What is Venus?
Venus Protocol is an automated protocol designed to bring a complete decentralized lending and credit system onto Binance Smart Chain. Venus declares itself a money market and stable coin platform built on top of Binance Smart Chain. Venus can be compared with Aave or Maker of Binance Smart chain.
Venus enables users to earn interest on their assets by supplying cryptocurrencies as a collateral to the network. These tokens are then borrowed by the process of collateralization. This ensures both safety and incentive to users and the network.
Venus aims to solve all the problems and remove the involvement of traditional finance in the DEFI world. They have developed features that are considered unconventional for most DEFI platforms. This excites a larger demographic towards Venus.
Stablecoin backed by Cryptocurrencies
Venus enables the world’s first decentralized stable coin, VAI. This coin is built on Binance Smart Chain that is backed by a basket of stable coins and crypto assets rather then actual US dollars. This ensures that it is completely decentralized and no monopoly exists in their protocol.
Decentralized and Un-Biased
A lot of stable coins are actually backed by US dollars which actually brings FIAT into the play. This process is stable as FIAT currencies are a lot more stable as compared to cryptocurrencies, but somehow eliminates the core concepts of cryptocurrencies which is decentralization.
The decision making on most DEFI platforms is considered biased while there are stakeholders and private equity firms in play. These adversities are technically making them heavily centralized.
Faster and Cheaper!
Venus utilizes the Binance Smart chain for fast, low-cost transactions. This over comes the conventional problem faced by the Ethereum blockchain at the moment which is the heavy fees and slower transaction.
Incentivized on Demand and Supply
Users can supply cryptocurrencies and stable coins and earn a variable APY for providing liquidity the protocol. The liquidity provided is secured by over-collateralized assets locked by borrowers. The interest rate, however is not fixed but based on demand and supply of the particular assets, this can bring some ease for borrowers with lower collateral rates.
Minting stable coins
The Interest for lending assets is earned by the block and can be used as collateral to borrow assets or to mint stable coins. These stable coins can be used on a platform called Swipe. This platform provides virtual and physical debit cards backed by cryptocurrencies. You can spend on more than 60 million locations world wide.
The protocol-created pegged assets when collateral is supplied are called vTokens. Users that supply their cryptocurrency Venus receive a vToken. If you provide Venus BTC you will get vBTC token in return. vTokens are created and implemented by Governance processes and voted by Venus Token holders.
These vTokens can be stored in cold storage, and can transferred to other users.
Governance Token (Venus Token (XVS))
The Venus Protocol is governed by the Venus Token (XVS), which is designed to be a “fair launch” cryptocurrency. There are no founder, team, or developer allocations, and the XVS can only be earned through the Binance Launch Pool project or through providing liquidity to the protocol.
Code and Security
Venus is over all a great platform with still a lot to come. The zero FIAT involvement, protocol governance, better rates and algorithms allows venus to embraces the definition of decentralized in DEFI.