BENQI is a non-custodial liquidity market protocol, built on Avalanche. 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. DeFi has grown substantially in the last 2 years, and 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 concerns 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 aims to 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, but also have a live and transparent view of interest rates around the clock based on the asset's market supply and demand.
BENQI’s lending and borrowing protocol filled a crucial gap within the Avalanche DeFi ecosystem by providing a user-friendly solution for users to supply assets to earn interests and/or borrow assets in an over-collateralized manner. 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. 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