As the use of cryptocurrencies is on the rise, some people get the need to obtain loans on digital assets. While in the period of centralized exchanges, the bottleneck limitations in the procedure for loans are quite numerous.
There were issues with the KYC process, from background checks on credits to the long wait for confirmations. Also, the finance provider may also reject you.
With the emergence of decentralized finance in cryptocurrency comes the transformation through blockchain-based services. The transactions in Defi are transparent and don’t require third-party authorization.
Despite its enormous benefits, Defi exchanges still have their short fallings. The Ethereum blockchain on which most of the exchanges run lacks scalability. Also, transaction fees are high, but the rates are low, and the blockchain has a poor user interface.
Though those platforms claim to be decentralized, close observation shows that they are not fully decentralized. Then with the onboarding of Venus brings relief to the issues in lending and borrowing on the Defi ecosystem. Through Binance Smart Chain, Venus provides a high-speed transfer to users at a very low price.
This Binance chain-based protocol brings lots of flexibility to crypto loans. It enables investment in collateral, leveraging against collateral, fast minting of stable coins, and interest collection on collateral.
Venus is an exclusive protocol running on Binance Smart Chain that enables lending, borrowing, and credit on digital assets. Venus tends to form a better Defi ecosystem than centralized and even decentralized exchanges in cryptocurrency.
From its operation, Venus permits consumers to invest against collaterals. This investment transacts with high speed at a very low cost. Also, users can mint, with few seconds, VAI stable coins.
The Venus protocol has the following highlights:
We see that exchanges that enable lending on Ethereumblockchain have some problems in their operations. Some of these problems include:
The Venus protocol offers a solution to some of the problems through the following ways:
Venus can give these solutions by providing leverage to the Binance Smart Chain. The blockchain supplies collateral which people are to borrow on. Also, the blockchain earns interest on the collateral. Usually, the collateral is represented through venus tokens.
This empowers the users to repurchase the mortgage on the collateral as they take loans. In this way, you can easily work out the interest rate using a specific market through the yield curve.
As Venus runs on the Binance Smart Chain, its solution has brought billions of dollars to the blockchain. This huge success excludes the lending assets’ need. Some of the assets include Litecoin, Bitcoin, etc.
Venus provides you various ways of benefitting from the platform. Here’s a way you can accomplish that below:
The protocol enables you to deposit supported digital assets and receive an APY for them. These assets can be cryptocurrencies or stable coins. Depositing into any pool provides liquidity for that pool. Borrowers can access the funds in the pools to trade on the market.
Liquidity providers or stakers earn from the interest rates charged to borrowers. The interest rates are variable and determined by the yield curve of that token’s market.
A user that supplies collaterals into a pool becomes a lender for the protocols pool. The smart contract aggregates the total deposited assets. Users can, in turn, borrow part/all of their deposited funds, provided the balance supports the transaction.
Depositing assets to the protocol reward you a token incentive. This synthetic token is in the form of the v-wrapped equivalent of the token (vETH, vBTC, etc.). The vTokens are the only tokens you can use to redeem the underlying asset. Redeeming the underlying protocol enables you to store it in any wallet that supports Binance Smart Chain.
You can also use these redeemed tokens to trade with other tokens.
To participate as a borrower, you have to lend an asset. The token should, however, over-collateralized. They should also make up to 75% of the amount you desire to borrow. The collateral ratio is controlled by the community.
They use the governance mechanism to vote. The valid collateral ratio for withdrawal between 40-75%. For example, if USDC has a collateral of 75%, this means that you can borrow up to 75% of the deposited asset. But, if the asset is below 75%, you can liquidate the assets.
If you are to return the borrowed asset, you have to pay for both the borrowed balance and the interest added.
Venus is a combination of the Compound and MakerDAO cryptocurrency protocols. The inherited features that make up its structure are:
The venus controller smart contract operates like a distributed processor. It is built on the Smart Chain mainnet and also enables interoperability with other smart contracts on the blockchain.
Tokens are not autonomously accepted in Venus. Each accepted protocol must provide its service to specified sectors that have been validated by the Controller terms.
The smart contract accesses whitelist markets by releasing Venus’ help market admin component. The protocol’s connection must be checked on the controller contract until execution.
As a user performs a transaction with the protocol, they are most times interacting with collateral. This collateral is used for leveraging and has dollar values pegged to the vTokens. The leverage value is gotten from the present market situation to operate accurately.
Asset values are gotten from price Oracles, suchlike Chainlink’s Oracle. This Oracle tracks real-time prices and reflects them on the blockchain to be clarified and valid. Owing to the high speed and structure of the Binance Smart Chain, these prices are determined cheaply and effectively.
Presently, there is an impedance on Oracles that are accessed on Ethereum. These issues consist of high transactional fees and activity overloading. Thus making the price feeds economical or effective.
Venus prioritizes community governance. For the development team and its creators, there were pre-created tokens. Consequently, mining the token provides you leverage on how the protocol works. The characteristics of the governance are:
The market rate adjustments.
Interest rates for virtual assets.
The protocol’s execution of newly minted collaterals.
This is a native token for the platform. It is used for governing the network. The Venus token is referred to as the XVS. The token is not pre-mined for the consultants, the team members, and even the foundation. Hence, it has a fair launch.
You can get the Venus token by putting liquidity into the pool or by partaking in the launch pool of the Binance project.
The Venus team has mined 23,700,000 XVS within the past four years. Their average daily mining rate is 18,493. Twenty percent, which is equivalent to 60,000 of the total supply, is used to support the Binance ‘Launchpool’ program.
The remaining token is allocated to the protocol. Thirty-five percent each is reserved for borrowers and suppliers, making a total of 70%. And the last thirty percent is allocated to all the minters of the stable coin.
The Venus team plan to make the XVS the official utility and governance token for the network after mining up to 10 million of its coins. But before then, the Swipe token (SXP) will be used.
Venus’ main strength is its high speed and extremely low transaction costs, which are a direct result of being built on top of the Binance Smart Chain. The protocol is the first to enable users to access lending markets for Bitcoin (BTC), XRP Litecoin (LTC), and other cryptocurrencies to source liquidity in real-time, thanks to its near-instant transactions.
Customers sourcing liquidity using the Venus Protocol do not have to pass a credit check and can quickly take out a loan by interacting with the Venus decentralized application (DApp).
Since there are no centralized authorities in place, users are not restricted by their geographic region, credit score, or anything else and can always source liquidity by posting sufficient collateral.
These loans are provided from a pool contributed by Venus users, who receive a variable APY for their contribution. These loans are secured by the over-collateralized deposits made by borrowers on the platform.
To avoid market manipulation attacks, the Venus Protocol utilizes price feed oracles, including those from Chainlink, to provide accurate pricing data that cannot be tampered with. Thanks to the Binance Smart Chain, the protocol can access the price feeds at a lower cost and with better efficiency, reducing the overall cost footprint of the system.
You can only trade Venus token on one exchange as of Nov. 2020. This single exchange is the Binance. The XVS token is one of the Binance chain tokens. You can store it in Binance supported wallets like Coinomi Wallet, Enjin Wallet, Guarda Wallet, Trust Wallet, Wallet, Ledger Nano S, and Atomic WalletEdge.
The Binance exchange has listed XVS tokens against Binance Coin (BNB), Tether (USDT), Binance USD (BUSD), and Bitcoin (BTC). There are presently no direct ‘fiat on-ramps’ to procure Venus.
The Venues protocol users who wish to purchase XVS token on Swapzone will follow the steps listed below.
The Binance Smart Chain (BSC) secures the Venus protocol. The BSC is a blockchain that supports the EVM (Ethereum Virtual Machine). It runs alongside the Binance Chain. It can continue its operation even when the Binance Chain encounters problems or go offline.
The BSC uses POSA, a proof-of-staked authority, to secure Venus. POSA is a special ‘consensus algorithm.’ It is a unique consensus mechanism that utilizes the aspect of (POA) proof-of-authority and (POS) proof-of-stake. It is made up of twenty-one validators that are in charge of task execution on the BSC.
However, the Venus protocol supplier is secured by an ‘automatic liquidation’ process. This process involves prompt liquidation of borrower’s collateral once it goes below seventy-five percent of their borrowed value. This enables the protocol to pay back its suppliers on time to stabilize the min collateralization ratio.
Venus is among the first networks to build ‘Launchpool’ on Binance. It has a max of 30 million XVS token supply with over 4.2 million of the token in circulation (Nov. 2020). This allows its users to farm XVS tokens by staking various crypto assets like Binance USD (BUSD), Binance Coin (BNB), and Swipe (SXP) tokens.
The project team and others were allocated zero XVS tokens because the project has no private sale or pre-sale. But 300,000 XVS, which is 1% of the total token supply, is reserved as grants for the BSC ecosystem. The 23.7 million XVS tokens left will be unlocked gradually within four years via mining by the Venus protocol users.
As contained in the protocols white paper, XVS borrowers and suppliers shared 35% each, and the 30% left are given to the minters of VAI stable coin.
The market performance of the XVS token is analyzed as follows using the XVS price live data of June 28, 2021.
XVS has a total of 4,227,273 tokens in circulation. The current price is $18.40, with a market cap of USD 188,643,669. The XVS 24-hour trading volume is USD 29,298,219 and a max supply of 30 million.
Image Credit: CoinMarketCap
However, the token recorded its highest price on October 17, 2017, at USD 4.77. While the lowest value ever is USD 2.22 as of 13th October 2020.
The Venus protocol is built on the Binance Smart Chain, not on the Etherereum blockchain. This is why the network operates at a very high speed and very low transaction cost.
It is the first protocol to allow users to use the lending markets for tokens like Litecoin (LTC), XRP, Bitcoin (BTC), and other cryptos for liquidity.
Investors in the venus platform can easily get a loan via interacting with Venus Dapp. They are not limited to their location or credit score since no centralized authority is in place. Users can source liquidity once they have sufficient collateral.
The protocol provides loans from a pool of funds contributed by its users who get variable APY in return for their contribution. The loans are protected by excess collaterals made as deposits by borrowers using the network.
The Venus network uses a price feed oracle to avoid attacks from market manipulation. This oracle provides correct pricing data that is impossible to tamper with.
The main aim of the Venus network is to allow the protocol users to operate in a more secure and healthy marketplace. The team wishes to provide a more reliable platform for transactions like mining aggregated lending and earning interest.
The protocol was built on BSC (Binance Smart Chain) and is void of all challenges associated with the Ethereum blockchain. In this blockchain, user’s welfare and protection are not a top priority because of business volatility dynamics.
However, the Venus protocol is now among the several protocols that aim to solve the Defi challenges. How far it can go with this is what we will find out more about with time.
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