Summary
Venus Protocol is an algorithm-based money market system in BNB Chain. With this system, users can safely borrow and lend cryptocurrencies through a decentralized approach.
After connecting to a cryptocurrency wallet such as MetaMask, everyone can start using this permissionless protocol. The Venus Protocol community owns and controls the protocol through the native governance token XVS, which can be staked in the Venus Protocol Vault to earn token rewards.
Decentralized Finance (DeFi) has begun to provide more More and more conventional services related to traditional finance. With Venus Protocol, users can borrow from asset pools without permission, and collateral providers can benefit from their idle funds.
However, rather than having centralized participants handle transactions, the protocol uses technologies such as smart contracts to automate the process.
Venus Protocol is an algorithmic money market and synthetic stablecoin protocol. Previously, money markets were an important part of an economy's response to demand for short-term loans.
However, Venus is integrating decentralized finance (DeFi) lending into BNB Chain and allowing collateral providers to Collateralize your position to mint the platform’s native synthetic stablecoin (VAI).
Venus Protocol is a fork of Compound and MakerDAO. Both are based on Ethereum. The former is a money market protocol and the latter is a stable currency. Casting protocol. Venus combines these features into one. Regardless of which function users use, they can use the same collateral in the same ecosystem.
We can think of Venus Protocol as a permissionless lending environment. First, in this environment, BNB Chain users with idle cryptocurrency provide collateral to the network. Secondly, users with more needs can borrow and borrow through over-collateralized cryptocurrencies. The lender earns a compound annual interest rate and the borrower pays corresponding interest on the loan.
Lending rates are set by the protocol, and the yield curve changes based on utilization. Interest rates are automatically generated based on demand in specific markets such as BNB or ETH. However, the protocol’s governance process also sets minimum and maximum interest rate levels.
Synthetic stablecoins are minted using vToken, which is the collateral provided by users to Venus Protocol. vToken represents the deposited collateral. For example, users who provide USDT will receive vUSDT, which is later used to redeem the underlying collateral. Users can also use their vTokens to borrow up to 50% of the value of the collateral in the protocol for minting VAI.
The way Venus Protocol determines stablecoin interest rates is different from the way it determines lending rates. The minting rate is fixed and can only be lowered and raised by the protocol's governance process.
Venus Protocol is a global cryptocurrency credit card Founded by the project development team of publisher Swipe, Venus (XVS) was launched in 2020. Since its inception, the goal of the protocol has been to bridge the gap between traditional finance and DeFi in BNB Chain and provide alternative applications that allow users to escape the problems encountered in Ethereum.
Swipe supports the development of Venus Protocol, but does not support developers or founders to pre-mine XVS tokens. Therefore, XVS holders have full control over the protocol and tokens.
Venus Protocol redefines rules based on community preferences. For example, the Venus V2 upgrade includes increasing VAI forced liquidation penalties and introducing fees for VAI minting and platform withdrawals, both of which will be added to the Venus reserve vault. In addition, the upgrade also includes an airdrop of native Venus Reward Token (VRT) to existing XVS holders as rewards.
With Venus Protocol, users can borrow and borrow from asset pools without permission. Users can also use over-collateralized positions to mint stablecoins (VAI) and participate in protocol governance.
User Reserve assets can be loaned and a variety of income earned. Venus Protocol uses smart contracts to create a cryptocurrency lending pool and distributes vTokens to users on a regular basis. In this way, the protocol will unlock unused value that already exists in BNB Chain, but is not as popular in the lending market as Bitcoin and Litecoin.
Venus Protocol uses an over-collateralized lending system that requires borrowers to pledge collateral before borrowing money. For example, assuming that Ethereum's collateral value is 50%, users can borrow up to 50% of their ETH value. They can then have a say in the proportion of collateral through the protocol’s governance process.
However, according to Venus Protocol’s white paper, the collateral value is usually around 40% to 75%. Users must exercise caution, otherwise their positions will be forced to be liquidated if the value of the collateral plummets.
Synthetic stablecoin The minting and redemption of VAI is fixed at $1, but the price can still fluctuate based on supply and demand.
Venus Protocol users can use the remaining collateral from previous vToken deposits to mint stablecoins. In addition, without the intervention of a central authority, anyone can mint stablecoins and use the newly minted stablecoins to earn income from other DeFi projects.
Users It can also affect the future development of Venus Protocol. The protocol is fully controlled by the community through the governance token XVS, a BEP-20 token that can be used for voting.
Users can vote on many protocol-related issues, including making improvements, adding new tokens to the protocol, and adjusting interest rates and reserve allocation time delegation. Venus Protocol also plans to build a product called “Venus Vault”. Through this product, users can lock governance tokens to improve the protocol’s risk resistance and distribute staking rewards.
Venus Protocol helps integrate conventional financial lending services into a blockchain decentralized protocol. This is actually not the first of its kind. Billions of dollars worth of assets have been locked in Ethereum-based DeFi applications.
However, these applications have their own pain points, such as high costs, low network speeds, and lack of cryptocurrencies from other blockchains (Such as XRP and Litecoin, etc.). Unlike many other money market protocols, the Venus Protocol can not only lend and borrow with the provided collateral, but can also be used to mint stablecoins.
In addition, users can earn income from minted tokens. In stark contrast, other protocols lock such tokens in smart contracts, preventing them from benefiting from the underlying asset. With Venus Protocol, users no longer need to transfer personal assets out of the currency market to mint stablecoins.
Different from many mainstream stablecoins, Venus Protocol’s synthetic stablecoins are not supported by traditional financial assets or legal currencies, but are backed by A basket of other cryptocurrencies. Additionally, BNB Chain ensures fast and low-cost transactions while providing a network with wrapped tokens and liquidity.
Venus Protocol combines money markets and stablecoin generation into the same protocol, unlocking collateral to benefit the cryptocurrency ecosystem. In addition, BNB Chain offers these financial products to everyone with a cryptocurrency wallet thanks to its speed and low transaction costs. Today, people around the world can borrow against, earn interest on, provide collateral, and mint stablecoins on demand.
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