What Is BENQI (QI)?
The BENQI Liquidity Market (BLM) protocol enables users to effortlessly lend, borrow, and earn interest with their digital assets. Depositors providing liquidity to the protocol may earn passive income, while borrowers are able to borrow in an over-collateralized manner. The Liquid Staking (BLS) protocol is a liquid staking solution that tokenizes staked AVAX to grant users the ability to utilize the yield-bearing asset within Decentralized Finance applications.
Decentralized Finance (DeFi) has grown substantially in the last few years. As most of DeFi’s activity is currently conducted on Ethereum, the network has started to experience congestion problems that have resulted in high network fees. This has proven to be a significant barrier for both old and new users with smaller capital to justify engaging in DeFi.
BENQI aims to alleviate these problems by providing a suite of DeFi products on a highly scalable and decentralized platform. With a focus on approach-ability, ease of use, and low fees, aims to democratize access to decentralized financial products by providing users.
BENQI Storage Key Points
|Circulating Supply||325,692,000.00 QI|
|Source Code||Click Here To View Source Code|
|Explorers||Click Here To View Explorers|
|Twitter Page||Click Here To Visit Twitter Group|
|Whitepaper||Click Here To View|
|Official Project Website||Click Here To Visit Project Website|
No protocol within the blockchain space can be considered entirely risk free. The risks related to the protocol may potentially include Smart Contract risks and Liquidation risks. The team has taken necessary steps to minimize these risks as much as possible by undergoing audits and keeping the protocol public and open sourced.
Using the protocol
To use the protocol, the user deposits their preferred asset that is accepted by the protocol. Users will be able to earn interest based on the asset’s market demand for borrowing. Additionally, deposited assets can be used as collateral to allow the user to borrow other assets. Interest earned by depositing funds offsets the accumulated interest rates from borrowing.
BENQI Additional token pools will be added as the platform grows. The additions into the protocol will be initially decided by the core team and as the protocol’s governance transitions into a Decentralized Autonomous Organization (DAO), additional pools will be approved based on community votes and proposals, using the QI governance token.
BENQI Depositors will receive continuous earnings (interest) on their assets that algorithmically adjusts based on market conditions. Each asset has its own market of supply and demand with its corresponding APY (Annual Percentage Yield) which changes over time. The QiToken is a representation of the user’s asset balance supplied to the protocol. It is received in the wallet for supplying assets to the protocol and functions to accrue value relative to the original asset through the token’s interest rate.
BENQI A user may want exposure on their current asset appreciating (going long) while looking to enter another position with additional capital. As a result, the user would be able to borrow, using the current asset being deposited in the protocol instead of fully selling it off. This provides the user liquidity (working capital) without the need to sell their current asset.Example Satoshi requires additional liquidity to enter a new position but does not want to sell his $AVAX tokens as he expects his $AVAX tokens to increase in value.
BENQI Before borrowing, the user is required to deposit an accepted asset to be used as collateral. Ensure that the “Use as Collateral” tab is enabled in the “Supply” section as shown in the image below. The maximum amount that can be borrowed depends on the value deposited and the available liquidity. The user cannot borrow an asset if there is not enough liquidity or if their Health doesn’t permit them to. The Collateral Factor varies across each asset. It is the maximum amount that can be borrowed from the protocol using this specific asset as collateral.
Time period for loan repayments
BENQI There is no fixed time period to repay back loans. As long as the user’s position is safe (Health > 1) , borrowing can be done for an undefined period. However, as time passes, the accrued interest will grow making the user’s Health decrease which might result in deposited assets becoming more likely to be liquidated. In order to avoid the reduction of the user’s Health leading to liquidation, the user can repay the loan or deposit more assets in order to increase their Health .