GENERAL INTRODUCTION
Berachain’s native stablecoin, HONEY, captures value through a single Representation value capture mechanism, however, its technical implementation is a bit more involved. This mechanism is implemented through a few smart contracts: the HoneyToken contract manages the minting and burning of HONEY tokens; the HoneyFactory contract facilitates the mint-and-burn process, interacting with vaults like USDCVault and BYUSDVault to handle collateral; and the HoneyFactoryReader contract provides users with preview data for minting and redemption operations. The detailed workflows for HONEY’s Representation VCM implementation will be explored below.
THE REPRESENTATION IMPLEMENTATION
The Representation VCM for Berachain’s HONEY token is implemented through HoneyToken, HoneyFactory, HoneyFactoryReader, and ERC-4626 vault contracts. As illustrated in the diagram, the workflow begins with users querying the HoneyFactoryReader contract using functions like previewMintHoney or previewRedeemHoney to estimate the collateral needed or HONEY required for minting or redemption, aligning with the Representation Origin of Value (OoV) by ensuring a predictable exchange ratio. The HoneyFactoryReader then accesses HoneyFactory state variables like mintRates and redeemRates, and calls methods such as getWeights and isBasketModeEnabled via the queryData interaction to fetch necessary data for these previews.For minting, users deposit USDC or BYUSD into the HoneyFactory by calling the mint function, which transfers collateral to the respective USDCVault or BYUSDVault using the deposit method, converting assets into shares. The HoneyFactory then invokes the mint function on the HoneyToken contract, issuing HONEY to the user, completing the receiveHONEY step. For redemption, users deposit HONEY into the HoneyFactory using the redeem function, which burns the HONEY via the burnHONEY interaction by calling burn on the HoneyToken contract, and subsequently redeems the corresponding collateral from the USDCVault or BYUSDVault using the redeem method, returning USDC or BYUSD to the user as part of the redeemUSDC/BYUSD step.
- Honey Mint Amount
honey_to_mint = vault_shares * mint_rate
- Mint Fee
fee_shares = vault_shares - honey_to_mint
- Vault Shares Redeem Amount:
vault_shares_returned = honey_to_redeem * redemption_rate
- Redemption Fee:
fee_shares = honey_to_redeem - vault_shares_returned
Key Contracts:
- HoneyFactory: Core logic for minting and redemption process.
- HoneyFactoryReader: Core logic for data query.
- HoneyToken: Core logic for HONEY.