Road to the Future(s)
It’s been a productive Q2 with the releases of Horizon Exchange, Horizon Genesis 2.0, Horizon Dashboard, Horizon Academy Beta and other various updates.
Now that we are in Q3, we’re sure many of you are wondering, what’s next? What challenges does Horizon Protocol face?
We believe that the long term success of Horizon Protocol is dependent on protocol usage (staking and trading) and the liquidity available in the system. Now that we have released the key products in our ecosystem, we plan to emphasize on creating additional value for HZN stakers and developing new, more capital efficient routes to increase liquidity for zAssets.
HZN alone as collateral for zAssets is relatively capital inefficient since it requires a higher over-collateralization relative to many other tokens due to its lower market cap and volatility. Utilizing larger cap assets on BNB Chain, like BNB and BUSD that are more liquid and less volatile, as collateral to back zAssets could allow for lower collateralization levels / greater capital efficiency. Opening the doors to these types of users will help Horizon Protocol grow from a liquidity standpoint and that will be a large part of our upcoming focus. However, our goal is not to dilute or replace the importance of HZN, but rather further enhance its role within the ecosystem by increasing the revenues it generates when staked on Horizon Genesis. Since HZN stakers take on the risk of the composition of the debt pool, all zAssets created from non-HZN sources will directly or indirectly generate fees and be paid to HZN stakers for taking on that risk. Furthermore, the primary long-term business model for Horizon Protocol and HZN stakers are the fees generated from trading on our protocol. With Horizon Exchange now launched, it sets the foundation for us to increase its utility and trading volume. We believe that working towards a perpetual futures exchange will be a key addition for Horizon Exchange that will introduce powerful capabilities to short and long with leverage. The volumes and fees generated from futures exchanges are typically much greater than spot exchanges, which will directly increase revenues for HZN stakers.
That being said, for Q3, the main focus will be on building the infrastructure so that we can introduce futures trading to Horizon Exchange as well as other upgrades that allow us to help improve liquidity for zAssets and increase revenues for HZN stakers. These updates will set the foundation for Horizon Protocol to scale and grow better in the longer term. Some of these updates include:
- Token Wrappers
- Futures Exchange
Users can use other crypto (i.e. BNB) to borrow zAssets (i.e. zUSD or zBNB) at a lower collateralization ratio than HZN stakers minting zUSD. These loans will be subject to a variable interest rate that will be paid to HZN stakers as a source of zUSD fees. This will open a new avenue for users who hold larger, more liquid cryptos to be able to add liquidity and enter the Horizon Protocol synthetic asset ecosystem.
Users will be able to open collateralized short positions against zAssets using zUSD. Users who open shorts will be effectively taking out a loan of the zAsset they are shorting and selling it into zUSD. These positions will be also subject to an interest rate that will also be paid to HZN stakers as zUSD fees when the position is closed. The loaning mechanism is a prerequisite to shorting and will be introduced together. Shorting will give Horizon Protocol users more options to take advantage of different market conditions as well as hedge their positions and the global debt pool.
Token wrappers will allow users to wrap their BNB or other BEP-20 tokens (i.e. BUSD, BTC, ETH) into their zAsset equivalent with a very minor fee that is competitive to exchange fee rates. These wrappers will always value the transaction at 1:1 making for arbitrage opportunities should there be any deviations in other open market pegs. These fees are given to HZN stakers as zUSD fees to offset their impact on the global debt pool. These wrappers also create a secondary, non-interest bearing mechanism to increase liquidity for zAssets that is also more capital efficient (as to not require any over collateralization).
Futures trading on Horizon Protocol will allow its users to get more capital efficient, leveraged long and short exposure to zAssets with the global debt pool used as the counterparty for trades. Futures positions will be charged a perpetual style funding rate that is paid from the side with greater open interest to the lesser side to reduce market imbalances. Trading fees will be levied when users open or increase positions and are paid out to HZN stakers.
Based on our estimated workload assessment, the expected deliveries for most of the above features will likely be in Q4 of this year and futures trading likely rolling out by Q1 2023. These are rough timeline estimates, but we will keep you guys posted as we progress.
While these smart contract upgrades will take the brunt of our time, we also plan to release some other products and updates to Horizon Protocol listed below:
We feel our homepage is due for an update and we plan to make updates to the information presented on it as well as improve the user onboarding experience and overall UI/UX.
Chainlink Keepers Integration
This has been in a pipeline for us for some time and we plan to utilize Chainlink Keepers to not only help further decentralize our protocol, but to also explore new ways to add value/quality of life improvements for HZN users. One possible avenue we are exploring is to allow users to automate the weekly “Claim Rewards” function (if they meet the issuance ratio requirements). This is an ongoing investigation on how we can utilize Chainlink Keepers and will keep you guys updated on the integration as well as any future comarketing opportunities.
Horizon DeFi Podcast series
We are excited to announce our plans on releasing a podcast series where we explore DeFi, synthetic assets, and their potential impact they will have on the world. This podcast will focus on people who are interested in learning more about what is happening in regards to innovation and development in the crypto, DeFi, and synthetic assets worlds. A big part of the long term success of Horizon Protocol is to grow the overall pie and we believe this, along with Horizon Academy, is an important part of that.
Deploy New zAssets
With the successful launch of Horizon Exchange and its ongoing smooth operations, we believe that adding some new zAsset options are in order. This will be driven by the community and we are excited to know what zAssets to add!
We are all very excited with what’s in the pipeline and we hope you guys are too. As always, our community is Horizon Protocol’s greatest asset, we greatly value your support, inputs and feedback and look forward to speaking with you all in the chat!