What is Venus Protocol? Is it Good?

 

The Venus Protocol is an algorithmic money market platform built solely on BNB Chain (BSC). It aims to offer lending and borrowing services to BNB Chain, acting as a rival to Decentralized Apps (Dapps) like Compound, Aave, and MakerDAO that are based on Ethereum.

Since its inception in November 2020, Venus Protocol has been a major player in the Web3 lending and borrowing market, particularly on BNB Chain. It was able to garner a lot of attention through its launch on both Binance Launch Pool and PancakeSwap, where users could stake and earn the XVS token.

In 2021, the team experienced some security issues, so they used 2022 to revamp and start a new chapter with a fresh team and appearance. In November 2022, their V4 updates were released with considerable modifications that will create a stronger future.

This article is going to provide a comprehensive look at Venus Protocol. Let's get started!

The Venus Protocol has been designed to provide three primary functions:

• Lending with an "over collateralized" approach, allowing borrowers to pledge assets worth up to 75% of the loan.
• Receive interest by supplying collateral assets to the protocol.
• Issuing VAI, the protocol's synthetic stablecoin pegged to the value of $1.00.

Transactions of Lending and Borrowing on Venus

The process of lending and borrowing on Venus is a common occurrence. This is done through a variety of means, such as banks, private lenders, and online platforms. Each of these forms of lending and borrowing come with their own set of rules and requirements. 

It is important to understand these before taking part in these transactions as it can have a significant impact on one's financial situation.

The primary capacity of Venus Protocol is lending and borrowing. It permits users to acquire or loan out digital assets permissionlessly from a pool. 

By lending, customers can provide assets and earn return on the assets they supply. With borrowing, Venus Protocol uses an over-collateralized loan approach which requires the borrower to provide collateral before borrowing.

VAI Stablecoin Minting

Venus Protocol makes it possible for users to borrow, lend, and issue assets. Synthetic stablecoin minting is enabled by vTokens, which are derived from the collateral made available to the protocol. Through the Venus Protocol, users are able to generate VAI tokens. These are pegged to the value of $1.00 and are generated by inputting collateral into the protocol.

By depositing collateral on the platform, users can generate vTokens as a form of security. This allows them to borrow up to 50% of their remaining collateral to mint VAI. 

For example, when someone supplies BUSD, they will receive vBUSD which can be exchanged back later.

The picture shown here is a visual representation of the idea that global collaboration is essential for progress. It is clear that working together can help us achieve more than working in isolation. We need to come together and embrace our collective strengths to move forward.

Token for Governance Purposes, XVS

Venus Protocol incorporates a significant element of governance, and a vibrant, vocal community is the key element in making changes to the rules in accordance with the collective's wishes.

The native token of the Venus Protocol, $XVS, serves as its governance token. Those with $XVS are allowed to vote on various initiatives, from including new assets as collateral to altering parameters on the contract.

The limit of $XVS that can be attained has been set at 30,000,000 (thirty million). Of this, 21% was allocated to the Binance Launch pool while the other 79% can be earned through ecosystem mining. Users can also purchase XVS on the platform.

Making a Profit on the Venus Mainnet Platform

In November 2020, the Venus Protocol Mainnet was released on the BNB Chain, providing users with the opportunity to gain $XVS by contributing and borrowing the assets needed for creating the $VAI stablecoin.

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

The cost efficiency and quick transactions possible on BNB Chain make it more desirable than Ethereum-based markets for money exchange. On days with heavy trading activity, transaction rates may reach as high as $50. 

Venus, however, offers a solution to this problem on BNB Chain, allowing users with limited resources to take advantage of its minimal fees.

Strategies to Facilitate Expansion in Venus:

Venus is creating a thriving community on the BNB Chain and is continuing to grow it with a variety of techniques and rewards such as:

• Holding conversations with other BNB Chain projects in the form of AMAs.
• Consistently providing content and news on the DeFi money market.
• Participating in and organizing DeFi and blockchain-related conferences, workshops, and meetups.
• Collaborating with current BNB Chain protocols.
•  Posting updates on Medium.
• Constantly engaging with the public through social media channels.
•  Establishing Governance pools.
• Launching initiatives to incentivize liquidity.
• Introducing new collateral to inspire more people to join the protocol.

In Summation

Venus protocol is the inaugural lending and borrowing platform on BNB Chain, having been endorsed by Binance's Launch Pool. It is the first of its kind on the BNB Chain to offer money markets, and has drawn in many users due to its convenient services, with XVS tokens also being minted to stimulate liquidity.

Venus has already established a strong presence on BNB Chain. Leveraging its assets, the company was able to join forces with Binance's accelerator fund and link up with other crypto projects like SwipeWallet.‍ [pc]

source: BSC News