Horizon Protocol is 100 percent community-driven; hence the platform’s native token HZN will exist based on community mining, staking, rewards, grants, bounties, and partnerships.
Once the decentralized autonomous organization-based (DAO) governance is launched, HZN stakers will be responsible for managing critical parts of the protocol, including but not limited to: l Collateralization ratio of zAssets l Staking and Liquidity pool rewards l Liquidity pool farms l Exchange (fees, rewards, burns) l Protocol direction and functional improvements
The entire initial supply of 100 million HZN tokens will be 100% community mined through various staking rewards, partnerships, grants, bounties, and other rewards that can drive the Horizon ecosystem. For this reason, the upcoming mainnet Horizon token (HZN) launch distribution has been revised in the interest of fairness, transparency, and the strength of Horizon in the long term.
Community-driven DeFi ecosystems are focused on involving their users as much as
possible, which means there will be no team and founder’s allocations, or venture capitalist pre-sales. The current circulating supply of HZN is approx. 40% of the initial 100m supply, with 10% allocated to the initial PancakeSwap IFO and 30% to be distributed through community staking rewards over the course of this year. The remaining 60% is locked in a community and ecosystem fund only to be used to further Horizon Protocol and its ecosystem via stabilization of synthetic asset collateralization, market making for synthetic assets, protocol grants, bounties, partnerships, and other community incentives
Roles of HZN on the Horizon Protocol
Horizon Protocol’s core is based on two parts; the collateral backing the synthetic assets (zAssets) and the Oracles that provide a decentralized data transmission between the blockchain and the real economy that replicate the synthetic asset’s price feeds; and therefore, the liquidity, volatility, and each asset’s associated returns/valuation. These two parts combine to allow users to trade synthetic assets against a community pooled collateral and not a counterparty as with most DEXs or CEXs. This allows for no slippage and infinite liquidity up to the total amount of community collateral.
The HZN token acts as the foundation of Horizon Protocol as before traders gain exposure to synthetic assets, they must first stake HZN and mint liquidity for the network. The early stage of growth of Horizon Protocol sees a front-loaded incentive to reward HZN stakers.
Collateralization
Furthermore, the platform’s users can stake the value of HZN as collateral against the value of Horizon Protocol. Users (let’s say nodes) with the highest HZN are considerably more trustworthy to achieve complete decentralization through the DAO model.
A 800%collateralization ratio is issued whenever a user stakes HZN tokens, ensuring enough collateral to prevent price fluctuation of the token.
The collateralization ratio fluctuates in the direction of price fluctuations. Community users who’ve already staked must restore the balance by creating zAssets or burning them to reclaim their tokens.
Upholding community fairness
HZN holders are incentivized to stake their tokens into a community-based liquidity pool that will collateralize the issuance of all zAssets. HZN stakers are rewarded with HZN staking rewards, which is generated from the token’s inflationary monetary policy, and exchange fees from the Horizon Exchange. Each transaction on the Horizon Exchange incurs up to a 0.3% exchange fee that will be distributed to HZN stakers at a rate proportional to their position size within the liquidity pool.
The future of the HZN token
HZN’s value, along with the creation and liquidity provision of zAssets tied to real-world investment instruments. Community participants will reap the rewards from the platform to provide HZN and stablecoins used in backing zAssets to boost ecosystem liquidity.
You can learn more about Horizon Protocol on Twitter and Telegram here.
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