BENQI: the first decentralized financial protocol on Avalanche

Photo: BENQI

Despite an impressive amount of news, announcements and projects related to decentralized finance (DeFi), this burgeoning ecosystem is still young and in constant development. However, we can say for sure that there is indeed a trend towards a paradigm shift, with many investors of all stripes turning to decentralized options. It is in this context BENQI, the first decentralized finance protocol that works on Avalanche, intends to excel in the DeFi ecosystem.

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Avoid Ethereum Overload

For about two years, DeFi has shown impressive growth and stable capital inflows. We are talking today, judging by the site Pulse call$ 65 billion in TVL (Total cost locked) when a year earlier this figure did not reach 900 million.

In addition to the inevitable explosion of DeFi, we can make another factual observation: overwhelming dominanceEthereum as a blockchain used in this ecosystem. But the price of fame is that the network is currently experiencing severe congestion problems, the main consequence of which is rising network costs.

It goes without saying that this reality presents a major hurdle for anyone looking to join the DeFi ecosystem but with little capital. And this is exactly the problem BENQI wants to solve by providing a liquidity market protocol that uses not Ethereum, but Avalanche.

BENQI’s goal is to offer a common, decentralized liquidity market that, on the one hand, allows users to borrow instantly using their assets as collateral (collateral), and on the other hand, to those who provide liquidity for the passive income protocol.

Smart fund management

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At BENQI, all funds are managed by smart contracts. Specifically, lenders receive QiTokens, tokens that will be used to withdraw funds from the pool at any time. These QiTokens can then be exchanged like any other crypto asset for Avalanche.

The QI token, which is Avalanche’s own asset, is used inter alia by BENQI users to vote and choose among various protocol improvement proposals (BIPs). This is initially regulated by the founding team, but later on we will witness the transition to a Decentralized Autonomous Organization (DAO).

As for the total number of QI tokens, this will be 7,200,000,000 tokens. Please note that the maximum supply must be fully distributed in the first quarter of 2024.

According to the team, “the token distribution is intended to ensure that market participants who actively interact with the platform receive IQ tokens. Most of the tokens will be distributed through the Liquidity Mining program. “

Distribution of IQ tokens:

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As shown in the chart above, 50% of the total supply is channeled into liquidity to increase TVL and platform usage speed. 3.6 billion IQ tokens (half of the offer) will be distributed over 260 weeks.

Specific use case

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To fully understand the benefits of BENQI, it is easiest to consider a specific case. Imagine Michael needs extra money to enter a new position, but he doesn’t want to sell his $ AVAX tokens. Thanks to BENQI, he can increase his investment capital while maintaining his assets:

  • He will deposit AVAX with BENQI as collateral.
  • He will borrow $ USDT using his $ AVAX as collateral.
  • He will be able to use the borrowed $ USDT to open additional positions.

Successful token sale

IQ token sale took place on April 28, 2021. All members who successfully completed KYC through Tokensoft were eligible for 504 million available IQ tokens. This first sale was completed in less than 24 hours.

If you missed this event, don’t panic, another sale is coming soon. To be aware of the date and conditions of participation, the easiest way is to follow BENQI Twitter account, join their Telegram group or subscribe to their Medium account.

Learn about the project:

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