Venus (XVS)

Venus

Type	algorithmic money market and synthetic stablecoin protocol
Total supply	30 million XVS tokens
Website	https://venus.io/

Algorithmic money market and synthetic stablecoin protocol. Aka the MakerDAO of BSC

Basics

• Based in:
• Announced on: 28-9-2020
• Mainnet release: 29-9-2020
• From The Block (28-9-2020):

"Binance has unveiled a new “decentralized” stablecoin system called Venus. The system is built on the Binance Smart Chain and will mint the decentralized stablecoin called VAI, backed by a basket of various BEP-20 tokens (BEP-20 is Binance's token standard). The Venus protocol can be seen as a mixture of MakerDAO and Compound, said Binance CEO Changpeng “CZ” Zhao".

History

• From The Block (28-9-2020):

"The protocol is developed by Swipe Wallet, which Binance acquired earlier this year for an undisclosed amount. Binance first revealed a project called Venus last August. At the time, Binance said Venus would be a "regional version of Libra.""

• From this article (29-9-2020):

"According to a tweet by Joselito Lizarondo, founder of Swipe Wallet and Venus Protocol, the BSC-based platform is a fork from Compound (COMP) and Maker (MKR).

In September 2019, BEG reported Binance’s Venus project launch as a government-friendly replacement of Facebook-led stablecoin, Libra. But the Venus Protocol was clear to say that this wasn't the same as the open project from Binance."

Audits & Exploits

• Bug bounty program exists according to their docs (16-2-2021). DeFi Safety couldn't find any info on it however (7-6-2021)
• From their docs:

"The Venus protocol was developed with a specifications of security principles, and formally verified by Certik Foundation, which is integrated into Venus continuous integration system." Their docs also link towards a Certik audit.

• Got a score of 63% on DeFi Safety (7-6-2021): "Certik did an audit on them on December 16th, 2020. From this come a 70% score. The Certik audit does not seem to have looked at the financial environment at all. It just looks at superficial code aspects. As such it offers minimal value. For this reason the score is dropped 20% to 50%. Venus.io was launched on the Binance launchpool September 29th, 2020. Governance is easy to find. Score 15+0+10 = 25%:

a) Contracts are implied as upgradeable in the timelock section --15% b) Type of ownership is not clear -- 0% c) Minimal information implied about changes -- 10%. Documentation of a "Pause Guardian" which is capable of disabling protocol functionality, used only in instances of unforeseen vulnerability." With the comment: "Our highest scorer on BSC but still not a pass.  Good tests, ok testing but a weak audit.  With some extra work this can pop over 70% "

Bugs/Exploits

• According to Risk DAO, it had the highest Bad Debt of all DeFi, with $81.63M across 1132 insolvent accounts (13-6-2022).
• Had a liquidation incident during the crash of 19-5-2021. All funds and the protocol were safe according to Venus itself. From The Defiant (20-5-2021):

"When the XVS token suddenly spiked in value, borrowers were able to use it as collateral at the new, vastly increased $140+ price point. Then, when the price dropped, many of those XVS loans became under-collateralized, triggering the $200M liquidations.

But because the price swings were so huge, some borrowers realized they would be better off permanently defaulting on their loan, keeping the tokens they borrowed and permanently losing their now-diminished XVS collateral. This resulted in Venus getting stuck with over $100M in “bad debt,” or debt that will never be paid back.

In an analysis thread posted on Twitter, The Block researcher Igor Igamberdiev said the XVS’ price swing and the resulting liquidations were the result of price manipulation due to XVS having low liquidity on Binance, where most of the trading occurred. Igamberdiev pointed to two traders who left the majority of the bad debt.

Venus will deploy its grant program and utilize XVS to cover the system shortfall. The XVS from the grant program will be leveraged with oversight from the Venus Team or directly traded to a partner with a long-term hold agreement, and will not be sold into the market."

Governance

• From this article (29-9-2020):

"The protocol is governed by its governance token, XVS, which allows users to vote on issues on the platform such as adding collateral assets, initiating product developments, and major changes on Venus. At the start, Swipe wallet’s native token, SXP, will be used for governance “until there’s enough quorum of XVS mined to be sufficiently decentralized,” Lizarondo said."

• From the whitepaper (27-11-2020):

"The Controller smart contract deployed on Binance Smart Chain is the decentralized version of a processor. This smart-contract creates all the interactions between other associated smart contracts. Venus does not natively support tokens by default. It will rely on specific markets to be whitelisted within the Controller contract. The protocol has access to whitelist markets by utilizing the admin function: supportMarket with parameters for address and interest rate models. For an asset to have a functional marketplace, there must be a valid price feed from the Value Oracles alongside a Collateral Factor. Every interaction with the protocol will be verified and validated through the Controller smart contract, which validates liquidity and collateral before a function is executed. Governance features include:

1. Adding new cryptocurrencies or stablecoins to the protocol
2. Adjusting variable interest rates for all markets
3. Setting fixed interest rates for synthetic stablecoins
4. Voting on protocol improvements/proposals
5. Delegate protocol reserve distribution schedules"

• From their docs (16-2-2021):

"The Venus protocol is governed and upgraded by XVS token-holders, using three distinct components; the XVS token, governance module (Governor Alpha), and Timelock. Governor Alpha is the governance module of the protocol; it allows addresses with more than 300,000 XVS to propose changes to the protocol. Addresses that held voting weight, at the start of the proposal, invoked through the getpriorvotes function, can submit their votes during a 3 day voting period. If a majority, and at least 600,000 votes are cast for the proposal, it is queued in the Timelock, and can be implemented after 2 days."

Admin Keys

• From DeFi Safety (7-6-2021):

Governance is easy to find. Score 15+0+10 = 25%:

a) Contracts are implied as upgradeable in the timelock section --15% b) Type of ownership is not clear -- 0% c) Minimal information implied about changes -- 10%. Documentation of a "Pause Guardian" which is capable of disabling protocol functionality, used only in instances of unforeseen vulnerability."

Token

Token allocation

• From this article (29-9-2020):

"Venus does not include any VC pre-mined tokens or team allocation funds in a bid to fully decentralize the project. The VAI token is a multi-collateralized stablecoin offering cross-chain collateral with other crypto assets based in the BEP-20 format.

A total of 20% of the mined XVS tokens will be allocated to the Binance launch pool, 1% to the Binance Chain Ecosystem, and the rest will be distributed to the miners. A total of 30 million XVS governance tokens will be mined by May 2024."

• From the whitepaper (27-11-2020):

"The remainder of the supply will be exclusively available for the protocol, which will result in 23,700,000 XVS mined over a period of approximately four years, which begins after the Binance LaunchPool event at a rate 0.64 XVS per block (18,493 per day). The distribution of XVS is based on liquidity mining, where 35% of the daily rewards get distributed to borrowers, 35% to suppliers, and 30% for stablecoin minters."

Utility

• From this article (29-9-2020):

"The protocol is governed by its governance token, XVS, which allows users to vote on issues on the platform such as adding collateral assets, initiating product developments, and major changes on Venus. At the start, Swipe wallet’s native token, SXP, will be used for governance “until there’s enough quorum of XVS mined to be sufficiently decentralized,” Lizarondo said."

Token Details

• From CMC (16-2-2021):

"VAI tokens are synthetic BEP-20 token assets that are pegged to the value of one U.S. dollar (USD), whereas XVS tokens are also BEP-20-based, but are instead used for governance of the Venus protocol, and can be used to vote on adjustments—including adding new collateral types, changing parameters and organizing product improvements."

Stablecoin

VAI

• From The Block (28-9-2020):

"The system is built on the Binance Smart Chain and will mint the decentralized stablecoin called VAI, backed by a basket of various BEP-20 tokens (BEP-20 is Binance's token standard). The Venus protocol can be seen as a mixture of MakerDAO and Compound, said Binance CEO Changpeng “CZ” Zhao.

"VAI is minted by the same collateral that is supplied to the protocol. Users can borrow up to 50% of the remaining collateral value they have on the protocol from their vTokens to mint VAI," said Binance. "The collateral provided to Venus will be represented by vTokens (such as vBTC) which will enable users to redeem the underlying collateral as well as to borrow against it."

Technology

• Whitepaper can be found here (27-11-2020).
• Code can be viewed here.
• Built on: Binance Smart Chain

How it works

• From CMC (16-2-2021):

"The protocol introduces a simple-to-use crypto asset lending and borrowing solution, enabling users to directly borrow against collateral. In addition, Venus allows users to mint VAI stablecoins on-demand within seconds by posting at least 200% collateral to the Venus smart contract.

Venus suppliers are protected by automatic liquidation measures, which will automatically liquidate the collateral of borrowers if it falls below 75% of their borrowed amount—thereby reimbursing suppliers early to maintain the minimum collateralization ratio."

Staking

• From this article (29-9-2020):

"The platform allows over-collateralized lending with 75% or lower of the assets supplied on the Venus Protocol and interest-earning on collateral supplied. Users can also stake their vTokens (e.g., vETH) to mint VAI stablecoin, which is pegged to the dollar at a ratio of 1:1."

Liquidity Mining

• From CMC (16-2-2021):

"Venus was one of the first platforms to conduct a Launchpool on Binance, which allowed users to farm XVS by staking different assets including Binance Coin (BNB), Binance USD (BUSD) and Swipe (SXP) tokens. A total of 20% of the total supply (6 million XVS) was allocated to the Binance Launchpool, and the token was listed shortly after on the Binance spot exchange platform."

• From the whitepaper (27-11-2020):

"The remainder of the supply will be exclusively available for the protocol, which will result in 23,700,000 XVS mined over a period of approximately four years, which begins after the Binance LaunchPool event at a rate 0.64 XVS per block (18,493 per day). The distribution of XVS is based on liquidity mining, where 35% of the daily rewards get distributed to borrowers, 35% to suppliers, and 30% for stablecoin minters."

Oracle Method

• From CMC (16-2-2021):

"To avoid market manipulation attacks, the Venus Protocol utilizes price feed oracles, including those from Chainlink to provide accurate pricing data that cannot be tampered with."

Compliance

• From CMC (16-2-2021):

"Customers sourcing liquidity using the Venus Protocol do not have to pass a credit check and can quickly take out a loan by interacting with the Venus decentralized application (DApp). Since there are no centralized authorities in place, users are not restricted by their geographic region, credit score or anything else, and can always source liquidity by posting sufficient collateral."

A side-note is that Venus runs on top of Binance Smart Chain, which runs on top of the Binance Chain, which has centralized components. Therefore Binance can always re-org tx on top of it.

Roadmap

• Can be found [Insert link here].

Usage

• From Decrypt (11-2-2021):

"Binance Smart Chain (BSC) is starting to match Ethereum (ETH) on some key network numbers—but it’s all dependent on one single application, according to DappRadar’s report published today. “In January BSC reached new heights in terms of transaction volumes and unique active wallets. If the trend continues in February, BSC might become the number one blockchain in terms of transaction volume,” the researchers summarized. In January, the total transaction volume on BSC amounted to $15 billion. This is up considerably compared to previous months. Venus (XVS) is responsible for over 90% of the total transaction volume."

Competition

• Lending protocols and stablecoins such as Compound and Maker, from which it forked.

Pros and Cons

Pros

• Fast and cheap.

Cons

• Built on top of a permissioned blockchain.
• Not innovative but a fork of other projects (2-2021).

Team, Funding, Partners

Team

• Full team can be found [here].
• Developed by Swipe Wallet, which got acquired by Binance.

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