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Venus Protocol: Bringing DeFi to the masses

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Venus Protocol: Bringing DeFi to the masses

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The first algorithmic money maker on BNB Chain wants to make DeFi mainstream — and it’s on the road to get there.

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Updated: June 15, 2022 at 7:52 pm

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Achieving mass adoption seems like it requires going down the road of centralization. However, projects like the Venus Protocol show that it’s quite possible to bring DeFi to the masses by striking a balance between the security of decentralization and the ease of use centralized services offer.

The first algorithmic money maker to launch on the BNB Chain, Venus Protocol put Binance’s blockchain network on the map. Brad Harrison, the CEO of Venus, said that it was the first dApp to launch on BNB Chain and has remained one of the most popular projects on the blockchain since.

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Speaking to Cryptonites’ Alex Fazel at the Paris Blockchain Week, Harrison said that the Venus Protocol was currently the most popular project on BNB Chain, with its transaction volume exceeding that of Ethereum.

The goal of the project was to bring decentralized finance to more people. To achieve that, Harrison believed that Venus needed to strike a balance between the freedom of decentralization and the convenience of centralization. This is why Venus chose to launch on BNB Chain instead of on a larger blockchain with a bigger network effect like Ethereum.

Another major reason Venus decided to launch on the much smaller and lesser-known BNB Chain was to make it more accessible to a larger number of users.

“I call Ethereum the Beverly Hills of blockchain.”

Harrison explained that while developers in Europe and North America were mostly building on Ethereum, the rest of the developing world was focusing on BNB Chain — which is where Venus decided to be.

Binance’s blockchain now has one of the biggest rates of user adoption out of any network, surpassing its larger and older competitors both in terms of transaction counts, transaction volumes, and TVL.

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However, he realizes that there are sacrifices when using what is essentially a permissioned, centralized network.

“It comes with tradeoffs.”

And while some might raise concerns over just how “decentralized” a BNB Chain project really is, Harrison said that both Venus and BNB Chain were working on becoming more decentralized. There are things happening behind the scenes that will make BNB Chain more secure and less reliant on centralized services, he told CryptonitesTV.

That hasn’t stopped users from onboarding to Venus. Harrison said that the majority of its users want a service that’s effective, easy to use, and that saves them money — and Venus checks all the boxes.

To attract more users to the platform, Venus is working on introducing new services, including stable yield and undercollateralized loans. The project is positioning itself to be able to cater both to institutions and retail investors it believes will flock to the crypto market in the coming months.

“It’s a matter of time when we’ll be talking about liquidity in terms of trillions, not billions. DeFi is here to stay.”

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Altcoins

Chainlink: How a ‘price discrepancy’ resulted in millions lost from DeFi protocols

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Chainlink: How a ‘price discrepancy’ resulted in millions lost from DeFi protocols

Terra’s total value locked suffered a major fall, losing as much as $14 billion, amid the de-pegging fiasco resulting in reduced DeFi investor interest and a bearish market. The protocol lost around 78% in TVL since the first quarter of 2022. De-pegging of UST, the protocol’s stablecoins made the situation worse.

Following this, different other platforms, exchanges such as Binance suspended LUNA’s interaction over extreme market conditions.

One suspension of LUNA led to this…

Chainlink halted the price feed due to extreme market conditions with the LUNA token. As per the official announcement, the unprecedented volatility across the cryptocurrency markets triggered the minimum value circuit breaker for the LUNA/USD price feeds.

Official team statement on the Chainlink LUNA/USD Price Feeds situation pic.twitter.com/EjA5naYalu

— ChainLinkGod.eth (@ChainLinkGod) May 13, 2022

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But this wasn’t it. This development affected two decentralized finance (DeFi) protocols due to a price discrepancy. DeFi lending platform, Venus Protocol explained that when Chainlink paused the LUNA price feed, the LUNA price on their platform remained at $0.107 while the market price stood at $0.01.

“In order to de-risk this situation, the protocol paused using PauseGuardian via multisig,” it stated.

Dear Venus Community,

Due to the unanticipated suspension of Chainlink’s LUNA price feed, Venus has taken a precautionary measure to protect our users and is currently paused.

A VIP to unpause Venus following the disabling of LUNA has been launched: https://t.co/RSnGmshIeG

— Venus Protocol (@VenusProtocol) May 13, 2022

The protocol got its price feeds from Chainlink oracles- This is where the problems began. As per further investigation, the team discovered two large deposits of LUNA at the errant price, used to borrow assets on the platform. The blog post added:

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“Upon this desyncing event, 2 accounts had suspiciously deposited a sum of 230,000,000 LUNA valued at over $24,000,000. Assets were borrowed totaling around $13,500,000.”

Overall, the platform lost $11.2 million due to Chainlink’s suspension of LUNA price updates, and the LUNA lending market remains suspended. Even though, the platform launched a proposal to resume the system, the damage seems to be done.

As per DeFiLama, XVS’ TVL had dumped 28% over the past 24 hours due to the incident.

Source: DeFiLama

In addition, Blizz Finance, a lending protocol on Avalanche suffered a similar fate. Several attackers deposited millions of LUNA, worth $0.10 according to the Chainlink oracle to borrow all the collateral. As a result, Blizz Finance mentioned that its protocol drained before the team could act to offset the situation.

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We have built on the AVAX ecosystem in good faith with the expectation that @chainlink oracles would behave as expected. Sorry to those affected.

— Blizz Finance (@BlizzFinance) May 13, 2022

The blame game

Chainlink and its ecosystem faced criticism on the social media platform following the aforementioned fiascos. Some believe that the losses occurred due to the protocols’ negligence. However, not everyone rode this bandwagon. Twitter user TheSoftwareJedi pointed out that Chainlink’s feeds had the tools necessary to avoid the problem.

Feeds have a datetime associated with the price data. You should be using it, no excuse not to. That’s simply negligent – and worse blaming Chainlink. Their docs call this out. See 4 things you didn’t do: https://t.co/NdNHc9nwoP

— Dana 🦀⚓ Glass Farm◎◎◎r (@TheSoftwareJedi) May 13, 2022

Nonetheless, despite raising fingers, the crypto community as a whole had suffered.

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Aave

More Than 80% Of The Funds Locked In Decentralized Finance Are Kept On 5 Chains, 21 Different Defi Protocols

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More Than 80% Of The Funds Locked In Decentralized Finance Are Kept On 5 Chains, 21 Different Defi Protocols

In mid-March, the top five blockchains — in terms of total value locked (TVL) in decentralized finance (defi) — currently command more than 82% of the $198 billion TVL in defi across all blockchains. Each of these chains offers different types of defi protocols like decentralized exchange (dex) platforms and lending applications, allowing people to designate their finances in various ways.

5 Blockchain Networks, 21 Defi Protocols

Today, there’s just under $200 billion in defi and that’s just the total value locked (TVL), as it doesn’t include the large quantity of tokens tied to these specific protocols. Right now, five different blockchain TVLs represent 82% of the $198 billion locked in defi protocols. The chains include Ethereum, Terra, Binance Smart Chain, Avalanche, and Solana.

Ethereum

Ethereum currently holds the largest TVL with $108.51 billion or 54.59% of the value locked in defi protocols. On March 14, the top decentralized exchange (dex) platform tied to Ethereum is Curve Finance, with its $17.72 billion in TVL. Ethereum’s top collateralized debt position (CDP) application is Makerdao, which is just under Curve as the second-largest TVL in defi today.

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In terms of liquid staking, Lido is the top defi protocol and Convex Finance is Ethereum’s top protocol for yield. Lastly, Ethereum’s largest lending protocol is the defi application Aave, with its $11.35 billion TVL.

Terra

The second-largest chain in terms of TVL in defi is Terra, with $25.79 billion or 12.98% of the aggregate TVL. Terra’s most popular dex is Astroport, and Lido is the largest in terms of liquid staking. In terms of yield, Pylon Protocol is Terra’s most popular product with the highest TVL.

Currently, there is no CDP application for Terra but the blockchain’s largest lending application is Anchor with $13.03 billion total value locked. The defi lending protocol Anchor has seen a 63.23% TVL increase during the last 30 days.

Binance Smart Chain

The Binance Smart Chain (BSC/BNB) is the third-largest blockchain today in terms of defi TVL with $11.73 billion or 5.9% of the aggregate held in defi. The top dex on BSC is Pancakeswap, and the largest CDP application is the Mars Ecosystem.

There’s no liquid staking via BSC but in terms of yield, Alpaca Finance is the largest on the network. When it comes to defi lending, the largest protocol in terms of value locked on BSC is Venus.

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Avalanche

Avalanche holds the fourth-largest position in decentralized finance this week with $10.88 billion or 5.47% of the $198 billion locked in defi protocols. Today’s top Avalanche dex application is Trader Joe and the blockchain’s most popular CDP is Defrost.

In terms of yield, the protocol Yield Yak is the leader on Avalanche, and Benqi holds the top liquid staking position. Like Ethereum, Aave is the biggest lending protocol on Avalanche at the time of writing.

Solana

Lastly, Solana is the fifth-largest defi blockchain in mid-March 2022 with a $6.69 billion TVL or 3.37% of the aggregate held in defi today. Solana’s top dex is Serum and the blockchain’s CDP leader is Parrot Protocol.

Marinade Finance leads Solana’s liquid staking apps and Quarry is the leading protocol in terms of yield. The largest lending application on Solana this week is Solend with $575.3 million locked.

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Besides the Top 5 Chains, There Are Still Dozens of Networks and 862 Lending, CDP, Yield, Liquid Staking, and Dex Applications to Choose From

While the five different blockchains and the dozens of aforementioned protocols is where most of the money is in defi today, there’s a large assortment of other blockchains and applications available. At the time of writing, there are 384 dex applications that allow people to swap coins and there are 125 lending defi protocols that allow people to borrow and lend crypto. 328 defi apps offer some sort of yield and there are 16 different liquid staking apps. Furthermore, there’s at least 30 different CDP protocols that issue stablecoin assets via collateralized backing.

What do you think about the top five blockchains offering different applications for dex platforms, CDPs, liquid staking, yield, and lending? Let us know your thoughts about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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