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Technical Overview

Power-user mechanics: CDP structure, NAV, collateral ratio, rebalancing, and fees. For a plain-English walkthrough first, read How It Works. Terms: Glossary.

Three statements that should never be conflated.

Core mechanics​

Harbor is a decentralized platform for synthetic assets: tokens that track price feeds without custody of the underlying. Each market is a shared collateralized debt position (CDP) with 100% collateral efficiency; the combined NAV of ha + hs equals deposited collateral value (subject to fees).

That is not the same as minting ha 1:1 against collateral alone; hs is the residual equity claim. It is also not the system collateral ratio (collateral value ÷ ha value, e.g. ~130%), which gates rebalancing.

  • Collateral: yield-bearing assets (fxSAVE, wstETH) in the market pool
  • ha (Harbor Anchored): pegged synthetic debt
  • hs (Harbor Sail): leveraged residual claim
  • Health: stability pools rebalance without off-chain liquidators

Users can:

  1. Mint ha (and optionally hs) against shared collateral
  2. Hold hs for protected leverage exposure (Leverage)
  3. Deposit ha into stability pools for yield (Earn)

Protocol architecture​

1. Collateral​

  • Approved yield-bearing collateral per market (fxSAVE, wstETH, …)
  • Collectively managed, not isolated per-user CDPs
  • Global minimum collateralization ratio (collateral ÷ ha, e.g. 130%) for solvency, distinct from mint-time 100% collateral efficiency (ha + hs NAV ≈ collateral)
  • Collateral yield + mint/redeem fees → protocol revenue

Revenue waterfall (per market):

  1. Up to ~5% → Maiden Voyage Yield Share (when eligible)
  2. Remainder → any post–$10M TVL treasury take, then 75% stability pools / 25% buy TIDE

See TIDE Tokenomics.

2. ha (pegged)​

  • 1:1 with oracle reference price
  • Live examples: haETH, haBTC, haEUR (Live Markets)
  • Redeemable; composable ERC-20s
  • Peg maintained via arbitrage + protocol rebalancing

3. hs (leverage)​

  • Residual NAV after ha claims
  • Named by collateral and peg (hsFXUSD-ETH, hsSTETH-BTC, …)
  • No funding fees or margin calls; value moves with collateral ratio
  • Absorbs losses before ha in stress; rebalanced via stability pools

Rebalancing​

When collateral ratio falls below threshold (e.g. 130%):

  1. Protocol enters rebalance-eligible state
  2. MEV searchers execute rebalance txs (incentivized)
  3. ha from stability pools is burned
  4. Pool depositors receive collateral (collateral pool) or hs (Sail pool)
  5. System collateral ratio improves

Both pool types earn yield on ha deposits; rebalance payout differs. See Stability Pools.

Protocol workflow​

  1. Mint: user deposits collateral via minter or zaps; mints ha and/or hs with 100% collateral efficiency (subject to dynamic fees)
  2. Earn: deposit ha into collateral or Sail stability pool; claim rewards
  3. Leverage: mint or hold hs for directional exposure
  4. Rebalance: automated when thresholds hit

Security & audits​

Harbor has a Sherlock Collaborative Audit Report covering bao-base and bao-minter (now Harbor core). Coverage of currently deployed mainnet contracts is partial; post-audit upgrades shipped afterward; zap contracts and some packages were out of scope. See Risk Considerations.