Everything about HECTA
HECTA is the vehicle to engage retail investors in the long game of investment thus benefit every participants within Hectagon ecosystem.
Investment is hard, play the long game is hard, especially when all the odd of the market is against the retail investors. So, we design HECTA to make this game easier by respecting the need of parting away while keeping the door open, so you can come back when the rainy day is over.
After the system is initiated, Policy team will sell HECTA with discount and vesting term to build Treasury. The discount is usually 5-10% compared to market price. Price can be much cheaper if the commitment required for buying is high. For example: a HECTA with 6-months vesting term should be cheaper than a 1-week one; a HECTA for sale issued when the market is down should favor buyers more than when the market is up.
To buy HECTA with discount and vesting terms, investors have to send "quote token" to Hectagon Treasury. There are 2 main types of quote token:
These 2 quote tokens serving 2 unique purposes. The LP Token is used to build the Liquidity Pool to facilitate the liquidation rights of HECTA owner. Owning LP Tokens also bring a steady revenue stream to Hectagon Protocol. The stable token can be used for investment.
However, it might be too complex for retail investors to create a LP token so we develop a solution that user can buy HECTA using virtually any BEP 20 (ERC20) tokens. The current UI support a dozen of popular tokens, such as: BUSD, WBNB, etc. In the future, we would let user paste the address of the token they want to pay for HECTA.
Another thing to keep in mind that HECTA price offer in the website is constantly changing. There is an algorithm behind its pricing mechanism to favor a steady stream of revenue instead of unsustainable spike. This algorithm also prevent the whale from take advantage of the protocol by (1) only a small amount of HECTA can be bought once at a time (2) if too much HECTA is bought within a short time then the price will spike. The configuration of the algorithm is depended on the Policy team whose objective is a 6-12 month revenue target.
After user bought, some HECTA will be minted to:
- Pay the buyer when vesting term is over.
- Supplement the Investment Fund and build the Community Reward Pool.
Hectagon Treasury works through a series of events:
- Stake Event happens whenever a user stake their HECTA to receive gHECTA.
- Reward Event happens every epoch (approximately 8 hour). In this event, extra HECTA is minted to distribute to all gHECTA owner by increasing an "Index" number.
- Unstake Event happens whenever a user burn their gHECTA for HECTA.
In Stake Event, user lock his HECTA to receive gHECTA and become a staker. You can think of gHECTA as a saving account. Your number of gHECTA stay the same but the rate (Index) to convert from gHECTA to HECTA increases.
No of HECTA = No of gHECTA * Index
In Reward Event which happens every epoch, the system will reward stakers a number of HECTA accordingly to the total supply of $HECTA. The reward rate will be high at the beginning of every 12 months and reduce gradually to zero. The reward rate will be announced by the Policy team on all Hectagon DAO's channels (Medium, Forum, Discord). Not everyone is going to stake their HECTA so for every staked HECTA, stakers will take extra benefit for every unstaked HECTA. To reflect the above mechanism, the algorithm will adjust the increase of Index number.
Long story short, being early HECTA holder and stake HECTA for a long time equal to a very high APY
In Unstake Event, user "burn" their gHECTA for HECTA. This action will reduce the number of staked HECTA hence favor the remaining stakers in the next Reward Event.
gHECTA represents a part of the Treasury. This statement lead to 2 consequences:
The total value of Hectagon Treasury consists of Investment Fund and all Hectagon Investment would represent the total value of all existing HECTA, similar to the way the Book Value represent value of a company.
HECTA owner can stake HECTA to get gHECTA. gHECTA owner can burn gHECTA to mint NFTs and extract a portion of the Treasury.
This is the mechanism provide some protection to HECTA price against the downside market.
If the HECTA market value (trading on exchanges) is higher than backed value hence holding HECTA is more beneficial than selling. However, if the HECTA market value is smaller than backed value so there would be 2 scenarios that would bring the price back:
- Some parties in the market will realize that HECTA is trading under the book value and they want to buy HECTA to earn this premium. Their actions will make HECTA price going up.
- Or, some sophisticated HECTA owner would want to stake thus getting gHECTA. After that, they can burn their gHECTA to receive the project token. Burning gHECTA with premium increase the scarcity of HECTA hence make HECTA price going up.
HECTA price is up to the market and there is no single one has the authority to decide its price. So, for the designers of the protocol - price is not our main concern. Our main concern is promoting value creation activities, such as: increasing the value of Hectagon's Treasury through perfecting the investment pipeline; encouraging HECTA owner to contribute value to projects; building on-chain social profile for every contributors thus expanding the use-cases of Crypto in the real world.