Venus (XVS) is a utility token issued by a money market system that was developed to bring a fully decentralized finance lending and credit system on the Binance Smart Chain (BSC). BSC is a blockchain that works in parallel to the Binance Chain and plays the same role for Binance as Ethereum Virtual Machine for Ethereum.
Venus protocol is an algorithmic money-making protocol created for BEP-20 assets. That means that it was developed for one platform only. The customers can use their cryptocurrencies after supplying collateral to the network and borrow against the collateral without a credit check. Venus protocol helps to bridge traditional lending and decentralized protocols on top of blockchains. As billions of dollars are locked now on-chains devoid of lending markets (BTC, XRP, LTC, etc.), the potential of the project is really huge.
The project was announced on September 28, 2020. At the time of writing, the customer base of the platform has 18,000 users, while the total value locked in the system has already exceeded 2 billion USD.
The main goal of the team is to bring a high-class environment to the ecosystem. Venus tries to connect the current money market and synthetic stablecoin generation to make the locked collateral accessible so that users could get benefit from it. BSC follows the step of decentralized Ethereum-based projects but wants to perform it better and avoid the issues encountered by the rival platform such as slow work and high cost of transactions. Also, the platform was designed to avoid the centralization problem that is still a challenge even for decentralized projects.
The testnet of Venus Protocol was launched in October 2020, while the official launch of the platform took place at the end of November. At that time, 6 cryptocurrency assets were available for users: SXP, USDT, BUSD, XVS, USDC, and BNB. Since then, more cryptocurrency assets have been listed on the platform, so the service has expanded its offerings considerably. The mining mechanism is applied for the creation of new tokens which are distributed among the members of the community.
The platform actively supports its users and attracts new followers. For instance, in January it announced airdropping in BNB gas fees. The reward was given to the first 5,000 new users of the service who could deposit any amount of BNB to the wallet to get the reward.
The platform offers high-speed, affordable transactions via leveraging BSC to supply collateral, earn interest on it, borrow against it, and mint stablecoins right on the blockchain. The minted stablecoins can be used around the world at more than 60 million locations via the Swipe platform.
The Venus protocol is a forked codebase of two popular decentralized protocols Compound and MakerDAO connecting the features of both platforms. The consensus algorithm that secures the blockchain is unique. It is a hybrid of proof-of-stake and proof-of-authority algorithms, hence this is proof-of-stake authority, also called POSA. At the time of writing, the consensus is supported by 21 validators.
The protocol employs the Controller smart contract, which is a decentralized version of a processor. There is no native support of tokens in the system, which resorts to market regulation instead of it. However, these markets should be whitelisted within the Controller contract. The high functionality of the marketplace is ensured by a valid price feed that is received from the Value Oracles.
The Venus Protocol helps to mint a synthetic stablecoin VAI by using vTokens from the collateral supplied by them. Instead, they can borrow any amount that doesn’t exceed half of the collateral in value.
It’s worth mentioning that there are no underlying reserves of fiat money behind the value of the synthetic stablecoin on the Venus protocol. It fully depends upon the market with its collateral basket and the safety scheme enabling pegging of 1:1 to the synthesized currency, for instance, 1 VAI is initially equal to 1 USD. The protocol employs the programmatic mechanisms for the protection of the initially established peg. If something goes wrong, there is a special governance process that initiates the Price Adjustment Module. It sets different parameters with the system to disattach the peg and affect the supply and demand conditions to return the stability to the token.
The protocol sets a collateral ratio for each synthetic stablecoin, which should have a definite liquidation price and a penalty ratio, establishing a penalty percentage to be paid by users.
Being entirely governed by the Venus Protocol, XVS isn’t allocated to the members of the team, advisors, etc. Therefore, it is fully controlled by the community. It’s possible to earn XVS by providing liquidity to the protocol via the Binance LaunchPool facility that received 20% after the allocation of tokens, while the rest were allocated to the protocol and divided among minters, liquidity suppliers, and borrowers. The first group of users gets 30%, while the other two get 35% each. According to the protocol, the distributed assets are released within 4 years.
It’s necessary to have 300,000 XVS to make a proposal on new assets, which should ultimately reach 600,000 XVS to get approval. It’s also possible to decide on the rates of synthetic stablecoins and other issues.
Customers can stake funds into BUSD, SXP, and BNB pools for farming XVS, and unstake them at any time. They can choose another pool for staking. It is also allowed to stake assets into different pools at the same time. The tokens can be stored in a cryptocurrency hardware wallet SafePal that was developed thanks to the Binance investments.
The platform was developed by the team of the Swipe project. Swipe is a crypto-fiat gateway enabling cryptocurrencies spending in real-time. The project has a debit card and wallet that enable fast conversion of assets. The CEO of the Venus project is Joselito Lizarondo who makes much effort to develop and promote the ecosystem of the Venus project. In 2019, he founded Swipe and took the position of CEO in the company.