Heiko Finance project

5 min readSep 27, 2021

Heiko Finance is the sister network to Parallel Finance. Parallel Finance is a decentralized money market protocol that offers lending, staking, and borrowing in the Polkadot ecosystem.

Parallel Heiko’s Parachain Crowdloan: Everything You Need to Know:

· Heiko, powered by Parallel, is hosting a crowdloan to compete for a Kusama parachain slot.

· Heiko’s crowdloan campaign will be one month and its parachain lease will be one year.

· Contributors will be rewarded with Heiko tokens (HKO) and as high as 5% of the HKO total supply will be distributed (2.5% for current crowdloan and 2.5% for future crowdloan)

Parallel Heiko’s Kusama Parachain Auction

Similar to the relationship between Polkadot and its “canary network” Kusama, Heiko Finance is the sister network to Parallel, and the parachain that we hope to launch on the Kusama blockchain. We are building for a decentralized future that empowers the community to increase capital efficiency, security, and accessibility through our leverage staking and auction lending platform. We are excited to announce that Heiko will be participating in batch 2 of the Kusama parachain auctions.

How to Prepare

If your KSM is currently being used for staking or governance, you will need to unstake them before you can bid. This process takes about seven days, so if you want to be early to the crowdloan, you should think about unstaking sooner rather than later.

How to Participate

To participate in Heiko’s auction bid, KSM holders will need to lock their KSM for HKO via Parallel’s website or Polkadot.js.

Parallel Heiko Token Distribution

Users who want to play a part in Parallel’s future are encouraged to participate in Heiko’s crowdloan. In return, contributors will receive a weighted distribution of up to 2.5% of HKO, Heiko’s governance token. This up to 2.5% will be split among all of the contributors in the parachain auction, and released according to a linear vesting schedule if/when Heiko wins a parachain auction. 400,000 KSM is the max we will raise. If we raise more than the max, the contribution will be capped. We will reward as many as 25 million HKO tokens, and as few as 20 million as the reward for participating in the auction. We have set the max cap for the raise at 400k KSM, so no matter what, every KSM contributed should return at least 50 HKO tokens. The HKO token conversion rate will be determined by this formula:

Reward Rate = total HKO rewards / total KSM contribution

Vesting

The tokens rewarded will be unvested linearly across a one year time frame. This means that every block, a proportion of HKO rewards will be unlocked, and the user can claim them at any time. There is no cliff in the crowdloan vesting, so the distribution will occur evenly, every day and month.

HKO’s Utilities

· HKO token holders are delegated with voting rights and the ability to propose governance action, referenda, network upgrades, council elections, and other parameter adjustments.

· HKO is a native fee token that is required to execute the functionalities and security of the protocol.

· The native token is utilized to incentivize collators and validators, which is the mechanism that powers the decentralized node infrastructure of the network.

· HKO token is utilized to hedge risks, incentivize rewards, and share profits. The insurance parameters are determined by HKO token governance in the event of a slash.

· HKO will be burned whenever a fee is paid on our platform. These fees include money market fees, staking/unstaking fees, transaction fees, and any fees in our future fixed-rate products as well.

· HKO will be added as an incentive for users to stake, lend, and borrow on Heiko.

· Validators will have incentives to hold HKO in order to be whitelisted in our node evaluation schema/algorithm. The more HKO they hold, the better their chances will be of being nominated by our stakers.

Parallel Heiko’s Markets

Leverage Staking

Once launched, Heiko will offer liquid staking on Kusama. On Heiko’s lending interface, users will be able to compound their KSM stake with greater effectiveness than they ever have in the past, with minimal risk. Leverage staking allows you to lend against your staked assets, to earn interest from staking and lending at the same time. In addition, when Heiko receives the user’s KSM, it stakes them to the network by algorithmically nominating the most reliable nodes on behalf of the user. For comparison, with a custodial staking solution like Kraken, users receive a flat annualized yield of 12%. In this instance, the user does not strictly have possession of their coins, because Kraken takes custody of them. Compare this with Heiko, which is noncustodial and tailored to the users needs, offering APYs as high as 20% when leverage staking is added.

Auction Lending

Parachain auctions give users access to early liquidity via incentives, like the HKO given to our crowdloan participants. Heiko’s auction lending module will amplify this dynamic by allowing Heiko users to lend their DOT and KSM to auction participants for a fixed or floating interest rate, and a percentage of future equity to be determined by the project borrowing. If the borrowers win their parachain auctions, they pay their interest rate for the borrowed coins, which are locked for a defined period of time, usually between six months and two years. If they lose, users have the choice of extending their loan until the next parachain auction, or taking their loan back. When the parachain lease period ends, the coins will unlock from the parachain, and be returned to their lenders. Initiating this utility on Kusama will give Heiko and Parallel the go-to-market brand identity as the official auction lending platform, which will in turn attract the leaseholders launching on Polkadot.