Hector DAO will release its protocol this week allowing users to lend and borrow tokens for attractive annual percentage yields (APY).
Creating a financial center on the Fantom Opera chain
In late 2021, Hector DAO saw meteoric success: becoming one of the largest projects on the network and building a treasury of over $100 million in stablecoins alone. This set the project for significant progress this year.
One of the main issues with many APY-awarding projects is that minting new tokens increases the total token supply over time. While stakers are rewarded with tokens, the increasing supply gradually drives prices down. However, what if a project could offer APY rewards for stakers but also maintain a fixed or deflationary supply of tokens?
This is what the Hector project is working toward: In its 2022 plans, the Hector team explained the coming shift toward utility as well as plans to develop a series of revenue-generating subprojects for the Hector ecosystem. The revenues from these subprojects will be used to buy HEC tokens from the market and burn them, effectively reducing the supply of tokens and driving prices up while still rewarding stakers. The Hector team identifies an inflection point to describe the moment when revenue from subprojects outpaces the rate of token minting for APY rewards. It’s at this point that HEC becomes deflationary and has true utility. Hector Bank is one such subproject set to release imminently.
Hector Bank is our decentralized lending and borrowing platform built on the Fantom Opera chain. Users can lend and borrow a variety of crypto tokens, and lenders can achieve an attractive APY without any risk of volatility of HEC’s price by lending out stablecoins. Borrowers can use HEC as collateral to borrow stablecoins to use them in different projects without having to unstake or unwrap their tokens.
How does Hector Bank work?
Users will need to supply tokens to the protocol; this creates pools of tokens that users can either use as collateral or borrow. By default, users who supply tokens to the protocol — not using them as collateral to secure loans — will be rewarded with APY rates for allowing their tokens to be borrowed by other users. Lenders can withdraw their tokens and rewards at any time. Users can also lend stablecoins, allowing users to gain extremely low-risk rewards and mitigate volatility.
Users who want to take out crypto loans will need to enable their supplied tokens as collateral: This is as simple as connecting a wallet to the protocol and flipping a switch on the Hector Bank website. Users will then be able to take out loans on a variety of tokens and leverage crypto loans to maximize their gains.