This algorithmic money market system could be a faster, cheaper way for users to lend, borrow, and earn a return on their crypto

© Reuters. This algorithmic money market system could be a faster, cheaper way for users to lend, borrow, and earn a return on their crypto

Venus is a Binance Smart Chain-based lending and borrowing platform. Its goal is to enable “simple and powerful community finance for the whole world” by offering what it reports as a faster and cheaper alternative to Ethereum-based money markets like Compound or Maker. It also adds new features that provide users with more ways to generate yield and participate in emerging decentralized financial markets.

Here are some of the things users can do on the Venus Protocol platform.

What Users Can Do in the Venus Protocol Loan and Credit System When users provide cryptocurrencies to Venus, they can use those assets in three ways:

  • Use the assets as collateral for a loan to borrow over 20 different cryptocurrencies.
  • Provide liquidity to the Venus Protocol, earning an annual percentage yield (APY) in return.
  • Synthetic stablecoin Mint VAI

Here’s a quick look at how each of these works for users.

XVS Token users can purchase XVS$ and generate returns by staking them in the Venus Protocol XVS Vault to earn staking rewards. The XVS vault APR is set to a different daily issuance speed each quarter based on the previous quarter’s protocol revenue and the amount of XVS tokens redeemed in the market to be shared among stakers. – for example, the latest XVS vault reward distribution is currently offering users an annual percentage rate of almost 25%. The XVS token is also the governance token of the Venus protocol which is used to vote on DAO governance proposals. (Venus Improvement Proposals)

Borrow Loan Borrowers can borrow any of the supported cryptocurrencies or digital assets and stablecoins in exchange for pledging collateral. Borrowers are limited to borrowing a maximum of between 40% and 80%, depending on the risk assessment for each asset and the value of the collateral they have pledged. In the future, the platform hopes to add sub-collateralized lending capabilities.

The Venus Protocol reports that with no credit check and fast origination, borrowers can get the financing they need when they need it – and without monthly payment obligations and the ability to use As the value of their security for their loan balance appreciates, borrowers can make payments at any time.

Earn Interest by Providing Liquidity The APY variable earned to provide liquidity offers users another way to increase their returns without the risks associated with crypto trading. The protocol works on an algorithmic basis, which means that interest rates are set automatically based on demand in a specific market. When demand is high, for example, rates rise for that asset.

Although rates are variable, interest rates are based on fluctuating demand for different currencies and reward distributions can mean a substantial return, especially for those betting on the native Venus Governance (XVS) token.

The Venus Protocol is Built on the BNB Smart Chain Decentralized financial platforms built on blockchains could redefine the structure of money markets by removing the need for a central authority or third party decision maker. This lowers barriers for borrowers and opens the door for more people to become lenders.

However, many existing decentralized money markets are built on an expensive and slow blockchain that comes with its own barriers to access in the form of high fees and slow transactions – Ethereum takes 13 seconds to create a block compared to to the three of the BNB chain. seconds – and the lack of high market capitalization assets like or .

The BNB chain is fast, inexpensive, and more widely used around the world, with daily transaction volumes exceeding 2.866 million, more than double Ethereum’s 1.025 million. This is what would allow the Venus protocol to offer faster and cheaper transactions to people around the world, possibly opening the door to DeFi for the next billion users.

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James V. Hayes