Overview

Isolated Pools are made up of separate collections of assets with tailored risk management configurations. This design offers users broader opportunities to manage risk and allocate assets to earn yield. Moreover, it prevents hypothetical failures from affecting the liquidity of the entire protocol as they are confined to isolated markets.

Isolated Pools also offer custom rewards for each market in the pool, incentivizing users accordingly.

Isolated Pools Architecture

The Isolated Pools system is based on the PoolRegistry contract. It maintains a directory of isolated lending pools, allows the creation and registration of new pools, and offers getter methods to fetch pool details.

To add a new market to an existing lending pool, the PoolRegistry deploys a JumpRateModelV2 or a WhitePaperInterestRateModel contract, deploying the upgradable VToken for the market before gaining the approval of the market's Comptroller.

User Actions

Users can perform the following actions on any market in a pool:

1. Deposit: Users can deposit an asset, receiving vTokens that correspond to the liquidity deposited. These vTokens accrue interest until they are burned on redeem or liquidated.

2. Borrow: Users can borrow assets, in exchange for locked collateral.

3. Redeem: Users can redeem vTokens for the underlying asset based on the exchange rate.

4. Repay Borrow: Users can repay the borrowed asset and accrued interest.

What is Venus Protocol?

Venus Protocol is a trusted decentralized finance lending and borrowing protocol that's deployed on the BNB Chain. Initially launched in 2020, it combines the stablecoin minting facility of Maker and the algorithmic money markets developed by Compound, providing a simplified user experience and core capabilities in a single application.

How do I interact with Venus Protocol?

Interacting with Venus V4 is straightforward. Supply your chosen asset and the amount to start earning interest. Additionally, once you supply assets, you can also borrow against them. Any interest earned from supplying assets can help offset the interest you accrue when borrowing.

Where are my supplied funds stored?

Your supplied funds are stored in a smart contract on the BNB Chain. The contract's code is public, open-source, and has been formally verified and audited by external auditors. You can withdraw your funds on demand or receive Venus Tokens (vTokens) representing your stake. vTokens are as freely tradable as any other cryptographic asset on BNB Chain.

What is the cost of interacting with Venus Protocol?

Transactions on the Venus V4 protocol require BNB Chain fees, which depend on network congestion and the complexity of the transaction.

Is there any risk?

No platform can be considered entirely risk-free. Risks associated with Venus V4 include smart contract risk and liquidation risk. However, every possible step has been taken to minimize these risks, including making the protocol code public and conducting thorough audits.

What are the key areas Venus Protocol V4 aims to improve?

Venus Protocol focuses on improving three main areas:

• Risk Management: Prioritizing the risk management , Venus introduces new features like Isolated Pools and more sophisticated risk parameters.

• Decentralization: The governance model has been enhanced by introducing fast-track VIPs, role-based access control, and a fine-grained pause mechanism.

• User Experience: The latest version offers an enhanced user interface, a more effective reward system, and isolated lending. Future releases for V4 will feature stable rate borrowing and the Venus Prime Soulbound Token, all aimed at providing a smooth user experience.

What is the Resilient Price Oracle?

The Resilient Price Oracle introduced in Venus V4 fetches prices from multiple sources and validates them, providing a more reliable price indicator and protecting against price manipulations. It supports the integration of new price oracles and allows enabling and disabling price oracles per token.

What are Isolated Pools?

Isolated Pools are a new feature in Venus V4, designed to overcome the limitations of a single core pool. Each Isolated Pool is an independent collection of assets with custom risk management configurations. This setup allows users to better manage their risk and earn yield, while also preventing failures in one market from impacting others.

What is the Risk Fund?

In Venus V4, a risk fund is maintained for each pool. A percentage of the protocol's revenue is deposited into this fund, aiming to counterbalance bad debt and prevent potential market insolvencies.

What changes were made to the governance model in Venus V4?

Venus V4 features a new governance model that introduces fast-track Venus Improvement Proposals (VIPs), role-based access control, and a fine-grained pause mechanism. This new model allows for more agile and accurate decision-making, ensuring the protocol remains competitive and secure.

Overview

The Venus Reward Distributor allows for the configuration and management of rewards for lenders and borrowers, dependent on the user's activity within the associated markets. The addition of one or more reward distributors to a pool is facilitated through the addRewardsDistributor feature, enhancing the protocol's capability to customize distribution rates on a per-market basis.

In the Venus Protocol V4, the reward system has been upgraded to allow for rewards per market and lending activity, as well as the support for multiple reward tokens. This revamp serves to provide further incentives and yield opportunities for users.

Reward Distributor Architecture

The Rewards Distributor system is centered around the RewardsDistributor contract. This contract maintains the functionality to configure, track and distribute rewards to users based on their borrow and supply activities within the protocol. Upon initialization, each RewardsDistributor proxy is associated with a specific reward token and Comptroller, from which point the reward token can be disseminated to users that supply or borrow in the corresponding pool.

User Interactions

Users have a range of possible interactions with the Reward Distributor:

• Supply: Users can supply assets and earn rewards based on the supply speeds set for the reward token.

• Borrow: Users can borrow assets and earn rewards according to the configured borrow speed of the reward token.

• Claim Rewards: Users can claim their accrued reward tokens for individual markets, a feature that significantly reduces gas fees and streamlines the reward claiming process.

Launched in 2020, Venus Protocol (a.k.a. “Venus”) pushed the edges of decentralized finance through its composition of two pre-existing solutions and deployment on BNB chain, lowering the barrier to entry for millions of new users around the globe. By combining the stablecoin minting facility introduced by Maker and algorithmic money markets developed by Compound, Venus simplified the user experience and provided core capabilities that enabled decentralized finance to flourish in a single application. As a result, Venus found remarkable success and quickly rose to be one of the most widely used decentralized applications in web3.

The latest iteration of Venus Protocol, the most trusted and battle-tested lending and borrowing protocol on the BNB Chain, builds on prior successes and lessons learned to improve in 3 key areas:

1. Risk management

2. Decentralization

3. User experience

In doing so, Venus continues to push the boundaries of what's possible within the realm of decentralized finance.

Overview:

Stable Rate Borrowing is a distinctive feature of the Venus Protocol that provides an alternative to variable interest rate loans. Stable-rate loans set their interest rates at issuance until a rebalancing event occurs. This approach shields users who borrow at a stable rate from being affected by individual actions of other users and large fluctuations in the market.

Rate Determination:

The interest rates for stable and variable rate borrowing are determined based on several calculations involving parameters such as utilization rate, stable loan adoption rate, and total supply. For instance, the stable interest rate will include a base premium plus an additional premium that depends on the stable loan adoption rate.

Model Parameters:

The model parameters involved in the calculations include slopes for the variable interest rate, a base rate per block, the optimal utilization rate (kink), a reserve factor, base premium, and other parameters related to stable loan borrowing.

Rebalancing Conditions:

The fixed rate of a stable loan persists until certain rebalancing conditions are met. These conditions involve the utilization rate and the comparison between the market average borrow rate and the variable borrow rate. The stable rate provides predictability for the borrower but may come at a cost of higher interest rates compared to the variable rate.

Overview

The Peg Stability Module (PSM) is a crucial component of the Venus Protocol designed to maintain the value of the VAI stablecoin at $1. It functions similarly to the system provided by MakerDAO for DAI. The PSM contract utilizes two stablecoins: VAI (the target stablecoin) and USDT (used to help maintain the peg).

Features

Convert Functionality:

• Users can exchange VAI and USDT with a "fixed" conversion rate of 1 VAI = $1.

• Users can send VAI to the PSM and receive USDT if enough USDT is available in the PSM.

• Users can send USDT to the PSM and receive VAI, provided that the PSM hasn't reached its maximum allowed minted VAI limit.

No Stability Fee

The VAI minted through the PSM does not accrue any interest or stability fee.

Configurable Parameters:

The PSM contract has three configurable variables set via the Venus Improvement Proposal (VIP):

• feeIn: Fee charged when users send USDT to the PSM.

• feeOut: Fee charged when users send VAI to the PSM.

• maxMintedVAI: The maximum amount of VAI that the PSM can distribute. Conversions that exceed this limit will be reverted.

Fees Sent to Treasury: The collected fees are sent to the Venus Treasury contract in each operation.

Integration with Oracle Price: The PSM considers the USD value of the stablecoin to peg VAI to its value accurately.

Convert Functions

Function swapStableForVAI

This function allows users to exchange the paired stablecoin (USDT) for VAI.

Expected Parameters:

• receiver: Address of the user who will receive the VAI.

• amount: The amount of stablecoin (USDT) the sender wants to convert.

The received stablecoins will be held by the PSM, and the fee specified by feeIn will be sent to the Treasury contract.

This function returns the amount of VAI transferred to the receiver.

Function swapVAIForStable

This function enables users to exchange VAI for the paired stablecoin (USDT).

Expected Parameters:

• receiver: Address of the user who will receive the stablecoin.

• amount: The expected amount of stablecoin (USDT) the user should receive.

The received VAI will be burnt, and the fee specified by feeOut will be sent to the Treasury contract.

This function returns the amount of VAI transferred from the sender (burnt + fee).

Preview Functions

The PSM also offers preview functions that help users estimate the outcome of convert operations:

previewSwapVAIForStable(uint256 stableTknAmount)

Returns the amount of VAI that the sender would transfer (burnt + fee) to receive the specified stablecoin amount.

previewSwapStableForVAI(uint256 stableTknAmount)

Returns the amount of VAI that the receiver would receive after executing the swapVAIForStable function with the specified stablecoin amount.

Integration of the Oracle Price

To protect the value of VAI and consider the USD value of the paired stablecoin, the PSM integrates with the Resilient Oracle. The following rules are applied:

swapVAIForStable (the user sends VAI and receives USDT)

• If the oracle price of the paired stablecoin is below $1, the conversion rate is 1 stablecoin = $1.

• If the oracle price of the paired stablecoin is above $1, the conversion rate is 1 stablecoin = oracle price.

swapStableForVAI (the user sends USDT and receives VAI)

• If the oracle price of the paired stablecoin is below $1, the conversion rate is 1 stablecoin = oracle price.

• If the oracle price of the paired stablecoin is above $1, the conversion rate is 1 stablecoin = $1.

Overview

Key Aspects of the Token Converter

The Token Converter works on four key principles:

1. Distributed and Autonomous: No centralized management or human interactions needed, ensuring a secure and seamless conversion process.

2. Efficient: The system is designed to maximize the amount of specific tokens we receive while protecting against potential risks like sandwich attacks.

3. Streaming: The conversions occur continually, without waiting for scheduled intervals.

4. Transparent: All conversions are publicly recorded in the blockchain, reinforcing our commitment to transparency.

Venus Protocol will offer discounts to incentivize these conversions. This incentive will create arbitrage opportunities in the market, and external agents can potentially gain from these opportunities.

Rational

Before the Token Converter, token conversions were not as seamless and efficient. Venus Protocol needed a system that could constantly convert the received income into specific tokens, with no room for errors or delays.

The Token Converter streamlines the conversion process by allowing key elements in the Venus Protocol, such as the XVSVaultConverter and RiskFundConverter, to autonomously offer token conversions. This solution follows the rules of distributed and autonomous systems, removing the need for human intervention.

Moreover, the introduction of incentives through discounts encourages external agents to take part in the conversion process, thus creating a win-win situation for all. This is in line with the vision of decentralization, where processes are not only transparent but also rewarding for participants.

Architecture

The dashed lines represent transactions initiated by external agents (VIP’s, scripts, arbitrage bots, etc.), and the solid lines represent transfers of funds.

Overview

Venus Protocol's governance relies on participants locking XVS tokens into a vault to acquire voting power for Venus Improvement Proposals (VIPs). A 48-hour timelock period after voting ensures transparency and protection against malicious proposals. However, the initial model's rigidity prompted the introduction of a new governance structure in Venus V4. This upgraded model incorporates fast-track VIPs, role-based access control, and a fine-grained pause mechanism for enhanced flexibility and timely adjustments.

Governance Upgrade

Venus V4 introduces an improved governance structure with the following components:

• Fast-track and Critical VIPs

• Role-based access control

• Fine-grained pause

Fast-track and Critical Improvement Proposals

Venus Governance has now categorized VIPs into three types: Normal, Fast-track, and Critical.

• Normal VIPs encompass significant updates like contract upgrades or changes in access controls.

• Fast-track VIPs deal with risk parameter adjustments such as interest rates or collateral factors.

• Critical VIPs are utilized during emergencies demanding an immediate reaction.

Each VIP type has its unique proposal threshold, timelock, and voting periods, reflecting the potential risk and impact of the proposed changes.

The initial voting and delay periods for these types are as follows:

• Normal VIP: 24 hour voting period + 48 hour delay (+ 48 hour delay to execute commands on networks other than BNB Chain)

• Fast-track VIP: 24 hour voting period + 6 hour delay (+ 6 hour delay to execute commands on networks other than BNB Chain)

• Critical VIP: 6 hour voting period + 1 hour delay (+ 1 hour delay to execute commands on networks other than BNB Chain)

Role-based Access Control

Venus V4 employs a separate Access Control Manager contract that validates access permissions rather than merely verifying the caller as an "admin". This allows certain actions to bypass voting, enabling them to take the fast-track or critical route, or even to be executed directly through a multisig by guardians. It can be particularly useful for implementing borrowing and supply caps, pausing specific market actions, or responding to rapid market fluctuations.

Fine-grained Pause

A fine-grained pause mechanism allows the pause guardian to individually halt any action on any market. Unlike previous versions, where the entire protocol was paused for damage control or protection against attacks, the updated model enables guardians to pause individual market actions like supply, borrow, and enabling collateral, offering greater control and flexibility.

Overview

Venus Protocol is excited to announce Venus Prime, a revolutionary incentive program aimed to bolster user engagement and growth within the protocol. An integral part of Venus Tokenomics v3.1, Venus Prime aims to enhance rewards and promote $XVS staking, focusing on markets including USDT, USDC, BTC and ETH.

Venus Prime Essentials

Venus Prime's uniqueness lies in its self-sustaining rewards system, instead of external sources, rewards are derived from the protocol's revenue, fostering a sustainable and ever-growing program.

Eligible $XVS holders will receive a unique, non-transferable Soulbound Token, which boosts rewards across selected markets.

Prime Tokens:

Venus Prime encourages user commitment through two unique Prime Tokens:

1. Revocable Prime Token:

   • Users need to stake at least 1,000 XVS for 90 days in a row.

   • After these 90 days, users can mint their Prime Token.

   • If a user decides to withdraw XVS and their balance falls below 1000, their Prime Token will be automatically revoked.
2. Irrevocable "OG" Prime Token (Phase 2):

   • To be defined

Expected Impact and Launch

Venus Prime aims to incentivize larger stake sizes and diverse user participation. This is expected to significantly increase the staking of XVS, the Total Value Locked (TVL), and market growth.

Venus Prime intends to promote user loyalty and the overall growth of the protocol. By endorsing long-term staking, discouraging premature withdrawals, and incentivizing larger stakes, Venus Prime sets a new course in user engagement and liquidity, contributing to Venus Protocol's success.

Stake your $XVS tokens today to be eligible for Venus Prime, an exciting new venture in the DeFi landscape.

Technical Reward Details

Reward Formula: Cobb-Douglas function

Where:

Qualifiable XVS Staked:

Qualifiable supply and borrow:

Note: There will be a limit for the qualifiable supply and borrow amounts, set by the staked XVS limit and the market multiplier.

User Reward Example:

Model Parameters

• BTC Supply Multiplier = 2

• XVS Price = $4.0

User Parameters

Qualifiable Staked XVS

Qualifiable Supply and Borrow

User Rewards

Expected Rewards Function

Rewards in the Venus Prime program will automatically increase as a user increases its XVS Stake, so long as the amount staked and market participation fall within the limits outlined in the "Technical Reward Details" section below.

The graph above demonstrates the relationship between an increased XVS staked amount and its effect on market rewards, assuming a constant participation of $2.5K USD in the BTC supply market. This helps visualize how an increase in the staked amount influences the APY.