BNB

Project Insight: What is Venus Protocol

by BSC News

February 4, 2023

chain

Venus Protocol is the largest lending and borrowing protocol on BNB Chain and holds considerable influence across the ecosystem.

Introduction to Venus Protocol

Venus is an algorithmic money market protocol exclusively built on BNB Chain (BSC). Venus Protocol aims at providing lending and borrowing services to BNB Chain, competing with Ethereum-based Decentralized Apps (Dapps) like Compound, Aave, and MakerDAO. 

Venus Protocol has long been one of the largest lending and borrowing protocols on BNB Chain and within the entire Web3 industry. founded in November 2020, it had a successful launch on both Binance Launch Pool and PancakeSwap where users could stake/earn the $XVS token helped to get visibility for the project.

After facing several exploits in 2021, the team used 2022 to rebrand and usher in a new era behind a new team and look. The project launched its V4 updates in November 2022 with significant changes which align for a stronger future.

In this article, we will dive in deep to learn more about Venus Protocol. Let’s go!

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Venus Protocol aims to support these three core features:

  • “Over collateralized” lending, where users can borrow assets of which the value is 75% or lower than the supplied assets.
  • Earn interest by supplying supported collateral assets to the protocol. 
  • The ability to mint VAI, the protocol's default synthetic stablecoin pegged to the value of $1.00.

Lending and Borrowing on Venus

The major product feature of Venus Protocol is lending and borrowing. Venus Protocol allows users to lend and borrow permissionlessly from a pool of digital assets. For lending, users can lend assets and earn yield rewards on the assets they supply. When it comes to borrowing, Venus Protocol employs an over-collateralized loan process that makes the borrower pledge an asset for collateral before borrowing. 

$VAI Stablecoin Minting

Venus Protocol allows users to lend, borrow, and mint assets. Venus enables synthetic stablecoin minting by using vTokens, which comes from the collateral users provide to the Venus Protocol. Users can generate (mint) $VAI tokens, Venus Protocol's synthetic stablecoin pegged at $1.00. $VAI is minted by supplying collateral to the protocol.

vTokens represent the deposited collateral that a person is fronting on the platform in order to borrow. Users can borrow up to 50% of their remaining collateral to mint VAI, the collateral is made up of “V”(wrapped) tokens such as $vBTC. For example, if a user supplies BUSD, they will get vBUSD that can later be redeemed. 

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Governance Token $XVS

Governance is a major part of the Venus Protocol and it has a strong and vocal community. The community plays a central role in helping redefine the rules according to community choices. 

Venus Protocol's native token $XVS acts as its governance token. Holders of $XVS can vote on all kinds of initiatives ranging from adding new assets for collateral to changing parameters on the contract. 

$XVS can be bought but users can also earn $XVS on the platform through ecosystem mining. The maximum number of tokens is set at 30,000,000 $XVS (thirty million), of which 21% were originally distributed via the Binance Launch pool, with the remaining 79% available for ecosystem mining.

Venus Governance Proposal, Whitepapter

Earning on the Venus Mainnet

The Venus Protocol Mainnet launched in November 2020 on BNB Chain, allowing users to earn $XVS by supplying and borrowing the following assets which in turn can be used for minting $VAI stablecoin:

  • Swipe (SXP)
  • Binance Coin (BNB)
  • USDT (USDT)
  • USDC (USDC)
  • BUSD (BUSD)
  • Venus (XVS)

Low fees and fast transfers on BNB Chain make money markets such as Venus more attractive than Ethereum-based platforms. During high-volume days, users may experience transaction fees upwards of $50. Venus solves this issue on BNB Chain, as it allows for under-capitalized users to leverage the negligible fees on BNB Chain.‍

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Community Growth Strategies of Venus:

Venus is building a great community on BNB Chain and keeps building their community with various methods and incentives such as:

  • Conducting AMAs with other BNB Chain projects.
  • Regularly publishing content and news related to the DeFi money market.
  • Hosting and participating in DeFi and blockchain conferences, workshops, and meetups.
  • Partnering with existing BNB Chain protocols.
  • Publishing updates in Medium.
  • Actively communicating with the public via social channels.
  • Creating Governance pools.
  • Launching campaigns surrounding liquidity incentives.
  • Adding new collateral to encourage more communities to participate in the protocol.

Conclusion

Venus protocol is the first lending and borrowing platform on BNB Chain, endorsed by the Binance Launch Pool. Venus has the first movers advantage on BNB Chain money markets, being the first project to launch lending and borrowing. The platform’s frictionless services have attracted many different users, especially with the minting of XVS tokens to bootstrap liquidity.

Venus has already worked to secure its stronghold on BNB Chain. Using resources to its advantage, Venus was able to partner with Binance through their accelerator fund and further collaboration with other crypto projects, such as SwipeWallet.‍

So what are you waiting for, check out their social media and become part of the Venus community!

Where to find Venus Protocol:

Twitter | Telegram | Medium

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