What Is Venus Filecoin (vFIL)?

What Is Venus Filecoin (vFIL)? Complete Guide Review About Venus Filecoin.

What Is Venus Filecoin (vFIL)?

The Venus Filecoin Protocol is designed to enable a complete algorithmic money market protocol on Binance Smart Chain. The protocol designs are architected and forked based on Compound[1] and MarkerDAO[2] and synced into the Venus platform giving the benefits of both systems into one. The current protocols are also heavily centralized such as Compound, where stakeholders and private equity funds seem to be able to control most of the decision-making and do not have a variety of other control mechanisms.

Their distribution plan does not equate to decentralization. Also, over $1 billion in Ether[3] are locked up in MakerDao Contracts that earn no value but come at a cost to those minting assets. Lastly, in today’s landscape, a user who wants to use their assets to mint stable coins must remove it from a money market protocol and lock it up in a smart contract with no benefit of the underlying asset as collateral.

Venus Filecoin Storage Key Points

Coin BasicInformation
Coin NameVenus Filecoin
Short NamevFIL
Circulating SupplyN/A
Total SupplyN/A
Source CodeClick Here To View Source Code
ExplorersClick Here To View Explorers
Twitter PageClick Here To Visit Twitter Group
WhitepaperClick Here To View
Support24/7
Official Project WebsiteClick Here To Visit Project Website

Problems

The evolution of decentralized finance has created a diverse financial ecosystem built directly on blockchains, which are transparent/verifiable through cryptography and pre-defined coding known as smart contracts. These platforms are redefining the structure of money markets without the need for a central authority or third-party decision-makers.

In today’s traditional world, users will need to provide creditworthiness, provable income, and other factors for a lender to make a decision even when the user provides Venus Filecoin such as homes or cars. These protocols also lack higher market cap assets such as XRP and Litecoin. Traditional lenders do not enable digital assets and cryptocurrencies to be pledged and used to receive loans or earn interest rates for providing them to the lenders and banks.

Venus Filecoin is not the first protocol to help bridge these gaps between traditional financial lending into decentralized protocols on top of blockchains. There have been protocols that achieved this with billions in assets locked into the protocols. However, these protocols are primarily built on Ethereum, which has become costly, slow, and has caused pain points in user experience.

Solution

Creating a protocol that enables a traditional money market tied into synthetic stable coin generation will lead to accessibility and benefit of locked collateral. Venus will enable anyone to utilize a high-speed and low transaction cost blockchain by leveraging Binance Smart Chain[4] to supply collateral, earn interest on that collateral, borrow against that collateral, and mint stable coins on-demand within seconds.

These solutions all happen directly on the blockchain and may be utilized using a GUI. This protocol unlocks billions of dollars in value that are currently on-chains that have no lending markets such as Bitcoin, XRP, Litecoin, and more while enabling the participant to access liquidity in real-time.

Supplying Assets

Venus Filecoin Protocol users may supply various supported cryptocurrencies or digital assets onto the platform, which can be used as collateral for loans, supply liquidity and earn an APY, or to mint synthetic stable coins. Supplying assets such as cryptocurrencies or digital assets to Venus gives the users the ability to participate as a lender while maintaining the security of collateral in the protocol. Users will earn a variable-based interest rate depending on the yield curve utilization of that specific market.

All user assets are pooled into smart contracts so that users can withdraw their supply at any time, given that the protocol balance is positive. Users who supply their cryptocurrency or digital asset to Venus will receive a vToken, such as vBTC, which is the only token that can be used to redeem the underlying collateral supplied. This will enable users to use these tokens to hedge against other assets or move them into cold storage wallets that support Binance Smart Chain.

Borrowing Assets

Users who want to borrow any of the supported cryptocurrencies, stable coins, or digital assets from Venus Filecoin must pledge collateral that will be locked on the protocol. These assets must be over collateralized and will enable up to 75% of that collateral value borrowed. These collateral ratios are determined by the protocol and are controlled through the Governance process, which is documented in this Whitepaper.

Once these assets are supplied, you can borrow based on the collateral ratio of the asset. Typically collateral ratios are set anywhere from 40% to 75%. For example, if Bitcoin has a collateral value of 75%, that means you can borrow up to 75% of the value of your BTC. If the user has $100,000 in BTC supplied to the Venus protocol, that means they can borrow up to 75% of the value.