Binance, the world’s largest cryptocurrency exchange and fastest growing derivatives platform, just launched a ‘smart chain’ that will be used to issue smart contracts and manage the staking mechanism for BNB tokens. It’s open blockchain, DeFi project, called Venus, aims at empowering developed and developing countries to spur new currencies.
What is a DeFi Platform?
The Decentralized Finance (DeFi) movement employed by Binance, aims at creating an alternative to the peer-to-peer financial system which is transparent, open-source, and doesn’t require permission. The DeFi ecosystem is constructed with “programmable money” that enables infrastructure with the capability of providing access to financial services on a global level. Binance’s vision is to improve the freedom of money, as a result of which it has built what it calls a holistic Binance ecosystem to empower entrepreneurs and users.
How does Venus work?
Venus, which is built on the Binance Smart Chain, will mint the decentralized stablecoin called VAI, that’s backed by a plethora of BEP-20 tokens. The Venus protocol is more of a mixture of MakerDAO and Compound, and is minted by the same collateral that is supplied to the protocol. Users can borrow up to 50% of the remaining collateral value, and the collateral that is being provided to Venus will be represented by vTokens.
Users will be able to stake their Binance coin, Binance stablecoin (BUSD), and Swipe (SXP) tokens, into separate pools to farm Venus (XVS) tokens, by using Venus protocol. Binance will then list XVS into the Innovation Zone and open trading for XVS/BTC, XVS/BNB, XVS/BUSD, and XVS/USDT pairs.
Swipe Wallet is being used to develop this protocol, which Binance had acquired earlier in 2020. The Binance Smart Chain went live on Sept. 1, 2020 and this new version of Binance came with both opportunity as well as timing. It 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 high Ethereum fees seen during the DeFi craze.
Binance Venus v/s Facebook Libra
There has been speculation regarding the dominance of Binance Venus over its ‘rival’ Facebook’s Libra, whose goal is to to create a global digital currency to allow people to avoid the fees associated with remittance services and credit cards.
CEO of Binance, Zhao had earlier taken to Twitter and clarified that their aim is not to position as an opposition or rival, but to co-exist. He says Binance’s vision is to build a sustainable community through open alliance as this will add as leverage to its existing infrastructure.