Venus

Venus is an algorithmic money market and synthetic stablecoin protocol launched exclusively on Binance Smart Chain (BSC).

The protocol introduces a simple-to-use crypto asset lending and borrowing solution to the decentralized finance (DeFi) ecosystem, enabling users to directly borrow against collateral at high speed while losing less to transaction fees. In addition, Venus allows users to mint VAI stablecoins on-demand within seconds by posting at least 200% collateral to the Venus smart contract.

VAI tokens are synthetic BEP-20 token assets that are pegged to the value of one U.S. dollar (USD), whereas XVS tokens are also BEP-20-based, but are instead used for governance of the Venus protocol, and can be used to vote on adjustments—including adding new collateral types, changing parameters and organizing product improvements.

The governance of the protocol is entirely controlled by XVS community members, since the Venus founders, team members and other advisors do have any XVS token allocations.

Supplying Assets

Venus Protocol users may supply various supported cryptocurrencies or digital assets onto the platform, which can be used as collateral for loans, supply liquidity and earn an APY, or to mint synthetic stablecoins.

Supplying assets such as cryptocurrencies or digital assets to Venus gives the users the ability to participate as a lender while maintaining the security of collateral in the protocol. Users will earn a variable-based interest rate depending on the yield curve utilization of that specific market. All user assets are pooled into smart contracts so that users can withdraw their supply at any time, given that the protocol balance is positive.

Users who supply their cryptocurrency or digital asset to Venus will receive a vToken, such as vBTC, which is the only token that can be used to redeem the underlying collateral supplied. This will enable users to use these tokens to hedge against other assets or move them into cold storage wallets that support Binance Smart Chain.

Borrowing Assets

Users who want to borrow any of the supported cryptocurrencies, stablecoins, or digital assets from Venus must pledge collateral that will be locked on the protocol. These assets must be over collateralized and will enable up to 75% of that collateral value borrowed. These collateral ratios are determined by the protocol and are controlled through the Governance process, which is documented in this Whitepaper.

Once these assets are supplied, you can borrow based on the collateral ratio of the asset. Typically collateral ratios are set anywhere from 40% to 75%. For example, if Bitcoin has a collateral value of 75%, that means you can borrow up to 75% of the value of your BTC. If the user has $100,000 in BTC supplied to the Venus protocol, that means they can borrow up to 75% of the value. However, if a user’s collateral value drops below 75%, or whichever collateral ratio percentage that a certain asset has, it could cause a Liquidation event, which will be discussed later.

Users will have a compound interest rate that will be applied per block on these assets and have no monthly payment obligations. To return the collateral, the user must pay off their origination balance and compounded interest back to the protocol.

Market interest rates are determined by the specific yield curve that is designated in the contract. Depending on the market utilization, it will determine what the interest rate will be for that specified market.

Synthetic Stablecoins

The Venus Protocol, to start, will enable users to mint VAI (VAI), a synthetic stablecoin based on the price of $1 USD, by using the vTokens from the underlying collateral that they have previously supplied to the protocol. Users can borrow up to 50% of the remaining collateral value they have on the protocol from their vTokens to mint VAI.

Stablecoins on the Venus Protocol can be synthetically designed through Governance and added as a proposal. VAI will be the protocol's default stablecoin that can be minted by collateral already pledged in Venus.

These stablecoins will not have yielded curves that determine their interest rates, which in other protocols are known as stability fees. Interest rates will be determined by the Governance process within the Venus Protocol.

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 LaunchPool project or through providing liquidity to the protocol.

There will be an initial 20% of the total supply of 30,000,000 (6,000,000 XVS) allocated to the Binance LaunchPool project where users can mine (farm) these tokens alongside 1% of the total supply (300,000 XVS) placed aside for the Binance Smart Chain ecosystem grants. The remainder of the supply will be exclusively available for the protocol, which will result in 23,700,000 XVS mined over a period of approximately four years, which begins after the Binance LaunchPool event at a rate 0.64 XVS per block (18,493 per day). The distribution of XVS is based on liquidity mining, where 35% of the daily rewards get distributed to borrowers, 35% to suppliers, and 30% for stablecoin minters.