Frequently Asked Questions for Horizon Genesis
- Built on the BSC for faster, cheaper, scalable transactions
- More focus on bringing a wider range of synthetic assets that represent the real and crypto worlds
- Building more innovative synthetic assets such as zIndices, zNFTs, leveraged assets and others
- Bringing DeFi to NFTs via Synthetic NFTs
- Cross-chain interoperability: BSC, ETH, Solana, Polygon, Tron, Cosmos, Reef, and more
- Focused on user experience and education
- Community driven
The initial minted supply of HZN tokens is 100,000,000.
- 10% (10,000,000 HZN) will be reserved for the IFO on PancakeSwap.
- 30% (30,000,000 HZN) will be reserved for Liquidity Mining (PHB, HZN, HZN-BNB LP) purposes.
- 60% (60,000,000 HZN) will be reserved for the Ecosystem & Community Fund.
The 60M Ecosystem & Community Fund will be used to support the protocol and community via stabilization of synthetic asset collateralization, market making for synthetic assets, protocol grants and blockchain fees, bounties, partnerships, marketing, and other community incentives. None of these funds are going to the team, advisors, or investors and are not intended to ever be completely circulating in the market. This fund is the treasury of Horizon Protocol itself and is for the benefit and long term sustainability of the protocol. The intention for this fund is to eventually be completely governed by the community via a DAO.
To stake HZN you also need to mint zUSD, which is a stablecoin backed by your staked HZN. This zUSD must be paid back in order to reclaim your HZN and is considered as an interest-free debt. Staking HZN requires managing your Collateralization Ratio (C-Ratio) in order to be eligible for rewards and avoid liquidation.
You must burn zUSD in order to unstake HZN. Burning zUSD will reduce your debt which also reduces the amount of HZN required to back that debt.
- Any zUSD burned while under an 700% C-Ratio will only reduce your debt and increase your C-Ratio, but will not unstake any HZN.
- Any zUSD burned while over an 700% C-Ratio will reduce your debt AND unstake HZN at an 700% ratio. Reducing your debt to 0 would unstake all of your HZN. Unstaked HZN would become 'transferable' HZN, which is freely usable HZN.
When staking HZN in Horizon Genesis, your HZN will never actually leave your wallet. Horizon Genesis will automatically flag your HZN as 'staked' rendering it unusable until you unstake your position. HZN that isn't staked will be considered 'transferable' and freely usable to transfer or sell.
Horizon Protocol has a dynamic staking mechanism that automatically adjusts the amount of HZN staked based on the current price of HZN in order to always maintain an 700% backing of your current debt. Transferable and escrowed HZN are dynamically used to maintain an 700% C-Ratio as the price of HZN fluctuates.
Let’s take an example: (below calculations assumes 1 HZN = $1 and uses a C-Ratio of 800%, which was the original C-Ratio before being lowered to 700%)
- 1.You mint 100 zUSD with 800 HZN (1 HZN = $1) at 800% C-Ratio, your staked HZN balance would be 800 and your transferable HZN balance would be 0 (assuming you staked all of your HZN).
- 2.The price of HZN goes up to $1.5, now you would only need 533.33 HZN to back your 100 zUSD. Horizon Genesis would automatically release 266.67 HZN from being staked and it would become transferable HZN. This transferable HZN could then be freely used to mint more zUSD, transferred to another wallet, or sold on an exchange.
- 3.The price of HZN drops to $0.5, then you will need 1,600 HZN (1600 x $0.5 = $800) to back your 100 zUSD debt position. Horizon Genesis will automatically migrate any transferable or escrowed HZN in your wallet to become staked HZN until the necessary 1600 HZN backing is met. If you don’t have any transferable HZN, then your C-Ratio will fall below the 800% target C-Ratio and you will no longer be able to claim rewards.
Staking HZN means that you are putting the HZN in there as collateral to Mint/Borrow zUSD. The reason it is called Minting instead of Borrowing is because there is no interest in this process. This is also why zUSD is called “Debt”, because you are technically borrowing this zUSD and you need to return it to be able to take back your HZN. An example of this would be a second mortgage, where you use your house as the collateral and you’re able to borrow some money. To get the house back to be fully under your ownership, then you need to pay back all the money first.
C-Ratio stands for collateralization ratio. This is the amount of collateral needed to borrow/mint a certain amount of zUSD. At 700%, you need $700 worth of HZN to mint $100 of zUSD.
If the price of HZN goes up to double the price, then your HZN is now worth $1400, which means that if you haven’t touched anything else, you are now at a c-ratio of 1400%. At this point, you can Mint again, which would take the extra $700 of HZN and borrow/mint to give you another $100 zUSD for a total of $200 zUSD at 700% c-ratio.
If the price of HZN drops by half back to the previous price so that it is worth $700 again, then you c-ratio has now dropped to 350%. To get back to 700% c-ratio, you need to “Burn”/repay $100 of zUSD so you are back at $100 zUSD of debt.
So the final conclusion is if you hold the zUSD that you mint and don’t do anything with it (trading it away or using it to invest in something else), you will have all the zUSD needed to “burn”/repay your zUSD debt and take out your collateral of HZN.
When I stake HZN, and there is the possibility of liquidation, to what degree is my position "leveraged"? I still have my balance of HZN. The threat of liquidation implies that it is leveraged, but this scenario does not seem to entail it?
Liquidation in Horizon Protocol is not the same as liquidation of a leveraged or margin position. Your position in Horizon Protocol is not leveraged, you are actually over-collateralizing a debt position at an 700% ratio to back the creation of synthetic assets. Liquidation occurs when you lack sufficient backing of those synthetic assets. Please refer to the liquidation section.
Collateralization Ratio or C-Ratio is the ratio between your collateral and your debt. Horizon Protocol currently has a target C-Ratio of 700% meaning you need $7 worth of HZN staked to mint $1 zUSD to have a $1 debt. The purpose of the C-Ratio is to ensure that the synthetics produced by Horizon Protocol are sufficiently backed during price fluctuations.
If your C-Ratio drops below 700% you will not be able to claim rewards. You will continue to gain rewards but will need to restore your C-Ratio to 700% by burning zUSD or adding more HZN in order to claim rewards. If you do not claim your rewards after a week, your rewards will be forfeited and redistributed to the following week's reward pool.
Horizon Genesis has preset strategies to help you manage your C-Ratio. Simply clicking the “Aggressive - 700%” preset strategy will automatically calculate how much zUSD you need to burn to return to 700%. You may also manually input how much zUSD you want to burn if you want to maintain a different C-Ratio.
If your C-Ratio goes under 200% - you will be automatically flagged for liquidation. Horizon Genesis has a 3-day grace period to allow you to restore your C-Ratio and clear your liquidation flag before your account becomes available for liquidation. You will need to restore your C-Ratio back to 700% before you're able to clear your liquidation flag.
Please note that clearing your liquidation flag requires a blockchain transaction and is NOT automatic.
No, you never lose HZN when burning zUSD. If your C-Ratio is under 700%, burning zUSD just reduces your debt and increases your C-Ratio. Once your C-Ratio is above 700% you will begin to unstake your HZN when burning zUSD. Reducing your debt to 0 would unstake all of your HZN. Unstaked HZN will become 'transferable' HZN, which is freely usable HZN.
There are 2 reasons this can occur:
- 1.You are under 700% C-Ratio, therefore no HZN will actually become unstaked until you burn zUSD while over 700% C-Ratio.
- 2.All escrowed HZN you have used to stake must be first unstaked before un-escrowed HZN begins to unstake and become transferable.
Your rewards are calculated based on the proportion of your personal debt against the global debt pool. Your proportion of global debt is calculated based on a snapshot of the network taken every Friday around 15:00 UTC.
Your Weekly Rewards = Personal debt/Global debt * Weekly Rewards
To maximize rewards you want to hold more debt and mint with all of your HZN (aggressive 700% strategy). Any price drop from the point of minting at 700% will result in you not being able to claim rewards. You have 1 week, until the next week’s reward period starts, to make sure your C-Ratio is at least 700% and claim your rewards or they will be forfeited and returned to the following week’s reward pool for others to earn.
Maximizing rewards is risky and requires more active management. Do not take on risk that you are not comfortable with.
You have until the next reward period to claim your rewards (7 days from when rewards are claimable). Unclaimed rewards will be redistributed into next week’s reward pool. You can see how long you have left to claim by checking the bottom right of the screen where you will see a timer until the next reward claim period.
The reward claim period coincides with the Horizon Protocol monetary policy, which distributes new tokens on a weekly basis.
In addition, it is very important to maintain the global C-Ratio, therefore, it is critical that stakers are active stakers, re-adjusting their individual C-Ratios at least once a week. Staking in Horizon Protocol is not a stake-and-forget type of system.
Please remember that rewards for the previous week must be claimed before the start of the next reward period or they will be forfeited and redistributed into the next week’s reward pool.
Transferable HZN is HZN that is available to be used in your wallet. You can transfer it or sell it, or keep it in your wallet to increase your C-Ratio. Having a good transferable HZN balance will help you maintain your debt position if the HZN price drops and you need more HZN to be staked. Horizon Genesis will automatically migrate your transferable HZN to become staked HZN in this event.
The main purpose of zUSD to is to use it to trade for other zAssets on Horizon Exchange. These zAssets are an array of synthetic assets representing the crypto and real economy (i.e. zBTC, zETH, zAPPL, zTSLA, etc.)