In real world money market has the lending and the borrowing based on the collateral. And there are players who invest and also borrow for their own financial cashflow. This concept is getting popular in the crypto world too. In such case it comes under the DeFi protocols.
Ethereum blcokchain started the smart contract concept that has been heavily used in the lending and borrowing market of the blockchain finance. Ethereum has plenty of protocols that allow one to lend the money and borrow the funds. In case of Binance smart chain there is a Venus Protocol that does the same function.
In this post, I wish to discuss how the Venus Protocol works and how it is being in demand for the BNB chain for variety of market making opportunities.
What is the Venus Protocol? How does it work?
In Binance smart chain, Venus Protocol is a money market protocol that works for the lending and borrowing the cryptocurrencies. It also allows the minting of the stablecoins in the system. The best part about the blockchain is that it has fast transaction system. It also allows the users to take out the loans on their cryptocurrency and that would not require any form of the background check.
Venus protocol has it's own XVS token. And it can be used to mint the stablecoins too. And you would be using that to get the rewards out of the staking, liquidity rewards and minting stablecoins. It is also market's 2nd largest lending protocol that has the 30% of the total value locked in it of the market share. It supports variety of stablecoins and the cryptocurrencies on it's platform for lending market. You can check out the whitepaper document here.
What are the key functions of the Venus Protocol?
Venus protocol has been built using the BNB chain. And it combines the traditional finance and decentralized finance. It has 4 components - lending, borrowing, stablecoin minting and governance. Lending market would be working just like traditional lending system where you have multiple crypto coins that you can lend to the DeFi and your lending would earn you the XVS token which can be later minted for stablecoin.
Borrowing also works based on the crypto coins supported by the platform. It also has the low fees and fast transaction fees on the chain. As the system like this would also require the governance, that too is setup on the platform for which XVS token is being used. You can even access the Venus protocol through the Metamask and the trustwallet which you can easily use for your wallet app with internal feature.
What is the future of financial lending services on chain work?
Traditional market has the lending and the borrowing system that would allow the users to move the funds with some background check and also the tax system and the variety of hassles come in between. But the DeFi market has made this change very easily in such a way that it helps the screening redundant. Here the crypto lending is done without any personal data.
As you can see Venus protocol has the 2nd largest market share lead. And it allows XVS token to be minted through stablecoins. It has literally large portfolio of the stablecoins listed and it is in 75 percent of the total value locked of the market. This proves that there is a strong future for such type of the protocols on the chain.
In short there is going to be massive growth of such lending and borrowing protocols in upcoming future on the blockchain.
Venus protocol's lending and borrowing is one of the most valuable project on the Binance Smart Chain. The way it has made the traditional lending on the blockchain, there is a strong future for the DeFi lending protocols in multiple chains and their respective bridges.