Announcing Four New HIPs: Boosting Liquidity and Streamlining Access

Horizon Protocol
4 min readJun 21, 2023

Today, we would like to share four new Horizon Improvement Proposals (HIPs) designed to strengthen our liquidity pools and maximize the potential of the Ecosystem and Community Fund. These proposals are specifically aimed at boosting liquidity and making community participation more efficient by simplifying our pools.

The HIPs have been carefully sequenced and will intertwine with one another. While we have provided a brief summary for each HIP below, we encourage you to dive deeper into the complete proposals on Horizon Academy for a more thorough understanding.

HIP-7: Utilize the Community Fund for Additional Liquidity

We will allocate 15,000,000 HZN (this number is subject to change) from the community fund towards a dedicated staking wallet. This wallet will not claim the weekly rewards, ensuring that the rewards allocated to HZN stakers will not decrease. Instead, a safe C-ratio above 300% will be maintained to avoid liquidation risk.

Doing so will boost the liquidity of our liquidity pools in anticipation of the launch of highly expected new features like futures, loans, shorting and more, as well as prepare us for additional partnerships such as DEX aggregators.

Increasing the zAsset liquidity on the open market will bring a number of advantages, which will benefit all Horizon Protocol users, including:

  • Reducing slippage for on/off ramps
  • Ensuring more favorable trading
  • Stabilizing the zUSD peg
  • Facilitating more seamless trading for both existing and new users
  • Increasing the protocol’s TVL

HIP-8: Move the zUSD-BUSD and zBNB-BNB Liquidity Pools to Wombat Exchange

We will migrate the zUSD-BUSD liquidity pool from PancakeSwap and the zBNB-BNB liquidity pool from Ellipsis Finance to Wombat Exchange. Consolidating our stable coin liquidity pools into one stablecoin DEX will remove the barrier of having to obtain LP tokens from multiple places. This migration will also reduce the trading fees substantially: the zUSD-BUSD pool from 0.25% to 0.01%, and the zBNB-BNB pool from $0.04 to $0.01. As an added benefit, users will no longer be required to provide equal liquidity for both sides of the pair, making it easier for users to participate. Token pairs on Wombat Exchange will be tradable through DEX aggregators such as 1INCH, making our tokens more easily accessible in the broader DeFi ecosystem.

HIP-9: Redirect HZN from Earn Pools to Wombat Exchange as ‘Bribes’

Redirecting a portion, or all, of the HZN going towards our Earn pools to Wombat’s ‘Bribes’, can provide our users with increased value by leveraging Wombat’s incentives and bribes system. By providing liquidity to our LPs on Wombat Exchange, users will earn the equivalent or greater amount of value in the form of WOM tokens. Additionally, users can earn extra HZN by following Wombat’s incensitve system through staking WOM, and voting with veWOM.

HIP-10: Use zAssets from Community Fund staking to provide liquidity on Wombat Exchange

Should [HIP-7] and [HIP-9] pass, the zAsset liquidity provided from the Community Fund staking (HIP-7) will automatically be generating WOM tokens. This proposal aims to lay out how the WOM tokens will be utilized.

50% of the earned WOM tokens will be locked as veWOM for a period of 6-months and used to vote to direct WOM token incentives for Horizon Protocol liquidity pools. WOM used in this way will also earn a portion of the HZN bribes, which will be redirected back to the community fund. This strategy will help the protocol earn non-HZN based yield while simultaneously reducing the amount of new circulating HZN. Should the ‘Bribe Efficiency’ drop below 100% on a consistent basis, sending the HZN reward distribution to Wombat would not necessarily be a worthwhile endeavor. The community would have to monitor this ratio and work with Wombat to ensure it is economical to do so.

Wombat Exchange

Wombat is a multi-chain stableswap backed by Binance Labs, native on BNB Chain. Its innovative single-sided pool design allows users to swap stablecoins at minimal slippage and stake at maximum yield. Below are some of the benefits Wombat brings:

  • Scalable Equilibrium: Innovate coverage-ratio-based stableswap mechanism to remove scalability barriers, which allows the possibility of achieving 100% capital utilization with no impermanent loss.
  • Slippage minimization: Wombat adopts the asset-to-liability model; slippage is negated until higher transaction amounts and reduced when it occurs.
  • User-Friendly UI/UX: Simple and accessible interface with pure single token pool design.
  • Foundation for DeFi to build upon: A pure single-token pool design enables single-token LP tokens, ideal for borrowing and lending protocols and trading platforms to build on top of.

Horizon Protocol is a DeFi platform that facilitates the on-chain trading of synthetic assets that represent the real economy. Horizon Protocol seeks to provide exposure to real-world assets risk/return profiles via smart contracts on the blockchain.