Venus (XVS)
| 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
"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
"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), still not (26-4-2022).
- 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.
- Scored 75% on DeFi Safety (26-4-2022):
"This protocol has not undergone formal verification. While they mention they have done this in their documentation, the link they provide is dead."
- Previously scored of 63% (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
"In October, there was an exploit on the cross-chain bridge, BSC Token Hub. This exploit resulted in a 150% increase in BNB liquidity on Venus within minutes. The flaw in the verification process for proofs allowed the exploiter to trick the bridge into transferring 2 million BNB tokens, worth $568.6 million at the time, to their own wallet.
Of this amount, 900,000 BNB were deposited into Venus to borrow a total of $147.5 million in stablecoins including USDT, USDC, and BUSD. In response to the bug, BNB Chain was briefly paused to mitigate the issue and the remaining assets of the exploiter were subsequently frozen. According to blockchain security firm Certik, the exploiter was able to bridge roughly $110.7 million to other chains before the freeze. Despite the negative consequences of the exploit, the influx of BNB deposits came at a fortuitous time. Binance Launchpool and Launchpad took place for the first time since May, which significantly increased BNB demand. During these events, BNB loans originating from Venus generated $4.1 million in interest revenue, and the exploiters' BNB deposit made up 71% of all the available liquidity.
Although the exploiters’ BNB position remains healthy, a liquidation could potentially cause cascading negative effects on the BNB price and BNB Chain users. To avoid this, a member of the BNB Core Dev Team initiated a proposal to whitelist BNB Chain as the sole liquidator of the exploiters’ position to safely offload the outsized volume. Venus Governance executed the proposal with 100% approval."
- 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:
- Adding new cryptocurrencies or stablecoins to the protocol
- Adjusting variable interest rates for all markets
- Setting fixed interest rates for synthetic stablecoins
- Voting on protocol improvements/proposals
- 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 (26-4-2022):
"The relevant contracts are not identified as immutable / upgradeable. Ownership is clearly indicated in this location. It is in the hands of XVS holders who can vote / delegate their vote. Smart contract change capabilities are not clearly identified in any contracts. While votes are specified as possible to occur, it is not clear what the votes parameters are. This protocol's pause control is documented and well explained in this location. There is no evidence of testing. Pause capacities are clearly explained. This protocol has timelock documentation which can be found at this location. A duration is specified and the contracts dependent are identified."
- 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."
DAO
Treasury
"The DAO treasury increased 7% QoQ, the first increase since it began descending in Q1'22. During that time, it has been consolidated into stablecoins."
Token
Launch
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
"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
"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. From DeFi Safety (26-4-2022):
"At 360 commits, this development history has surpassed going to the moon and is currently orbiting Venus."
- Built on: Binance Smart Chain
How it works
"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."
Fees
Upgrades
"Venus was able to end the year on a successful note by reducing emissions by 50% and introducing the Venus v4 upgrade. The Venus v4 upgrade is a comprehensive overhaul that addresses various challenges and enhances the platform’s capabilities. One of its features, the DEX integration, has already been released and enables one-click borrow and repay, eliminating the need for users to switch to a separate application to swap tokens. This streamlines the experience of interacting with borrow/supply markets and vaults and brings Venus closer to owning user relationships. Venus also captures a percentage of the fee volume from PancakeSwap and likely future DEX partnerships for these transactions, providing an additional source of revenue for the protocol.
A stability fee for VAI, another highly anticipated feature, recently passed in on-chain voting and has already been partly implemented. The second part of the implementation (The Floating APY rate) is set to be implemented in early Q1 2023. The stability fee will help keep VAI pegged, providing a more predictable experience for borrowers.
Also included in Venus v4 are two new features that will help users manage the risk of their positions: isolated markets and stable interest rate borrowing. Isolated markets provide an alternative to the cross-margin core pool, allowing for the onboarding of long-tail assets with custom risk management configurations. This helps users diversify risk and better manage the health of their accounts. Stable interest rate borrowing allows users to pay a premium for predictable interest rates, particularly useful during periods of high market volatility when stable loan rates remain fixed and partially reduce the probability of liquidation due to volatility.
One of the most important aspects of Venus v4 is the inclusion of measures to ensure that shortfall risks are covered and managed effectively. When a liquidation does not occur, it can lead to a shortfall caused by various factors such as an oracle issue, high price volatility, or a lack of liquidator participation. To address this, Venus Protocol will maintain a risk fund for each pool that receives 40% of the income generated by that pool in the form of its currency. In the event of a shortfall, the risk fund will be used to recover the bad debt through an auction of the reserve fund."
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
"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."
Scaling
Different Implementations
Interoperability
Other Details
Oracle Method
- Pyth is mentioned as oracle (7-3-2022).
- From DeFi Safety (26-4-2022):
"Venus's oracle is not documented. There is no information in the documentation relating to where Venus gets its price feeds. However, there is a blog post that details that Venus uses Chainlink, though there is no software function documentation explaining this. Venus documents no front running mitigation techniques. This protocol documents flashloan countermeasures. Venus uses Chainlink, which prevents oracle price manipulation and therefore ensures no flashloans attacks can be used on this protocol."
"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
"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.
Their Other Projects
Roadmap
- Can be found [Insert link here].
Usage
"The TVL in Venus markets experienced a drop of 65% in 2022, a trend that mirrored the overall crypto market. The majority of this decline occurred in Q2 due to the LUNA crash and system-wide deleveraging. TVL remained relatively flat thereafter but slightly increased 12% QoQ in Q4 as a result of the BSC Token Hub exploit."
"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."
Projects that use or built on it
Competition
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.
- HasGauntlet as some of their professional delegates (30-11-2022).
Funding
"On top of the $1.3 million in base rewards, XVS stakers received an additional $2.7 million in XVS tokens from protocol revenue distributions in 2022. In Q4, these distributions increased by 34% in USD terms and 56% in token terms. Interest revenues are collected in the treasury over the quarter, and 20% of these revenues are used to purchase XVS tokens. These are distributed proportionally to stakers."
Partners
(:
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