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Launched exclusively on Binance Smart Chain (BSC), Venus Protocol is an algorithmic-based money market system and synthetic stablecoin protocol. It is designed to bring 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.

Users supply collateral to the network that may be borrowed by pledging over-collateralized cryptocurrencies. The lender receives a compounded interest rate annually (APY) paid per block. 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.

What Makes XVS Different?

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 XVS 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.

Is Venus A Good Investment?

Below are the aspects you should consider before investing in XVS:

1.Governance: XVS is essential to the Venus protocol. It is the governance token of the platform and gives users the right to make decisions related to the Venus ecosystem, including changes in platform parameters, rewards, adding new collateral and product improvement. Since there are no pre-mines for developers, founders or the Venus team, it provides XVS token holders with 100% control over the decisions and direction of the protocol. However, the only caveat is that staked XVS holders are ineligible for proposals.

2.USP: Venus lets users utilise high-speed transactions at a low cost by leveraging the BSC to lend or borrow collateral, earn interest on that collateral and mint stablecoins. Users with a significant portion of a stablecoin in their portfolio can buy VAI and deposit it in Venus to earn an annual percentage yield of 9.60% at the time of writing.

3.Hack: Venus protocol was subject to a substantial hack in 2021, with over $200 million in funds removed from the platform.

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