Introduction to BENQI (QI)
Over the past few years, decentralized finance (DeFi) has expanded dramatically. Users can access financial tools through transparent, open, and permissionless platforms provided by this significant crypto sector. Whether you’re utilizing BNB Chain, Ethereum, Avalanche, or another network, you can quickly access a wide range of financial services. Liquid staking, a novel financial product for releasing the value of staked coins, and lending & borrowing are two key financial products that BENQI (QI) seeks to democratize access to with a focus on approachability, ease of usage, and cheap fees.
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What is BENQI (QI)?
BenQi is a money market protocol that enables usage of the project by both lenders and borrowers. Through Benqi’s unique smart contract technology on the Avalanche network, users can lend their digital assets while earning passive income in exchange for providing stability at risk-free rates of interest.
By enabling access without restrictions or permission, BENQI seeks to develop a fully decentralized, liquid market protocol that intends to address all of the issues with the present financial markets. This innovation will make borrowing more reachable than on other platforms for lenders and borrowers equally on their highly scalable network.
BenQi enables users to perform the following tasks:
- Instantaneously provide liquidity to and remove it from a shared liquidity market.
- Instantaneously borrow money from a liquidity market while pledging their provided assets as security
- Have a real-time, transparent view of interest rates depending on the market’s supply and demand for the asset.
How does BENQI work?
A user must deposit their desired asset, provided it is supported by the platform, in order to use the protocol. In accordance with the market’s demand for borrowing, users will be able to earn interest and possibly even extra money as a reward.
Users who deposit assets may use them as collateral when borrowing other kinds of assets. Users’ interest earnings will be subtracted from the total interest charged on borrowing.
When the Decentralized Autonomous Organization (DAO) begins operations, the core team will decide on the token pools and employ the protocol’s governance voting. There are now only a few token pools available, as seen in the picture below. However, as the platform expands, more pools will be introduced.
Lenders and depositors will receive (Qi Tokens) that they can use to immediately withdraw money from the pool. This approach gives you an extra incentive to trade your money with other people who desire access to stable interest rates since the Qi token is tradeable like any other cryptocurrency asset on Avalanche’s exchange market.
BENQI Liquid Staking (BLS)
Users that stake AVAX on BLS are given an asset called sAVAX that bears a yield from Avalanche validator rewards. Within DeFi applications like automated market makers (AMMs), lending & borrowing protocols, and yield aggregators, sAVAX can be freely transferred, exchanged, or used.
Users can stake AVAX through BLS on the Avalanche C-Chain, which is EVM compatible, without doing so on the Avalanche P-Chain. With the use of this technique, users can obtain P-Chain validating rewards without having to run a complete node, lock up AVAX on a validator node, or stake the required minimum amount.
Users have the option to instantaneously swap the AVAX asset via AMMs with an exchange fee or redeem it at any time with no fees through a 2-week unstaking cool down period.
BENQI Liquidity Market (BLM)
On the Avalanche network, BLM is the loan and borrowing protocol developed by BENQI. Users may easily lend, borrow, and earn interest using their crypto assets thanks to this. In contrast to conventional loan and borrowing markets, BLM does not use any human intermediaries and is fully powered by smart contracts.
Utilizing smart contracts, yield is determined algorithmically based on the supply of lenders and the demand of borrowers on BLM. Depositors that supply the protocol with liquidity receive a yield depending on the algorithm, and borrowers can take out loans with excessive collateral.
Third parties who sell off the assets of borrowers are compensated. The parameters defined within these smart contracts and the price feed of the assets delivered to them form the basis for these liquidations. BLM obtains these price feeds from Chainlink, a decentralized oracle network that offers trustworthy and secure price information.
What makes BENQI unique?
Low prices, accessibility, and simplicity of use are priorities at BENQI. Users can take advantage of a highly scalable, fee-effective, and decentralized platform by deploying on the Avalanche network. The original BENQI team collaborates closely with the Avalanche and DeFi communities to regularly examine and enhance the distinctive suite of protocols that make up the BENQI system, which includes:
BENQI Liquid Staking (BLS)
- A seamless staking experience – BLS offers users a seamless solution to stake AVAX. By staking with BLS, users bypass the tedious process of running an Avalanche validator or having to meet the minimum requirement for staking on the Avalanche P-Chain.
- High levels of liquidity and integration – Users that stake AVAX with BLS receive a yield-bearing token, sAVAX, deeply integrated across major DeFi applications on Avalanche.
- Utility – The veQI token provides the QI token utility. By staking QI for veQI, Avalanche validators can directly stake AVAX delegations from BLS to their validator of choice to earn additional delegation rewards.
BENQI Liquidity Market (BLM)
Universal access – Assets listed on BLM include most blue-chip assets, like wBTC, wETH, AVAX, sAVAX, and a variety of widely adopted stablecoins, including BUSD. Through BLM, users can easily earn a yield on their assets while borrowing in an over-collateralized manner.
Deep liquidity and connectivity – BLM provides users with deep liquidity for borrowing. Users can easily borrow and transfer assets to top centralized exchanges or bridge borrowed assets to major Layer 1 networks, including BNB Chain, Ethereum, Polygon, Arbitrum, and more.
Conclusion
For those who already use DeFi or are interested in trying it out, BENQI (QI) offers a wide range of possibilities without the added friction it once did. Users only need a web3 wallet, an internet connection, and some money given this platform’s emphasis on usability and protocol’s strong interoperability with other DeFi systems.
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