In the world of cryptocurrency, the emergence of stablecoins has brought revolutionary changes to the use of digital assets. Venus (i.e. Venus Protocol), as an emerging decentralized finance (DeFi) platform, has risen rapidly with its unique design concept and strong technical support. This article will delve into the background and functions of the Venus protocol and the significance of its governance token XVS.
Background to the Venus Protocol
In 2019, with the announcement of Libra, Binance also launched the Venus Project in the same year and launched the Venus protocol. The original intention of Venus was to compete with Libra and become a regional version of stable currency. Binance hopes to use Venus to resist financial hegemony and allow more people who cannot use banking services to enjoy the convenience of cryptocurrency. Although Binance puts forward lofty reasons, its core goal is actually very simple:
Use Binance’s accumulated resources to build infrastructure, issue and promote new stablecoins.
After the launch of Libra, Binance took advantage of the policy environment to express its stance to the government and demonstrate its sense of responsibility as a private enterprise.
Launch of XVS Token
After a year of precipitation, Venus officially launched its governance token XVS on September 28, 2020. The launch of XVS marks the official launch of the Venus protocol and has become an important part of the DeFi field. By visiting the Venus official website, users can learn about the Venus application and its white paper, and clearly see the potential of the protocol in the DeFi wave.
Venus core features
The Venus protocol mainly uses the cross-chain technology brought by Binance Smart Chain (BSC) to conduct the following two core businesses:
Cross-chain DeFi lending platform: Venus is regarded as the cross-chain version of Compound or AAVE, and is committed to realizing the function of cross-chain DeFi lending. In this field, cross-chain technology is not a false demand, but a huge blue ocean market. With the booming development of DeFi, market participants have realized that the application of cross-chain technology will be an important part of the future financial ecosystem. Binance Smart Chain is equivalent to the cross-chain Ethereum 2.0 version built by Binance. It is compatible with the Ethereum Virtual Machine, allowing DApps on Ethereum to be easily migrated to BSC.
Cross-chain version of Maker DAO
Venus has also introduced a mechanism similar to Maker DAO, allowing users to generate stablecoin VAI by mortgaging token assets from different public chains. Unlike Maker DAO, which can only use Ethereum assets, Venus supports a variety of public chain tokens, which makes VAI generation more flexible. VAI's design concept is to combine a basket of stablecoins and crypto-assets to form an algorithmic stablecoin designed to be anchored to the U.S. dollar.
VAI's design concept: VAI is the core of the Venus protocol, backed by a basket of stablecoins and algorithmic stablecoins of crypto assets. Its design concept is similar to Libra's initial plan, which once proposed the concept of a decentralized basket of currencies based on public chains. The difference is that VAI does not rely on real currency deposits, but is generated through a combination of weights of various stable coins in cryptocurrency and different public chain tokens.
The advantages of this design are:
Decentralization: The issuance of VAI is entirely based on cryptocurrency and decentralized protocols, ensuring fairness.
Stability: Since the value of VAI is based on a combination of multiple crypto assets, it is relatively less affected by high volatility and therefore can provide a more stable value.
future outlook
As DeFi continues to develop, Venus Protocol is expected to become the largest stablecoin issuer and DeFi lending platform in the future. Through deep integration with Binance, Venus can not only attract a large number of users, but also gain first-mover advantages in technology and market. The governance function of the XVS token will enable community members to participate in the decision-making of the protocol, further promoting the ecological development of Venus.
in conclusion
The launch of the Venus protocol and its governance token XVS marks another important milestone in the DeFi field. Through the application of cross-chain technology and the design of stable currency VAI, Venus not only provides users with convenient lending services, but also lays the foundation for the popularization and application of cryptocurrency. In the future, as the market continues to evolve, Venus is expected to occupy an important position in the global financial system and lead the trend of decentralized finance.
In this era full of opportunities and challenges, the success or failure of the Venus Protocol will directly affect the future development of cryptocurrency. We look forward to Venus bringing us more surprises and innovations.