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Destablecoin HAY Staking
Destablecoin HAY (HAY) is not listed as a staking asset on Staking Rewards. You can still convert token prices, calculate reward rates and compare against rewards earned for other top staking assets.Learn more about Destablecoin HAY Staking
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What is a 'Destablecoin"
Destablecoin is a new type of asset class within the crypto space that seeks to label a more accurate term in the current stablecoin landscape. The prefix “de-” stands for decentralized – it does not signify price volatility the way assets such as BTC experience. Destablecoins utilize decentralized, liquid staked, crypto assets only as collateral and do not aim to achieve absolute price stability with fiat-based currencies such as USD. While destablecoins are not fully volatile assets, it will allow for some price fluctuations as regular fiat-currencies would experience with varying reference rates and interest rate paraties as defined by the open market.
What is the difference between a destablecoin and a stablecoin?
Destablecoins differ from the conventional 4 stablecoin types that currently exist in the market. Currently, there are four main types of stablecoins, Fiat-backed (BUSD), Crypto-backed (DAI), Algorithmic (USDD), Commodity-backed (PAXG). Like other crypto-backed stablecoins, destablecoins will utilize the overcollateralized model backed by crypto assets such as DAI. However, the key differences are:
- Destablecoins are fully decentralized. Crypto-backed stablecoins such as DAI leverage on centralized crypto assets such as USDC, while destablecoins such as HAY will use decentralized assets such as BNB. as collateral. Additionally, destablecoins will also leverage on liquid staked assets.
- Secondly, destablecoins aims to achieve stability broadly without an absolute peg to the fiat currencies. All currencies are different and have varying reference rates, so price fluctuations should be considered a norm defined by the market instead of aiming for a sense of absolute price stability at all cost. Similarly with destablecoins, it does not aim to achieve absolute price parity with US $1 as a primary objective nor rely on fiat assets as the backed collateral.
Why the term 'Destablecoin'
The term “destablecoins” helps to achieve two purposes.
Firstly, and more purposefully, the prefix “de” in “destablecoins” stands for decentralized, and that is to clearly distinguish products such as HAY from other legacy stablecoin products such as BUSD and USDC, which is controlled by a centralized custodian. This also helps mark the progression of stablecoins from being centralized to decentralized, and the DeFi industry as a whole
Secondly, the term “stablecoin” or even “algorithmic stablecoin” is generally a misnomer, as all stablecoins, including fiat-backed ones, have potential to de-peg become volatile, albeit to a much lower extent. The stablecoin industry is under constant scrutiny due to many retail investors over-investing under the allure of constant stability and becoming vulnerable to significant financial loss during such an event. Using the term “destablecoins” signals the underlying risk of stablecoins and encourages users to invest more responsibly, building a far healthier and more sustainable ecosystem of users.
Furthermore, products such as HAY do not use an “algorithm” to regulate its value, but rather through the use of over-collateralized assets. Therefore, “algorithmic stablecoins” is also not an appropriate representation of HAY.
Will this term confuse people?
What is the point of a destablecoin then if there is a risk of depegging?
The purpose of destablecoins, similar to stablecoins, is to offer a decentralized form of digital currency that is suitable for everyday trading and transactions due to lowered volatility, mirroring the way fiat currencies such as USD is used. Destablecoins enjoy the privileges of what stablecoins have to offer in terms of its ability to be borderless and permissionless due to its digital nature, and the element of decentralization further creates a more seamless, and secure user experience. Therefore, the value proposition of destablecoins, and stablecoins are still very much valid.
Using the term destablecoins offer greater clarity and understanding of this asset class to not just users, but also builders; and can help achieve greater focus when building such ecosystems.