The De-Fi ecosystem is filled with numerous exciting platforms that allow its users to make the most out of their crypto holdings by participating in their unbeatable offerings to the crypto world.
Today, we will discuss such a fantastic protocol that has taken its core concept from Maker DAO and Compound Finance but emerged as a completely new platform for borrowing and lending crypto assets.
Venus is a simple lending and borrowing platform where De-Fi users can lend their crypto assets to earn interest on them. Users can also borrow assets from the market by paying interest. This in turn creates a fair and secure environment for lending and borrowing of assets.
But, is it only about lending and borrowing of assets and nothing more?
Absolutely No, Venus also allows its users to mint VAI (a stablecoin whose value is pegged to 1 US Dollar) while lending and even borrowing cryptocurrency.
And, it does just not stop right here, there is much more to learn about it.
So, without any further delay let’s jump directly into it.
What is Venus Protocol?
To put it simply, Venus is a De-Fi protocol build on the Binance Smart Chain Network that allows its users to borrow, lend, earn cryptocurrency, mint stable coins, and much more, and that too at much lower transaction fees as compared to other De-Fi protocols that offer the same functionality but build on the Ethereum Network.
Venus aims to bring the entire decentralized financial system which involves lending and borrowing of the crypto assets onto the Binance Smart Chain.
And now, how does it happen? How does venus allow you to do much more at such a low transaction fee?
Well, don’t worry. In this article, I have covered every aspect of using Venus protocol.
Let’s dive in to see how to lend and borrow crypto assets on Venus.
Lending and Borrowing on Venus
Venus allows you to mint its stable coin VAI while earning interest on your supplied assets.
You can easily lend and borrow crypto assets on https://app.venus.io/dashboard by linking your preferred wallet with the Venus app.
Note: I am using Metamask and Venus testnet for illustration purposes. Make sure to have some BNB available in your account to pay the gas fee. Also, remember to buy some assets like USDC, USDT, etc. before stepping into the Venus dashboard.
Also, make sure to set the network as Binance Smart Chain Network in your Metamask wallet to avoid any loss of your funds because of direct cross-chain transfers.
All set? Let’s rock and roll!!
This is how my Metamask wallet looks like before starting with Venus protocol. You can see that I have some BNB available in my account to pay the gas fee with 500 XVS tokens and 5000 USDT.
Now, let’s see how to lend and borrow cryptocurrency on the venus platform.
- Go to https://app.venus.io/dashboard
- You will see a variety of markets available on the Venus Dashboard to lend and borrow crypto assets.
- Scroll down to see your preferred market and click on it to lock your assets.
- I am showing you to lock BNB.
- Enter the value you want to lock and Hit Supply.
- Confirm the transaction in Metamask by paying the gas fee. You will earn the interest on your supplied assets based on the mentioned “Supply APY” on each Vault.
- This is it. You can easily view the change in values on the venus dashboard.
Funds locked within the protocol can earn interest based on the market demand for that asset.
Now let’s see how to borrow assets using the Venus protocol.
- To borrow the funds from the market, switch the asset as collateral by paying a small gas fee.
- Confirm the transaction on Metamask and see the credit limit you have to borrow the asset from the market.
- So, for BNB collateral factor is 80%. It means for every $100 of BNB deposited users can borrow assets of $80. This can be different for different vaults.
- Now, flip it onto the borrow market and choose any assets that you want to borrow. Let’s try to take out USDC against BNB.
- Simply click on the asset, click on SAFE MAX to view the maximum assets you can take out as a loan.
- Hit Borrow → Confirm the transaction on Metamask by paying a little fee and it is done.
- You can check to see the successful credit of USDC in your Metamask account.
- Borrow APY shows the interest that the borrower has to pay for taking out a loan from the market.
- Here is an interesting thing to note that you will get Venus tokens not only for supplying assets to the market but also for borrowing assets from the market.
- Refresh the page to see both the supply and borrow balance on the Venus protocol.
- Now, let’s move further to see how to repay the loan to the market.
- For that, all you need to move quickly to the borrow market, click on USDC.
- Switch on to the Repay Borrow tab → Hit Enable followed by confirming the transaction on Metamask by paying the gas fee.
- Enter the amount that you want to pay, in my case, I am repaying the whole amount at once.
- Again a Metamask popup appears asking you to confirm the transaction.
- Go back to the Venus dashboard and you will see that your borrow amount has been set to zero as you have repaid the loan.
- Now, let’s move on to see the third amazing feature of the Venus protocol which is minting of the stable coin VAI.
VAI is the stable coin of Venus protocol. We can mint VAI in the same way as DAI, which is the stable coin of MAKER DAO. However, the cool thing about minting a stable coin on the Venus protocol to minting it on MAKER DAO is that you can still earn APY on your locked assets while minting which is not possible on MAKER DAO.
- So, to mint VAI, Flip the tab to the Mint section on the Venus dashboard.
- Hit SAFE MAX and it will automatically calculate the maximum limit you have to mint VAI based on the collateral you have. You can also select a lower amount depending upon your choice.
- Click Mint VAI followed by confirming the transaction on Metamask.
- You will see that VAI has been successfully minted and credited to your account.
- Another exciting thing about Venus protocol is that you can even stake your VAI tokens to earn APY.
- To stake VAI, first, enable them by clicking on the enable button in the mint/repay section of the Venus dashboard and confirm the transaction on Metmask by paying a little gas fee in the form of BNB.
- Now, enter the amount of VAI you want to stake and then hit stake followed by confirming the transaction on Metamask.
- And in just a few seconds you will see that your VAI has staked and earning the mentioned APY.
- You can also unstake your VAI by simply clicking on the Withdraw button and confirming the transaction on Metamask.
- Now since you have unstaked your VAI, you can repay VAI by clicking on the repay button in the same section of the venus dashboard followed by paying the gas fee for the transaction. This is because you have minted VAI against your deposited BNB.
This is all you can do while navigating on Venus Dashboard.
Now, Let’s talk about the XVS token.
Holders of the XVS token, which is the Venus governance token, have the power to govern the decisions related to the protocol. Users can earn XVS while supplying assets to the market, borrowing assets from the market, and minting VAI.
XVS holders can vote in the vote section of the protocol. Remember more XVS denotes more governing power of the protocol.
Risks Associated with Venus
Venus is audited by Certik but like every other De-Fi protocol, it also has risks associated with it. However, no major risks have been encountered since its launch. But, it is always advisable to enter into the crypto market at your own risk.
We highly recommend you do your own research on different facts and figures related to the protocol before making any investment. The Crypto market is highly volatile and is prone to malicious attacks from attackers because of the underlying smart contracts. Thus, invest only the amount you can afford to lose.
What are stablecoins?
Stablecoins are cryptocurrencies that are designed to decrease the volatility in the market by making their value pegged to a stable cryptocurrency or fiat money. Venus stable coin, VAI’s value is pegged to 1 USD. Stable coins offer less APY and have low market risk as compared to those tokens with high APY.
What is meant by an over-collateralized loan?
Overcollaterization means a user can borrow a loan from the market depending on the value of supplied collateral. This is used to cover the debts when a user fails to pay the borrowed amount.
For example, if you have supplied collateral of value $100, you can only take the loan of value $80. However, this varies with different vaults but the loan will always be given to you in an over collateralized manner. Your collateral will be liquidated into the market if you fail to repay the loan on time.
How to set your Metamask wallet to operate with Venus?
We all know that Metamask is an Ethereum wallet but it is also capable of interacting with BSC-based Dapps once its network is set to Binance Smart Chain. To do so, follow the steps below:
- Open Metamask
- Go to Network by clicking on the hamburger icon and clicking on settings.
- Click to add network.
- Enter the BSC mainnet details:
Network Name: Smart Chain
New RPC URL: https://bsc-dataseed.binance.org/
Block Explorer URL: https://bscscan.com
- Hit Save and it is done.
Before You Go…
Venus has recently become the fourth project to be launched on Binance Launchpool. Now, users can stake their BNB, BUSD, and SXP to earn XVS. This can also be seen as a partnership that will help Venus to bring more De-Fi users to its platform.
Venus has also introduced a new way of minting stable coins while earning interest on your supplied collateral which was not possible before the launch of Venus. This can also be a big reason for moving most of the De-Fi users to the Venus protocol from that of the protocols built on the Ethereum Network.