking LST holders. These protocols have experienced rapid growth in total value locked (TVL) over recent months. By creating more use cases for liquid staking tokens, LSDfi protocols could incentivize increased staking participation, ultimately promoting higher capital efficiency.
Before its pivot, Helio was primarily focused on stablecoin minting services, allowing users to mint HAY, a dollar-pegged decentralized stablecoin. This process involved over-collateralizing BNB tokens. This concept aligns with the functionality of Maker’s DAI and Aave’s GHO stablecoin. Helio’s recent developments include a merger with staking provider Synclub in July. Moreover, the platform diversified its collateral, moving beyond relying solely on BNB.
Exploring the potential of Helio’s liquid staking
Synclub, the second-largest staking provider for the BNB Chain, holds over 1 million BNB tokens. In the context of this evolution, Helio introduced a mechanism where BNB deposits are seamlessly converted into a basket of LSTs like AnkrBNB, snBNB, BNBx, and stkBNB. While account balances remain denominated in BNB, users can opt to withdraw any of the aforementioned LSTs.
In terms of performance, Helio Protocol has become the thirteenth largest DeFi protocol on the BNB Chain. The platform boasts 11,000 HAY holders who collectively contribute $300 million in total value locked. Notably, $260 million of this amount is staked in Synclub’s validator node, solidifying its position as the second-largest validator on the BNB Chain. The collaboration between Binance Labs and Helio Protocol signifies growing interest in the potential of liquid staking.
With its ability to provide additional utility to staked tokens, this innovative approach has gained traction, with various protocols exploring its possibilities. As the DeFi space continues to evolve, the expansion of liquid staking to new chains and networks could play a pivotal role in driving further growth and participation in the broader ecosystem.
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