What is Venus, and what problems does it help to solve?
17 May 2022 by Marlo Pluto
Reading time 4 min
What is Venus, and what problems does it help to solve? Learn about the features of Venus allowing you to borrow, gain interest, generate stabelcoins.
What is Venus?
Venus is a decentralized software that operates as an algorithmic money-market with a synthetically originated stablecoin called VAI. Venus seeks to bring comprehensive DeFi (decentralized finance) lending and borrowing solutions onto Binance Smart Chain (BSC). With Venus, it is possible to lend and borrow funds using XVS and 22 other digital currencies as collateral.
What sets Venus apart from other money-market platforms is the opportunity to borrow a diversity of crypto assets and the ability to mint synthetic stablecoins with over-collateralized positions backed by a bundle of virtual currencies to secure the network. Such an approach helps to create a secure lending platform where lenders gain a compounded interest rate annually (APY) that is paid with every new block added, while borrowers pay interest on the assets borrowed.
What Problems Does Venus Solve?
Venus looks to address notorious problems of the DeFi ecosystem that primarily revolve around poor transaction speed, user-unfriendly interfaces, elevated commissions for transfers, lack of high market capitalization, centrally-controlled compound interest, and the inability to use minor cryptocurrencies to access credit lines.
The platform helps to solve these issues. Venus creates a protocol that allows a regular money market to be synchronized with synthetic stablecoins, which eventually results in accessibility and benefits derived from locked collateral.
Venus also enables anyone to make use of a high-speed and low-fee BSC blockchain by leveraging to provide collateral, gain interest on that collateral and take loans against it, as well as instantly generate stablecoins on-demand. All these events happen directly on the blockchain and may be done through a Graphical User Interface.
The fact that Venus exists on the Binance Smart Chain allows for unlocking billions of dollars in value that are currently on-chains that do not have lending markets such as Bitcoin, Litecoin, XRP, etc. while enabling participants to access liquidity in real-time.
What Are The Key Features Of Venus?
- As a money-market and synthetic stablecoin environment, Venus offers the following functionalities:
- The Venus Token: it is the platform’s governance coin,
- Stablecoin minting: users can generate VAI synthetic stablecoin from their collateral that can be used at over 60 million locations throughout the world via the Swipe platform,
- Crypto & stablecoin lending: supplying the network with liquidity lets Venus participants earn a variable APY that is backed by over-collateralized assets,
- Crypto & stablecoin borrowing:stablecoins and digital currencies can be borrowed without undergoing credit checks right from Binance Smart Chain.
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What Is Venus Token?
The operation of the Venus Protocol is controlled by the Venus Token (XVS).XVS is aimed to be a “fair launch” digital currency because there is no token pre-minting for the founder, teams, or developers of the project. The only way to earn XVS was by participating in the Binance LaunchPool initiative or becoming a liquidity provider of the Venus platform. This also means that this protocol is managed solely by those who decide to mine Venus Tokens.
The Venus platform also has another token variety called vTokens. These tokens represent the unit of the collateral locked and can be utilized as a redemption tool. vTokens are issued and implemented by Venus governance procedures and voted by XVSholders.
Venus Bottom Line
The main goal of the Venus network is to allow its members to operate in a safer and more efficient financial blockchain. Powered by BSC, the project aims to establish a more secure environment for crypto transactions, crypto lending, borrowing, mining, and passive income earning. While doing so, the protocol is also tasked to solve the existing inefficiencies of the DeFi industry.