BENQI is an algorithmic liquidity market protocol on the Avalanche blockchain network, has announced the launch of a $4 million second phase of its ongoing Avalanche Rush incentive program. BenQi.fi is a Avalanch based Defi lending and borrowing platform.
BENQI is a non-custodial liquidity market protocol, built on Avalanche network. The protocol enables users to effortlessly lend, borrow, and earn interest with their digital assets. Depositors providing liquidity to the protocol may earn passive income, while borrowers are able to borrow in an over-collateralized manner.
Why Use BENQI DEX?
Decentralized Finance (DeFi) has grown substantially in the last 2 years. As most of DeFi's activity is currently conducted on Ethereum, the network has started to experience congestion problems that have resulted in high network fees. This has proven to be a significant barrier for both old and new users with smaller capital to justify engaging in DeFi.
BENQI aims to alleviate these problems by providing a Liquidity Market Protocol on a highly scalable and decentralized platform. With a focus on approachability, ease of use, and low fees, BENQI will democratize access to decentralized financial products by providing permissionless lending and borrowing where users can:
Instantly supply to and withdraw liquidity from a shared liquidity market
Instantly borrow from a liquidity market using their supplied assets as collateral
Have a live and transparent view of interest rates around the clock based on the asset's market supply and demand
Using the BenQI protocol:
To use the protocol, the user deposits their preferred asset that is accepted by the protocol. Users will be able to earn interest based on the asset's market demand for borrowing. Additionally, deposited assets can be used as collateral to allow the user to borrow other assets. Interest earned by depositing funds offsets the accumulated interest rates from borrowing.
Additional token pools will be added as the platform grows. The additions into the protocol will be initially decided by the core team and as the protocol's governance transitions into a Decentralized Autonomous Organization (DAO), additional pools will be approved based on community votes and proposals, using the QI governance token.
Benqi Storage of funds:
Funds are administered by Smart Contracts.
Depositors/Lenders will be given tokenized yield-bearing tokens (QiTokens) which will be used to withdraw funds from the pool on-demand when required. QiTokens can be transferred and traded as any other crypto-asset on Avalanche.
Risks
No protocol within the blockchain space can be considered entirely risk free. The risks related to the protocol may potentially include Smart Contract risks and Liquidation risks. The team has taken necessary steps to minimize these risks as much as possible by undergoing audits and keeping the protocol public and open sourced.
Benqi Depositing Assets:
Supplying / Depositing assets
Click on the MARKETS tab on the menu and click on "Supply"
Select the type of asset from the drop box menu in the "Supply" dashboard
Enter the desired amount to deposit and click "Deposit"
Once the transaction is confirmed, the deposit is successfully registered and it starts earning interest.
QiTokens will be deposited into your wallet as a representation of your supplied asset into the protocol
There are no minimum or maximum deposits imposed. Users can deposit any amount.
Withdrawals on Benqi.fi
To withdraw, locate the WITHDRAW button under the "Supply" dashboard and click on WITHDRAW on the selected asset.
Select the amount to withdraw and submit the transaction.
Opting out of assets being used as collateral:
Users with multiple different assets being deposited are able to select assets to be used as collateral. This can be enabled/disabled through the "Collateral" slider in the "Supply" dashboard.
You Opting for assests used as collateral you need to pay for Gas in AVAX tokens as shown on the screen even though it is very small.
Why borrow on BENQI FI?
A user may want exposure on their current asset appreciating (going long) while looking to enter another position with additional capital.
As a result, the user would be able to borrow, using the current asset being deposited in the protocol instead of fully selling it off. This provides the user liquidity (working capital) without the need to sell their current asset.
Example: Satoshi requires additional liquidity to enter a new position but does not want to sell his $AVAX tokens as he expects his $AVAX tokens to increase in value.
You may do the following:
Deposit $AVAX into the BENQI protocol as collateral.
Borrow $USDT using his $AVAX as collateral.
Uses the borrowed $USDT to enter his desired positions.
Note:
The user's Health should be monitored to ensure it does not go below 1 as this will result in the liquidation of the user's collateral to repay the debt plus additional liquidation fees.
Time period for loan repayments on BENQI:
There is no fixed time period to repay back loans. As long as the user's position is safe (Health > 1) , borrowing can be done for an undefined period. However, as time passes, the accrued interest will grow making the user's Health decrease which might result in deposited assets becoming more likely to be liquidated.
Benqi has following Risks just like any smart contract block chain.
Smart Contracts Risks
The protocol will be interacting with a number of smart contracts, all of which imposes risks. This can be both known and unknown risks that could result in the failure or vulnerability on the smart contracts which could result in assets being locked or lost forever.
Liquidation Risks
Assets that are supplied or borrowed on the protocol could fluctuate in value due to the systemic risks of the issuing platforms or market volatility, including the loss of peg of certain pegged assets. This could result in the liquidation or closing of a user's position.
Benqi Tokenomics:
The total supply of QI will be 7,200 million tokens.
Liquidity Mining Program 3,240 million at 45%
Token Sale 1,800 million at 25%
Treasury 1,080 million at 15%
Team 720,000,000 at 10%
Exchange Liquidity 360 million at 5%
Benqi Token Distribution:
A total of 10%, or 720,000,000 QI tokens will be distributed to the team which will be fully unlocked over four years, with quarterly unlocks, and a 12 month cliff after public listing.
Benqi ETH and AVAX Bridge
In order to use Benqi, since you assests needs to be in AVAX Avalanche network, you need to bridge Ethereum assests into Avalanche. Benqi use two bridges. One is bridge.avax.network natively supported in Benqi. Here you select from as EThereum Network and To as Avalanch network. Fees are very high because you are interacting with Ethereum network. Fees as high as $40 for $70 ETH to transfer over. This is outrages.
Second ETH to AVAX Bridge is cbridge.celer.network. Select EThereum as from and BSC as destinations fees for 1 ETH is 0.000557 ETH.
