Venus Stars
Venus Protocol continues to revolutionize decentralized finance (DeFi) by introducing new features and enhancements. With its latest update V4, Venus is now looking to implement Isolated Markets, allowing users to lend and borrow a wide range of tokens on the BNB Chain. This move aims to expand the platform’s lending capabilities and provide users with more options while managing risk effectively.
Isolated Markets Explained
Venus Protocol facilitates a decentralized lending and credit system, facilitating users to utilize their cryptocurrencies as collateral. By supplying collateral to the network, users can earn interest and borrow against their cryptocurrencies at the same time. The platform currently employs a common collateral pool model, where all assets are deposited into a single liquidity pool. This enables efficient capital allocation for loans but narrows the possibility of adding “long-tail” tokens at the same time.
Crypto lending has generally focused on large-cap assets only as liquidity is an important measure of risk and only the large, more liquid assets have been deemed safe enough for asset management. Less liquid assets create extended risk as large transactions can easily create violent price moves that force out positions and have a cascade effect that could lead to shortfalls. This risk is shared across all assets in standard lending pools, whereby a blowout in a “long-tail” asset would also take down the larger assets.
Isolated Markets address this concern by isolating assets into sub-sets of the general population. These isolated “pools” ensure that the entire population of assets is not at risk if a single asset fails. Only that asset, or any other asset in the same pool, is at risk. This way, risk is segregated to keep the less liquid and potentially more volatile assets from the general population.
Through Isolated Markets, new utility is being brought to tokens that previously had limited use cases. Venus Protocol allows holders to supply “long-tail” tokens and earn interest and also use their tokens as collateral to borrow other tokens listed in the same isolated market.
Managing Risk with Isolated Markets
The introduction of Isolated Markets allows users to choose lending pools based on their individual risk preferences. More conservative users can stick to the main protocol pool, while those seeking higher-risk opportunities can participate in the isolated lending pools. This approach expands the selection of assets available for lending and borrowing without exposing the entire liquidity pool to the risks of new assets.
Venus Protocol aims to simplify the use of Isolated Markets for users of all experience levels. To achieve this, the platform plans to implement a rating system that analyzes exchange data and lending market metrics for assets. This system will generate a custom pool rating, enabling users to identify lending pools that align with their risk preferences. By providing a more transparent assessment of the lending pools, Venus Protocol ensures that users can confidently choose the most suitable pools that match their risk tolerance.
Empowering Users with Isolated Markets
The implementation of the Isolated Markets on Venus Protocol will revolutionize the lending and borrowing landscape on the BNB Chain. Users will gain access to a broader range of assets and innovative protocol tokens while benefiting from a transparent risk assessment system. This enhancement is expected to drive further growth in Venus Protocol’s total value locked (TVL) and user base, solidifying its position as a leading lending protocol on the BNB Chain.
The new markets can be divided into categories. In the Tron family, for example, we have Bittorrent, APENFT, Wink, USDD, and TRON. In the Gamefi area, we find the metaverse of Raca, Floki, and Mobox. In DeFi, we expand our markets to include interesting solutions such as Ankr, Biswap, Beefy Finance, Woo Network, Alpaca Finance, and Baby Doge. At the same time, we will incorporate the stablecoin Helio (HAY), and in the liquid staked category, we will have BNB, pSTAKE, Stader Labs and AnkrBNB. Additionally, we will be focusing on AnkrETH in the Ethereum ecosystem.
This strategic move towards expanding lending capabilities demonstrates Venus Protocol’s commitment to innovation and growth in the lending space. By recognizing the limitation of focusing solely on large-cap assets, the protocol now aims to offer users more options and better risk assessment with the introduction of Isolated Markets.
To closely follow the progress and updates of this exciting V4 proposal, Venus Protocol will be by your side through its website, and the Dapp. For the latest news and events, you can visit Venus Community. For the latest updates, you can visit our Twitter and our Telegram Announcement Group. We also have a global community on Telegram and Discord.