> For the complete documentation index, see [llms.txt](https://docs.helixlabs.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.helixlabs.org/getting-started-on-helix/problem-and-solution-liquidity-vs.-governance-trade-off.md).

# Problem & Solution: Liquidity vs. Governance Trade-off

**Helix Labs enables strategic token holders—foundations, validators, and institutional stakers—to access liquidity from staked positions without unwinding governance participation or triggering sell pressure on native chains.**\
Blockchain foundations and large validators face a critical constraint: billions in staked assets generate network security and governance rights, but accessing liquidity requires unstaking—which means:

* **Weeks of lockup periods** (7-21 days depending on chain)
* **Lost staking yields** during unstaking
* **Governance exit** and voting power reduction
* **Downward price pressure** on native tokens

Traditional custody solutions cannot access staking yields across multiple chains while maintaining regulatory compliance.

### The Solution: Canton Network CDP Protocol

Helix operates **collateralized debt positions (CDPs)** on Canton Network's institutional settlement layer, enabling users to:

1. **Deposit multi-chain LSTs as collateral** (stETH, stADA, stICP, stATOM, stSOL)
2. **Borrow against staked positions** without unstaking
3. **Preserve native staking yields** (3-8% APY continues accruing)
4. **Maintain governance rights** on origin chains
5. **Access institutional lending markets** (LendOS, Canton lending protocols)

**Key Advantage:** Settlement on Canton Network provides privacy-enabled, compliant infrastructure trusted by Goldman Sachs, BNP Paribas, Circle, and HSBC.

***

### How It Works

#### **Step 1: Native Validator Operations**

Helix runs sovereign validators across seven blockchain networks:

* Cardano
* Internet Computer (ICP)
* BNB Chain
* Aptos
* Sui
* Solana
* Ethereum

Users stake assets through Helix validators and receive **Helix Liquid Staking Tokens (hstTokens)**—e.g., hstADA, hstICP, hstETH.

#### **Step 2: Cross-Chain Verification via ICP Chain Fusion**

Helix uses **ICP's Chain Fusion technology** (threshold cryptography + HTTPS outcalls) to provide cryptographic proof that each hstToken on Canton is backed 1:1 by staked assets on its native chain.

**No bridges. No wrapped tokens. No counterparty risk.**

#### **Step 3: Canton CDP Protocol**

Users bring hstTokens onto Canton Network and:

* Lock collateral in Helix CDP smart contracts (Daml)
* Borrow stablecoins (USDC, USYC) or access credit lines
* Deploy borrowed capital across Canton's institutional DeFi ecosystem (lending, repo markets, RWAs)

**Privacy guarantees:** Canton's sub-transaction privacy model ensures portfolio composition remains confidential—only authorized parties see collateral holdings.

#### **Step 4: Dual Yield Generation**

* **Base Layer:** Continue earning native staking yields on origin chains (3-8% APY)
* **Canton Layer:** Earn yields from institutional lending markets (12-18% on Blend protocol)

**Example:** Cardano Foundation stakes 100M ADA via Helix → receives hstADA → collateralizes on Canton → borrows $2M USDC → deploys into LendOS institutional lending → earns dual yield while maintaining ADA governance participation.

***