BENQI stands as the first decentralized lending protocol built on the Avalanche blockchain, designed to offer users flexible opportunities to earn yield on their crypto assets. By leveraging decentralized finance (DeFi) principles, it enables lending, borrowing, and liquidity provision with impressive speed and low transaction costs.
What Is the Avalanche Network?
Avalanche is an open-source platform for launching decentralized applications and custom blockchain networks. With a focus on interoperability, scalability, and low fees, it allows users to create and exchange digital assets in a highly efficient ecosystem. Its unique consensus mechanism enables near-instant transaction finality, making it an attractive environment for DeFi applications.
An Introduction to the BENQI Protocol
BENQI operates as a liquidity market protocol where users can supply cryptocurrencies to earn interest, borrow assets through over-collateralization, and participate in governance via the native QI token.
- Token Contract Address: 0x8729438eb15e2c8b576fcc6aecda6a148776c0f5
- Initial Offering Price: $0.009 USDT
- Protocol Type: Lending, Borrowing, and Liquidity Mining
How to Supply AVAX and Earn Rewards
To start earning on BENQI, you need to supply supported assets like AVAX to the platform. Here’s a simplified process:
- Acquire AVAX Tokens: Purchase AVAX from a supported exchange.
- Transfer to C-Chain: Move your tokens to the Avalanche Contract Chain (C-Chain), where BENQI operates.
- Connect Your Wallet: Use a Web3 wallet like MetaMask to connect to the BENQI application.
- Supply AVAX: Select AVAX from the supply list, enter the amount, and confirm the transaction.
Once supplied, your assets will start earning interest based on the platform’s supply APY.
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Understanding Borrowing on BENQI
Borrowing on BENQI allows you to access liquidity without selling your assets. This is especially useful for users who are bullish on their holdings but need short-term capital.
- Enable Collateral: Before borrowing, you must enable the collateral option on your supplied assets.
- Borrow Limit: You can borrow up to 40% of your collateral’s value in stablecoins or other supported tokens.
- Interest Rates: Borrow APY represents the annualized interest you pay on borrowed funds.
Key Terms Explained
- Borrow APY: The annual percentage yield you pay when borrowing an asset.
- Distribution APY: The total rewards earned from supplying assets, including native token rewards and interest payments.
- Collateralization Ratio: The percentage of collateral value that can be borrowed against.
Earning QI Token Rewards
By supplying or borrowing assets, users earn QI tokens as an incentive. These tokens grant governance rights and can be staked or traded on supported platforms.
- Rewards accumulate in real-time.
- Users can claim QI tokens directly from the platform’s dashboard.
Frequently Asked Questions
What is BENQI?
BENQI is a decentralized lending protocol on Avalanche that lets users earn interest on deposits, borrow assets, and participate in liquidity mining.
How do I start using BENQI?
You need an Avalanche-compatible wallet, AVAX tokens on the C-Chain, and a basic understanding of DeFi lending mechanics.
What are the risks?
Like all DeFi protocols, BENQI carries risks such as smart contract vulnerabilities, liquidation due to price volatility, and impermanent loss in liquidity pools. Always assess your risk tolerance before participating.
Can I borrow without collateral?
No, BENQI requires over-collateralization for all loans to maintain protocol solvency.
How often are rewards distributed?
QI rewards accumulate continuously and can be claimed manually by the user.
Is BENQI available globally?
Yes, it is permissionless and accessible to anyone with an internet connection and supported wallet.
Conclusion
BENQI offers Avalanche users a efficient and low-cost way to engage in decentralized lending and borrowing. With its dual reward system and user-friendly interface, it represents a significant step forward in making DeFi more accessible. Whether you're looking to earn passive income or leverage your crypto holdings, BENQI provides a compelling platform worth exploring.