Stellar Integration (Parallel Track)

Helix brings external L1 liquid staking token (LST) liquidity into Stellar's DeFi ecosystem, solving capital fragmentation across blockchain networks.

The Opportunity

Stellar hosts institutional-grade DeFi infrastructure with:

• Deep stablecoin liquidity (Circle USDC, Stellar native assets)

• High-yield lending markets (Blend Protocol: 12-18% USDC APY)

• Tokenized RWAs (Franklin Templeton BENJI: $496M, WisdomTree funds)

• Fast settlement (3-5 second finality)

• Low transaction costs ($0.00001 per transaction)

However, Stellar's DeFi protocols lack access to $50B+ in external LST liquidity locked on Ethereum, Cosmos, Solana, and other L1 blockchains.

Helix solves this by channeling cross-chain LSTs into Stellar via Axelar and Chainlink CCIP bridge infrastructure.

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How It Works

Step 1: Multi-Chain LST Issuance

Users stake assets through Helix validators on their native chains:

• Ethereum → Stake ETH → Receive hstETH (Helix Staked ETH)

• Cosmos → Stake ATOM → Receive hstATOM

• Solana → Stake SOL → Receive hstSOL

• Cardano → Stake ADA → Receive hstADA

Each hstToken represents: ✓ 1:1 backing by staked assets on native chain ✓ Continuous staking yield accrual (3-8% APY) ✓ Preserved governance rights on origin chain ✓ Cryptographic proof via ICP Chain Fusion

Step 2: Cross-Chain Bridge to Stellar

Helix uses Axelar and Chainlink CCIP to transfer LSTs to Stellar:

Bridge Security:

• Axelar: Decentralized validator network with cryptographic verification

• Chainlink CCIP: Defense-in-depth security architecture with multiple verification layers

• Helix Verification: ICP Chain Fusion provides additional proof-of-reserve layer

Step 3: Collateralized Lending on Stellar

Once LSTs arrive on Stellar, users can:

Deposit LSTs as collateral → Smart contracts lock tokens Borrow Stellar assets → Receive USDC, XLM, or other assets Deploy capital → Lend on Blend, trade on Aquarius, access RWAs Earn dual yield → Base staking yield (3-8%) + Stellar DeFi yield (12-18%)

Step 4: Liquidation Protection

Helix implements oracle-based liquidation mechanisms:

• Price feeds: Chainlink oracles track LST/USD prices

• Collateralization ratios: Configurable (default: 150-200%)

• Liquidation engine: Automated position closure if collateral falls below threshold

• Liquidation incentives: 5-10% bonus for liquidators

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Use Cases

Use Case 1: Foundation Treasury Management

Problem: Cosmos Foundation holds 50M ATOM staked for network security but needs $5M operational liquidity.

Traditional Solution: Unstake ATOM → 21-day unbonding period → Lost staking yield → Downward price pressure

Helix Solution:

1. Stake 50M ATOM via Helix → Receive 50M hstATOM

2. Bridge hstATOM to Stellar via Axelar

3. Deposit hstATOM as collateral → Borrow $5M USDC (150% collateralization)

4. Continue earning ATOM staking yield (8% APY)

5. Deploy borrowed USDC for operations or lend on Blend (15% APY)

Outcome: Foundation maintains governance position + staking yield + operational liquidity

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Use Case 2: Institutional Yield Arbitrage

Problem: Asset manager wants exposure to ETH staking yields but also wants to capture Stellar's high USDC lending rates.

Helix Solution:

1. Deposit ETH via Helix → Receive hstETH (earning 3.5% staking APY)

2. Bridge hstETH to Stellar

3. Collateralize hstETH → Borrow USDC at 50% LTV

4. Lend USDC on Blend Protocol (earning 15% APY)

Return Profile:

• Base yield: 3.5% on ETH staking

• Levered yield: 15% on 50% borrowed capital = 7.5% additional

• Total effective yield: ~11% on ETH position

• Maintains ETH governance rights and staking position

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Use Case 3: Validator Liquidity Without Exit

Problem: Solana validator operator has $20M in staked SOL but needs $2M to expand infrastructure.

Helix Solution:

1. Stake SOL via Helix → Receive hstSOL

2. Bridge hstSOL to Stellar

3. Collateralize hstSOL → Borrow $2M USDC (200% collateralization)

4. Use capital for infrastructure expansion

5. Repay loan over 12 months while continuing to earn SOL staking commissions

Outcome: Validator expands operations without reducing network security commitments

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Integration with Stellar DeFi Protocols

Blend Protocol (Lending)

Helix LSTs serve as approved collateral assets in Blend's lending pools:

Supported Collateral:

• hstETH (Ethereum staking)

• hstATOM (Cosmos staking)

• hstSOL (Solana staking)

• hstADA (Cardano staking)

Borrowable Assets:

• USDC (Circle native)

• XLM (Stellar native)

• BENJI (Franklin Templeton tokenized fund)

• Other Stellar-based stablecoins

Interest Rate Mechanism: Blend's algorithmic rate model adjusts based on utilization:

• Low utilization (0-40%): 5-8% APY

• Medium utilization (40-80%): 8-15% APY

• High utilization (80-100%): 15-25% APY

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Aquarius (DEX)

Helix LSTs provide liquidity to Stellar's leading decentralized exchange:

Liquidity Pools:

• hstETH/USDC

• hstATOM/XLM

• hstSOL/USDC

• Multi-asset pools with RWA tokens

LP Incentives:

• Trading fee share (0.3% per swap)

• Liquidity mining rewards (Aquarius AQUA tokens)

• Potential Helix governance token incentives (future)

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RWA Protocols

Cross-chain LSTs can be paired with tokenized real-world assets:

Franklin Templeton BENJI:

• Collateralize hstETH → Borrow USDC → Purchase BENJI (U.S. Treasury fund)

• Return: ETH staking (3.5%) + Treasury yield (5.2%) = 8.7% combined

WisdomTree Tokenized Funds:

• Use LST collateral to access equity, commodity, or bond exposure

• Maintain crypto staking position while gaining TradFi diversification

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Technical Architecture

Soroban Smart Contracts

Helix deploys the following smart contracts on Stellar's Soroban platform:

1. Collateral Vault Contract

// Manages user deposits and collateral tracking
pub struct CollateralVault {
    pub user: Address,
    pub collateral_token: Address,  // e.g., hstETH
    pub amount: i128,
    pub collateralization_ratio: u32,
    pub borrowed_amount: i128,
    pub last_update: u64,
}

2. Liquidation Engine Contract

// Monitors collateral ratios and triggers liquidations
pub struct LiquidationEngine {
    pub oracle_address: Address,
    pub liquidation_threshold: u32,  // e.g., 150%
    pub liquidation_bonus: u32,      // e.g., 5%
}

3. Oracle Integration Contract

// Fetches price feeds from Chainlink oracles
pub struct PriceOracle {
    pub asset_pair: String,         // e.g., "hstETH/USD"
    pub chainlink_feed: Address,
    pub last_price: i128,
    pub last_update: u64,
}

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Bridge Architecture Diagram

Security Model

Multi-Layer Security

Layer 1: Bridge Security

• Axelar's decentralized validator network (60+ validators)

• Chainlink CCIP's defense-in-depth architecture

• Multi-signature threshold requirements for asset transfers

Layer 2: Proof-of-Reserve

• ICP Chain Fusion cryptographic verification

• Real-time attestation that LSTs on Stellar = staked assets on origin chains

• Auditable on-chain proofs

Layer 3: Smart Contract Security

• Soroban formal verification capabilities

• Third-party security audits (OpenZeppelin, Trail of Bits)

• Bug bounty program ($500K reward pool)

• Time-locked admin functions

Layer 4: Economic Security

• Over-collateralization requirements (150-200%)

• Automated liquidation mechanisms

• Oracle price feed redundancy (multiple Chainlink feeds)

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Roadmap & Milestones

Phase 1: Testnet Deployment (Month 1-2)

✓ Deploy Soroban smart contracts to Stellar testnet ✓ Integrate Axelar testnet bridge ✓ Implement Chainlink oracle price feeds ✓ Test liquidation engine mechanics

Deliverable: Functional testnet demo with mock LST deposits

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Phase 2: Security & Audits (Month 2-3)

✓ Complete third-party smart contract audit ✓ Conduct economic attack simulations ✓ Implement rate limiting and circuit breakers ✓ Bug bounty program launch

Deliverable: Audited contracts ready for mainnet

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Phase 3: Mainnet Launch (Month 3-4)

✓ Deploy production smart contracts ✓ Activate Axelar/CCIP mainnet bridges ✓ Onboard first liquidity providers ✓ Integration with Blend Protocol

Deliverable: Live mainnet protocol with $5-10M initial TVL

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Phase 4: Ecosystem Expansion (Month 4-6)

✓ Add additional LST collateral types (hstADA, hstSUI) ✓ Aquarius DEX liquidity pool integration ✓ Franklin Templeton BENJI integration ✓ Governance token launch (optional)

Deliverable: $50M+ TVL, multiple DeFi protocol integrations

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Economics & Incentives

Fee Structure

Borrowing Fees:

• Protocol fee: 0.5% on borrowed amount (paid to Helix treasury)

• Interest rate: Determined by Blend Protocol's algorithmic model

• Liquidation penalty: 5-10% (split between liquidators and protocol)

Bridge Fees:

• Axelar cross-chain transfer: ~$5-10 per transaction

• Chainlink CCIP: Gas costs on origin and destination chains

• Helix bridge coordination fee: 0.1% of bridged amount

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Revenue Model

Helix Protocol Revenue Sources:

1. Borrowing protocol fees: 0.5% on all loans originated

2. Bridge coordination fees: 0.1% on cross-chain LST transfers

3. Liquidation revenue: 1-2% of liquidated collateral value

4. LP fees: Share of trading fees from Aquarius/Soroswap pools

Projected Revenue (Year 1):

• $50M TVL × 50% utilization = $25M borrowed

• Protocol fee revenue: $25M × 0.5% = $125K annually

• Bridge fee revenue: $100M total volume × 0.1% = $100K annually

• Total: $225K+ Year 1 protocol revenue

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Strategic Partnerships

Stellar Development Foundation

• SCF Build Award grant recipient

• Technical collaboration on Soroban optimization

• Co-marketing for cross-chain liquidity narrative

Axelar Network

• Preferred bridge partner for multi-chain LST transfers

• Joint developer documentation

• Cross-ecosystem liquidity mining programs

Chainlink Labs

• CCIP integration for asset bridging

• Oracle price feed infrastructure

• Security best practices consultation

Blend Protocol

• First-party lending market integration

• Co-designed collateral acceptance standards

• Joint liquidity incentive programs

Franklin Templeton

• Integration with BENJI tokenized fund

• Institutional client referrals

• RWA collateral expansion roadmap

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Risk Disclosures

Bridge Risk Cross-chain asset transfers rely on Axelar and Chainlink CCIP security. While both are battle-tested protocols, bridge exploits remain a vector of attack in DeFi.

Smart Contract Risk Soroban contracts undergo third-party audits, but cannot be considered completely risk-free. Users should only deposit amounts they can afford to lose.

Liquidation Risk Volatile market conditions may trigger liquidations. Users must monitor collateralization ratios and add collateral if needed.

Oracle Risk Price feeds depend on Chainlink oracle accuracy. Extreme market volatility or oracle failures could cause incorrect liquidations.

Regulatory Risk Cross-chain DeFi protocols operate in evolving regulatory environments. Compliance requirements may change over time.