Before diving into the details, it is imperative to know what Venus protocol is. Venus protocol is a platform that has been developed to provide a completely decentralized finance-based system where one can lend and credit on Binance Smart Chain. The way venus allows its users to make use of their cryptocurrencies is by providing a collateral network that is potentially borrowed by making pledges over-collateralized cryptocurrencies.
This method brings about a safer and more secure lending system where the lender is receiving a compounded interest rate which is paid on every block, whereas the borrower is paying for the interest that is applied on the borrowed crypto. The rates for these interests are marked by the protocol in a curve yield, these rates depend on the demand of the particular crypto, Bitcoin is the perfect example for this. What sets Venus apart from the other money markets is its potential to make use of the collateral provided for not only borrowing various assets but for minting synthetic stablecoins with such positions that are over collateralized and are also acting as a protection to the protocol.
To gain access and advantages of locked collateral, it creates a protocol that enables the common currency market to work with synthetic stable coins. It generally gives access to the high-speed blockchain and lower transactions fee to everyone, it does this by giving leverage to the Binance Smart Chain that supplies collateral, this moreover, earns interest on that collateral. People are also able to borrow on that collateral.
These solutions have taken place on the blockchain. The protocol brings about a lot of money, to be precise, billions of dollars, this too without the need of lending assets. Some of these assets include Bitcoin, Litecoin, and other such cryptocurrencies.
The representation of the collateral is done via vTokens. It enables the users with the opportunity of repurchasing the underlying mortgage on top of taking out a loan. The method that is used to determine the interest rate is by making use of a specific market following the yield curve.
Binance has come up with the latest stablecoin issuance system, what this will do is that it will enable the government and other big organizations to build and set off their asset-backed tokens, it allows you to peg it to whichever fiat currency. This increases the feasibility and ease of use for the individuals, as they can now convert their digital assets to flat currencies and minimize the threat posed by their volatile nature. Venus, an open blockchain project, provides the user with the necessary tools to build a stable coin on Binance Smart Chain.
Yi He, the co-founder of Binance, has set the main objective of this project to give access to the countries with the potential to build a fair and just financial sector. It is believed that the stablecoins will take the place of the common fiat currencies in countries worldwide, and bring balance and a new concept to the digital economy. It will further give utmost technical support, an enhanced method of controlling risks, and will make use of its connections to make sure that it brings regulatory compliance. Over the years, many countries have been reluctant in regulating the use of cryptocurrencies and making them a part of the mainstream economy, but with these developments and advancements, crypto is gaining more relevance in the global economy. Governments are realizing the importance and significance of digital assets in the modern world and how they can assist developing nations to gain maximized profits over a short period of time. Thus, they are now showing technical and legal support towards the use of cryptocurrency in order to promote the concept in their countries.
The main objective of venus protocol was to come up with a decentralized platform that would be a safe and secured marketplace for its user where they can perform activities such as, aggregated lending, earn interest, and stable mining in a secure manner. As it runs completely on Binance Smart Chain, it eliminates any drawback of the Ethereum blockchain. All these benefits bring about a controlled and scalable solution in the marketplace. The uncertain market conditions post imminent threats do the safety and security of users. Hence, Venus protocol is emerging as a reliable and a fairly convenient platform for the users. People can also acquire the services of platforms like swap zone to get their hands on Venus and XVS tokens, as its user friendly nature provides immediate result without consuming any extra time.