Hive Protocol
OVERVIEW
Introduction
Hive Protocol is redefining the world of DeFi (decentralized finance) with a unique objective: to create a more simplified and secure version of previously complex investment yield strategies. This philosophy is paramount to the team and was ultimately developed to make smart investing accessible to everyone including novices. Hive's model relies heavily on market volatility, hence creating enormous opportunities in both bear and bull market conditions. By simplifying the process for newcomers to the cryptocurrency market, Hive Protocol is constantly evolving to provide straightforward yield strategies for all.
What is Hive Protocol?
Hive Protocol operates as a fully independent volatility farming protocol without the need for centralized permissions, maintaining a trustless environment. This means that anyone can participate without the need for permission or trust.
This groundbreaking mechanism allows participants to harness the benefits of continuous price fluctuations (volatility) inherent to cryptocurrency markets, in order to generate yield (profit) on liquid assets (tokens). This strategy has been termed volatility farming.
To further the ultimate “investor experience” and success of the protocol, Hive developed its unique Cell* to deliver several key benefits:
Complete decentralization and self-custody: Smart contracts alone dictate the fund's rules and management without the need for intermediaries.
Fixed token weight for each token: This removes the need to rely on external price information (oracles**) for the wrapping/unwrapping of tokens.
Consistently collateralized: Every cell is always backed by sufficient collateral which can be easily verified and audited on the blockchain at any time.
Increased potential for yields: With the subsequent addition of more cells , along with increased market volatility, liquidity providers (LPs) stand to earn greater returns, distributed in our (deflationary) reward asset, HIP.
Staying true to the basic doctrine of decentralized finance, Hive Protocol embodies the fundamental principles of DeFi including accessibility for all.
*Note:
*Cell- refers to the individual yield-generating opportunities within the platform in the context of Hive Protocol
**An oracle is a third-party service that provides data or information to smart contracts. Oracles are used to obtain and deliver external data, such as price updates, to decentralized applications (DApps) on the blockchain, essential in the execution of smart contracts.
A Purist's Approach to DeFi
Numerous DeFi initiatives as well as conventional finance products have launched similar ventures in the past, also known as index funds, however most of them fall short of the true DeFi principle mostly because there are usually some centralized components that have been integrated into these platform models. For better or worse, centralization is associated with security. At Hive Protocol we've developed a fully decentralized, transparent and secure system that allows users to control and oversee a collection of investments while simultaneously earning genuine returns.
How Does it all Work?
Hive Protocol makes it easy for users to generate yield on most liquid assets (tokens). With Hive, users can wrap their HIP tokens into a single token called cHIP. Wrapped tokens are then called cells. Cell tokens (cHIPS) are backed by the original asset (HIP) and can be converted back at any time. This ensures that cell tokens always have a value based on the assets they represent.
When the price of HIP and cHIP tokens differ more than the cost of converting between them, this presents an opportunity to benefit from the difference (arbitrage) and turn over a profit. This trading opportunity generates income for the protocol through swapping fees, benefiting both cell token holders and those providing liquidity. This synergy is also known as a flywheel effect.
TOKENOMICS
Contract on Base chain: 0x5399d094b5eC64bDeeE130206098EF0e385Dc2e9
Real Yield
HIP tokens can not be minted. The entire supply was minted when the contract was deployed. This will prevent potential inflationary issues later on including issuance of additional tokens to compensate for emissions.
Deflationary aspects explained
The fees obtained from using the protocol are converted into HIP tokens through market purchases. A fraction of these tokens are burned while the rest are distributed based on the cell set-up. This process operates autonomously and automatically, ensuring continuous decentralized yield.
Initial Supply
10,000,00 HIP
Liquidity: 7,000,000 HIP
Cell Liquidity, Rewards, CEX and Development: 3,000,000 HIP
VOLATILITY FARMING BASICS
Arbitrage Explained:
Arbitrage is a strategy whereby investors profit from price differences for the same asset on different markets by buying low and selling high simultaneously.
Volatility Farming:
Given the constant fluctuation in asset prices, both users and MEV bots continuously seek arbitrage opportunities for swift profits. The protocol exploits this by generating arbitrage opportunities itself through the existence of cells. When the price of HIP and cHIP deviates enough to cover wrapping/unwrapping costs, arbitrage occurs. Taking advantage of these opportunities leads to the collection of protocol fees, distributed based on the individual cell configurations.
When users supply liquidity to a cell with their wrapped tokens (cHIPS) they are reinforcing the stability of the fund thereby stimulating the Hive ecosystem so that all holders can benefit from real yield. The greater the investment the greater the rewards.
Cells and how they work:
Cells are bundles containing one or more types of assets. They can be a mix of many assets, like an index, or just one type of asset. When cells are created, they are backed up with the same amount of assets they contain. This backing never decreases, but it might increase if a cell has a fee for burning cHIP tokens. Each cell is like a part of a vault. Holders of cHIP tokens can exchange them at anytime to get back their share of the assets in that particular cell.
Example: for illustrative purposes only
Hive Protocol's unique Wraplock technology:
Safeguard your pooled assets from depreciation using our innovative WrapLock technology. This unique feature preserves the value of your wrapped tokens (cHIP) even if there is a significant drop in price of the underlying asset (HIP).
Coming soon:
Multi asset cells
Each multi-asset cell on Hive Protocol has a predetermined weight for each asset it contains upon creation. These cells are independent of token market values and can be created by anyone at any time.
Dencentralized
Unlike some conventional or crypto methods that rely heavily on centralized control of client assets, our structure is completely decentralized. This by definition translates to complete autonomy for users. There is no middleman or central control from the team once a cell is launched. Investors can participate independently and earn fees based on asset volatility by providing liquidity to the fund.
ROADMAP
Phase 1
Contract audit: Quantstamp
Onboarding of self-serve & native pool insurance options
Website & Gitbook modifications V2
Marketing push & KOLs onboarding
Aggregator listings
Strategic DeFi partnerships
Phase 2
Cross project cell aggregator
Arbitrage scanner & tracker
TBA
Last updated
