Token Converters

Only available on BNB chain and Ethereum

The Venus CLI supports making conversions using flash swaps on Pancake Swap to fund the conversion.

The Token Converter Bot shows how to interact with the converters and can be used as a base to build advanced conversion strategies.

Overview

The Venus Protocol generates income in various underlying tokens from interest and liquidation fees, that are then sent to the ProtocolShareReserve contract. The ProtocolShareReserve contract disburses these earnings to number of destinations. The distributions to the converter contracts are listed next.

BNB Chain

Converter

Accepts

Interest Reserves (%)

Liquidation Income (%)

Ethereum Chain

Converter

Accepts

Interest Reserves (%)

Liquidation Income (%)

XVSVaultConverter and every Prime converter are instances of SingleTokenConverter contract.

RiskFundConverter and SingleTokenConverter convert incoming earnings into specific tokens, with RiskFundConverter converting them into RiskFund's convertible base asset and SingleTokenConverters converting them into their baseAsset. Each time a conversion is completed, the resulting tokens are sent to their respective destination addresses.

The following diagram illustrates the flow of funds between contracts and its architecture:

The transfer of funds to and from the ProtocolShareReserve contract are initiated by external agents (permissionless).
The transfers of funds from the Token Converters to their destinations are performed on each conversion. The conversions are performed by external agents (permissionless).
The transfer of XVS from the XVSVaultTreasury to the XVSVault will be performed via VIP.

RiskFundConverter and SingleTokenConverters possess the ability to "facilitate" token conversions for the income they receive, obtaining the desired tokens (base asset) by relying on oracle prices as reference points to accept conversions that external agents will carry out.

Venus encourages these conversions by providing incentives that create arbitrage opportunities in the market, with the expectation that external agents will seize these opportunities.

The diagram below illustrates the connection between income harvesting (the process by which Venus transfers income to the ProtocolShareReserve), distribution (application of the protocol's Tokenomics-defined rules), and conversion (acquiring the required base assets).

Token Converters Destinations

RiskFund already includes the integration with the Shortfall contract. The USDT received in the conversions will be auctioned off in the Shortfall contract.
XVSVaultTreasury accumulates the XVS received in the conversions. Those XVS will be sent to the XVSVault eventually via VIP, which will update also the APR in the XVSVault.
PrimeLiquidityProvider accumulates the Prime funds and distributes them according to the speeds configured via VIP.

`AbstractTokenConverter`

AbstractTokenConverter contract provides required features to configure and convert desired assets. The RiskFundConverter and the SingleTokenConverters extend this abstract contract (that could also be extended by other contracts in the future because it provides these features agnostically).

Configuration of conversions

There will be one configuration per pair tokenAddressIn / tokenAddressOut. Only authorized contracts (Governance) will be able to add or update these configurations. The configuration for a conversion includes:

tokenAddressIn and tokenAddressOut: address of the token accepted by the converter in the conversion, and the address of the token sent to the user/wallet from the converter in the conversion
incentive: percentage used to increase the amount finally sent to the user (see below).
conversionAccess:
- NONE: Conversion is disabled for the pair
- ALL: Conversion is enabled for private conversion and users
- ONLY_FOR_CONVERTERS: Conversion is enabled only for private conversion (see more about private conversions below)
- ONLY_FOR_USERS: Conversion is enabled only for users

For example, in the XVSVaultConverter there would be a configuration entry with these values:

tokenAdressIn: XVS token address (the converter accepts XVS)
tokenAddressOut: BTCB token address (the converter offers BTCB)
incentive: 0 (initially there won't be any incentive)
conversionAccess: ALL (everyone can perform conversions of XVS for BTCB in the XVSVaultConverter)

Incentives

To incentivize conversions we allow an increase in the final amount sent out from the converter contract.

Example:

Given:
- Conversion rate provided by the oracle: 1 XVS = 5 USDC
- Incentive: 10%
If the user sends 1 XVS to the contract, they will receive 5.5 USDC (5 USDC base + 0.5 USDC applying the incentive).

The incentive is applied on the base out amount calculated using the conversion rate, which is based on oracle prices. Incentives will be defined using normal VIP’s, following the Governance mechanism. Each pair of tokens can have a different incentive value. Bigger incentives can be set for converting tokens with lower liquidity, for example.

Interaction with the Token Converter contracts

Get Amount Out

View function getAmountOut(uint256 amountInMantissa, address tokenAddressIn, address tokenAddressOut) returns (uint256 amountConvertedMantissa, uint256 amountOutMantissa), to request the amount of tokenAddressOut tokens that a sender would receive providing amountInMantissa tokens of tokenAddressIn.

Where:

Params:
- amountInMantissa: the amount of tokenAddressIn tokens the sender would provide to perform the conversion. It is defined in terms of the mantissa of tokenAddressIn
- tokenAddressIn: the address of the token provided by the sender to get tokens of tokenAddressOut
- tokenAddressOut: the address of the token to get after the conversion
Returned values:
- amountConvertedMantissa: the amount of tokenAddressIn that would ultimately be transferred from the sender to the contract. This will be the lesser of the converter's liquidity (available with balanceOf(address token)) or amountConvertedMantissa.
- amountOutMantissa: the amount of tokenAddressOut tokens that the sender would receive in that transaction if they provide amountInMantissa tokens of tokenAddressIn. It is defined in terms of the mantissa of tokenAddressOut.

Internally, this function uses:

the oracle to calculate the conversion rate to apply
the configuration for the pair tokenAddressIn / tokenAddressOut, to apply the right discount

There must be a ConversionConfig entry for the pair tokenAddressIn / tokenAddressOut. Otherwise, the transaction is reverted.

The convert functions use this view to calculate how many tokens must be transferred.

Example:

Given:
- There is a configuration entry for the pair tokenAddressIn / tokenAddressOut: XVS/USDC. That means, the contract accepts conversions where the sender sends XVS to the contract, and the contract sends USDC to the sender. This would be a possible configuration in the XVSVaultConverter contract.
- Current liquidity: 100 USDC
- Current conversion rate, given by the oracle: 1 XVS = 5 USDC
- Configured discount: 1%
Invocation 1: getAmountOut(15 * 10^18, address(XVS), address(USDC))
- It means: how many USDC would the sender receive if they would provide 15 XVS to the contract
- Response:
  - amountConvertedMantissa: $ 15 * 10^{18} $ There is enough liquidity of USDC to use 100% of the provided amount
  - amountOutMantissa: $(15 * (5/1) * 10^{18}) * 1.01 = 75.75 * 10^{18}$. That is 75.75 USDC.
    Where:
    15 is the input amount
    1,01 is the application of the discount
    5/1 is the conversion rate given by the oracles
Invocation 2: getAmountOut(25 * 10^18, address(XVS), address(USDC))
- How many USDC would the sender receive if they provided 25 XVS to the contract?
- In this case, there isn’t enough liquidity to convert 100% of the input amount (25 XVS would be 126.25 USDC), so 100% of the liquidity will be the amountOutMantissa, and this function (getAmountOut) calculates the input amount needed to “cover” that amount (taking into account the discount).
- Response:
  - amountConvertedMantissa: $((100 / 1,01) / 5) * 10^{18}$ = 19.80$ Where:
    100 is the liquidity of USDC in the contract
    1,01 is the application of the discount
    5 is the conversion rate given by the oracles
    19.80 is the amount of XVS needed to review the available liquidity
  - amountOutMantissa: 100 * 10^18. That is 100 USDC

Get Amount In

View function getAmountIn(uint256 amountOutMantissa, address tokenAddressIn, address tokenAddressOut) returns (uint256 amountInMantissa, uint256 amountConvertedMantissa), to request the amount of tokenAddressIn tokens that a sender should send to the contract, to receive amountOutMantissa tokens of tokenAddressOut.

Where:

Parameters:
- amountOutMantissa: the amount of tokenAddressOut tokens the sender would like to receive in the conversion. It is defined in terms of the mantissa of tokenAddressOut
- tokenAddressIn: the address of the token provided by the sender to get tokens of tokenAddressOut
- tokenAddressOut: the address of the token to get after the conversion
Returned values:
- amountInMantissa: the amount of tokenAddressIn tokens that the sender has to send to the contract to receive amountConvertedMantissa tokens of tokenAddressOut
- amountConvertedMantissa: the amount of tokenAddressOut tokens that would ultimately be transferred from the contract to the sender if the user sends amountInMantissa tokens of tokenAddressIn to the contract. This will be the lesser of the available liquidity or the requested amount to receive.

Example:

Invocation 1: getAmountIn(40 * 10^18, address(XVS), address(USDC))
- Response:
  - amountInMantissa: $8 * 10^{18}$ (XVS)
  - amountConvertedMantissa: $40 * 10^{18}$ (USDC), equal to the amountOutMantissa param
Invocation 2: getAmountIn(120 * 10^18, address(XVS), address(USDC))
- Response:
  - amountInMantissa: $20 * 10^{18}$ (XVS)
  - amountConvertedMantissa: $100 * 10^{18}$ (USDC), different from the amountOutMantissa param because there is not enough liquidity

Conversions Fixing the Amount In

Function convertExactTokens(uint256 amountInMantissa, uint256 amountOutMinMantissa, address tokenAddressIn, address tokenAddressOut, address to).

Where:

amountInMantissa: the number of tokens (tokensAddressIn) the sender wants to convert
- It’s defined in the mantissa of the tokenAddressIn Example: -amountOutMinMantissa: the minimum amount of tokenAddressOut tokens the sender is willing to receive in the conversion. It’s defined in the mantissa of the tokenAddressOut.
- If the amount that would finally be transferred to to is less than amountOutMinMantissa, the transaction is reverted
tokenAddressIn: the address of the token provided by the sender to perform the conversion. For instance, in the XVSVaultConverter and in the RiskFundConverter there will be configurations to accept XVS and USDT token addresses respectively
tokenAddressOut: the address of the token the sender wants to receive with the execution of the conversion
to: the address where the tokens of tokenAddressOut should be sent

The received tokens (amountInMantissa) are transferred, in the same transaction, to the destination address. The destination address is configured as a storage attribute in the AbstractTokenConverter contract.

If the received amount is less than amountInMantissa or the transferred out amount is less than the expected one, the transaction is reverted because we don’t support tokens with fees on transferring in this function.

There must be a ConversionConfig entry for the pair tokenAddressIn / tokenAddressOut. Otherwise, the transaction will be reverted.

What if there is not enough liquidity?

The contract will send to to 100% of the available liquidity, and it will only transfer from the sender the needed amount to cover the conversion (that will be less than the amountInMantissa) It must satisfy the constraint of sending more than amountOutMinMantissa
See the second invocation example in the section Get amount out

Conversions Fixing the Amount Out

Function convertForExactTokens(uint256 amountInMaxMantissa, uint256 amountOutMantissa, address tokenAddressIn, address tokenAddressOut, address to).

Where:

amountInMaxMantissa: the maximum amount of tokenAddressIn tokens that the sender wants to convert. If the needed amount is greater than this param, the transaction is reverted
amountOutMantissa: the exact amount of tokenAddressOut tokens that the sender wants to receive in the conversion
tokenAddressIn: the address of the token that the sender is providing to complete the conversion
tokenAddressOut: the address of the token that the sender wants to receive in the conversion
to: the address where the tokens of tokenAddressOut should be sent

If the received or the transferred out amounts are less than the required amounts, the transaction is reverted, because we don’t support tokens with fees on transferring in this function.

There must be a ConversionConfig entry for the pair tokenAddressIn / tokenAddressOut. Otherwise, the transaction will be reverted.

This implementation of this function can use the getAmountIn function internally because the same liquidity check is needed. If the amountConvertedMantissa amount is less than the param amountOutMantissa, the transaction is reverted. This constraint is similar to checking that the liquidity of tokenAddressOut is less than amountOutMantissa.

Private Conversion

Private Conversions aims to maximize the conversion of tokens received from the ProtocolShareReserve contract (to any converter) among existing converters in the same ConverterNetwork contract. This is done to preserve incentives and reduce the dependency on users to perform conversions. Converters will autonomously carry out Private Conversions whenever funds are received from ProtocolShareReserve. No incentives will be provided during this process.

The following diagram illustrates the flow of private conversion.

RiskFundConverter

The RiskFundConverter contract extends the AbtractTokenConverter contract. It maintains a distribution of assets per comptroller and assets. ProtocolShareReserve sends the RiskFund's share of income to this contract which will convert the assets and send them to the RiskFund contract.

SingleTokenConverter

The SingleTokenConverter contract extends the AbtractTokenConverter contract. ProtocolShareReserve distributes the income share among various SingleTokenConverter contracts, such as the USDTPrimeConverter contract. This particular contract facilitates the conversion of assets to its base asset and subsequently sends them to their designated destination address.

Users can convert tokens through these contracts(RiskFundConverter and SingleTokenConverters) and receive the converted tokens along with an incentive. A conversion config for the tokenAddressIn / tokenAddressOut pair is necessary for a successful conversion; otherwise, the conversion will revert.

XVSVaultTreasury

One instance of XVSVaultTreasury is configured as the destination address in the XVSVaultConverter. This treasury is used to fund the XVSVault.

ConverterNetwork

This contract contains the list of all the converters and will provide valid converters which can perform conversions. Converters will interact with this contract to get the list of other converters open for Private Conversions.

Last updated 1 month ago