Add USDT0 as Collateral for $HONEY Minting

Collaterals
1

Summary

This proposal seeks to whitelist USDT0 (USD Tether bridged via LayerZero) as a supported collateral asset in the $HONEY minting system on Berachain. USDT0 is the omnichain extension of USDT, the world’s largest and most liquid stablecoin. Whitelisting USDT0 will enable minting of $HONEY against USDT0 deposits.

Motivation

  1. Strengthen $HONEY’s Collateral Base
  • Collateral options for HONEY are USDC and BYUSD (pyUSD). New assets to mint HONEY can be added through governance.
  • As shown in the attached supply chart, $HONEY circulation has dropped ~90% from peak, limiting its utility and DeFi integration.

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  • Currently, 100% of $HONEY supply is backed by BYUSD, as the USDC supply has run out after persistent outflows
  • BYUSD has limited adoption and liquidity in Berachain and broader DeFi.
  • Whitelisting USDT0 introduces a more accessible and liquid collateral option
  1. Leverage the Rise of USDT0 on Berachain
  • USDT0 on Berachain has grown from ~$2M to nearly $10M TVL, even as HONEY supply shrunk, now stabilizing around $8M.
  • The current utility includes:
    • Reservoir RUSD-USDT0 and Beraborrow NECT-USDT0 Kodiak pools with reward vaults
    • Backstop protocol-owned unincentivized liquidity on Kodiak in USDT0-HONEY and USDC.E-USDT0 pairs
    • Supply / borrow in Dolomite
    • PSM collateral for mint Beraborrow’s NECT
    • NECT-USDC.e-USDT0-HONEY 4-pool on BurrBear
  • Integrating USDT0 into $HONEY minting will tap into this momentum, helping expand HONEY’s utility in swaps, lending, and DeFi integrations.
  1. Align $HONEY with the Global Standard
  • USDT is the dominant stablecoin globally ($140B+ supply). It is the de facto unit of account and preferred settlement currency on both CEXs and DEXs.
  • USDT0 provides a seamless path for omnichain users to bring value into Berachain and interact with HONEY-native protocols.
  1. Unlock Institutional and Cross-Chain Opportunities
  • USDT0 team has expressed interest in expanding support for other assets like XAUT0 (Tether Gold) on Berachain.
  • Whitelisting USDT0 sets the stage for strategic collaboration with the USDT0 team and further Proof of Liquidity integrations.
  1. Benefits for Market Makers and LPs
  • Many liquidity providers on Berachain (e.g. Kodiak) prefer USDT as a quote asset to reflect prices from CEXs.
  • Backing $HONEY with USDT0 will greatly unlock capital efficiency and grow DEX volumes (especially driven by CEX-DEX arbitrage volumes), especially as we onboard bring new CEX-listed assets such as SOL, HYPE, SUI on Berachain.

Specification

Conclusion

USDT0 is the gateway to global stablecoin liquidity. Adding it to $HONEY’s collateral set unlocks growth, composability, and credibility. Let’s take the next step for Berachain’s native stablecoin.

FOR: Add USDT0 as collateral for minting $HONEY

AGAINST: Do not change current collateral configuration

2 Likes
2

FOR:

USDT0 has been gaining significant traction since launch and from our experience we have seen a good uptick in volumes and also a willingness for USDT0 holders to particiapte in DeFi activities. Also think that the volume from having USDT0 collateral should aslo increase fees/revenue generated by honey as there is now another asset that can be arbitraiged via honey.