Binance has expanded on its goal to integrate DeFi by launching a Decentralized Finance Lending/Borrowing system.

The Venus Protocol will feature Binance Smart Chain “v” tokens to compete with money market protocols like Compound and Aave.

On Sept. 28, 2020, the company announced the Venus Protocol, a money market protocol for its Smart Chain. The project will debut through the exchange giant’s Launchpad, a popular platform for new tokens.

Decentralized Finance by Centralized Exchange

Though Binance is primarily known for its centralized exchange, it has also committed to taking part in the DeFi space. Its DEX has existed for over a year now. And according to Coingecko, it is the 26th most popular of such an exchange.

Advertisement
Continue reading below

However, things have changed since the Binance Smart Chain went live on Sept. 1, 2020. This new version of Binance’s chain looks and feels a lot like Ethereum, and came with opportune timing. The DeFi craze was in full swing at the time, and users were dealing with high Ethereum transaction fees.

What’s more, Binance’s Panama system will eventually allow for crossover and pegging of Binance assets to both the Ethereum and Tron networks.

Since Sept. 1, some Binance Smart Chain Uniswap clones such as Pancake Swap, Burgerswap, and Bakery Swap, have seen a good deal of traffic (BurgerSwap is the #11 most popular DEX according to Coingecko).

Binance Smart Chain offers a similar interface to ERC-20 and Ethereum-based tokens, including compatibility with wallets like Metamask and familiar 0x* addresses. Plus, the fees are low compared to the outrageous Ethereum fees seen during the DeFi craze.

Now, Binance is dipping its toes into the full-on decentralized finance lending and borrowing space.

Venus de Millionaire

Binance (Venus) Tokenomics | Source: Binance Research

While Binance’s explanation of the new protocol makes it sound similar to established DeFi lenders, there are some peculiarities with the tokens.

Similar to Compound’s ‘c’ tokens or Aave’s ‘a’ tokens, there will be ‘v’ versions of tokens like vBTC that will fuel the platform. This allows users to integrate with the protocol while keeping their assets safe in their wallets.

However, Venus comes with a couple of new tokens as well. The first is VAI, which is a US-dollar pegged stablecoin. According to Binance’s blog, users will be able to mint VAI worth up to 50% of the collateral they hold on the platform.

As for governance, Binance is launching the XVS token. Since the success (and less extreme pullbacks) of YFI, LEND, and COMP governance tokens, it’s no surprise Binance is looking to simluate their growth. XVS will keep the system decently decentralized as users will have the power to vote on protocol changes.

Users will reportedly be able to borrow and lend cryptocurrencies and stablecoins over the protocol in a decentralized manner.

A Head Start

While the project has similarities to competitors, users can get a head start by mining XVS on the Binance Launchpad. Mining begins Sept. 29, 2020, at 0:00 UTC and will last 30 days. BNB, BUSD, and SXP can be staked on the platform (in fact, the launch is being operated by the Swipe (SXP) team).

On Oct. 6, 2020, the Venus (XVS) tokens will be available for exchange. Binance likely hopes this pre-market mining will attract users to the new platform.

While it’s the 8th largest centralized crypto exchange according to Cryptocompare, the company’s products (like Venus and the DEX) are huddling close to popular DeFi protocols.

Whether this is merely a marketing strategy or will really catch on remains to be seen. Binance’s CEO CZ tweeted last year that in the end, the market will decide which protocols are best.