LSDfi is a fast growing space within DeFi. Now Binance is throwing capital into it.
Tim Hakki•
Binance’s venture arm Binance Labs has invested $10 million into Helio Protocol to help expand the protocol's ongoing pivot to becoming a liquid staking platform.
Though Helio is currently built on the proof-of-stake network BNB Chain, this new funding is expected to help the platform expand to other chains. "Helio's objective is to launch on Ethereum, and subsequently with prominent L2 networks like Arbitrum and Zksync," a Binance Labs spokesperson told Decrypt.
The move to enter the liquid staking sector is a recent one for Helio.
Liquid staking refers to the process of staking tokens to a network and receiving a different token representing that staked position in return. Often, the staked version of the token–called liquid staking tokens (LSTs)–can then be reused in the world of decentralized finance. The largest staking platform on Ethereum, for example, is Lido Finance, which gives users Staked Ethereum (stETH) in exchange for depositing their ETH with the protocol.
A spokesperson for Binance Labs told Decrypt over email that the venture firm is bullish on the world of liquid staking, sometimes referred to liquid staking derivative finance or "
“LSDfi protocols have opened up new opportunities for yield-seeking LST holders, and have experienced a rapid increase in TVL over the past few months,” said Binance Labs. “By providing additional use cases for liquid staking tokens, LSDfi has the potential to accelerate the growth of liquid staking by incentivizing staking participation towards higher capital efficiency.
Previously, Helio only offered stablecoin minting services, lettings users mint HAY, a dollar-pegged decentralized stablecoin that’s backed by staking an over-collateralized amount of BNB. In practice, it’s similar to how Maker’s DAI and Aave’s recently launched GHO stablecoin work.
In July, the Helio protocol merged with the staking provider Synclub and, that same month, it announced it had diversified the collateral it was using to back HAY. Synclub is also the second-largest staking provider for the BNB Chain, amassing more than 1 million BNB tokens.
Since then, Helio BNB deposits are seamlessly converted to a basket of LSTs like AnkrBNB (ANKR), snBNB (Synclub), BNBx (Stader), and stkBNB (Pstake). Although users’ account balances are denominated in BNB, they can opt to withdraw any of the above LSTs.
To date, Helio is the thirteenth largest DeFi protocol on the BNB Chain. It has 11,000 HAY holders who have deposited $300 million in total value locked (TVL), $260 million of which is staked in Synclub’s validator node, making it the second-largest validator on BNB.
