Venus is a decentralized finance (DeFi) algorithmic money market protocol on BNB Chain.
Decentralized lending pools are very similar to traditional lending services offered by banks, except that they are offered by P2P decentralized platforms. Users can leverage assets by borrowing and lending assets listed in a pool. Lending pools help crypto holders earn a substantial income through interest paid on their supplied assets and access assets they don't currently own without selling any of their portfolio.
The first generation of lending pools, including the Venus Core Pool, aggregate a diverse group of assets for users to interact with. This introduces significant risk to the entire protocol's liquidity if any token included in the pool experiences extreme volatility. It is difficult to list new tokens due to the lack of specific risk parameters. The Venus Core Pool also lacks risk analysis parameters for the pool's shortfall which would give users a view into the current market stability.
Venus Isolated Pools is designed to tackle all of the shortcomings that its previous versions had. Isolated Pools is composed of independent collections of assets with custom risk management configurations, giving users broader opportunities to manage risk, allocate their assets in the protocol and earn yield. Multiple isolated pools also reduce the impact of any potential asset failure affecting the liquidity of the protocol. Rewards can be customized per market in each pool to provide the best incentives to users.
The Isolated Pools architecture centers around the PoolRegistry contract. The PoolRegistry maintains a directory of isolated lending pools and can perform actions like registering new pools, adding new markets to existing pools, setting and updating the pool's required metadata, and providing the getter methods to get information on the pools.
The risk fund concerns three main contracts:
ProtocolShareReserveRiskFundReserveHelpers
These three contracts are designed to hold funds that have been accumulated from interest reserves and liquidation incentives, send a portion to the protocol treasury, and send the remainder to the RiskFund contract. When reduceReserves() is called in a vToken contract, all accumulated liquidation fees and interests reserves are sent to the ProtocolShareReserve contract. Once funds are transferred to the ProtocolShareReserve, anyone can call releaseFunds() to transfer 50% to the protocolIncome address and the other 50% to the riskFund contract. Once in the riskFund contract, the tokens can be swapped via PancakeSwap pairs to the convertible base asset, which can be updated by the authorized accounts. When tokens are converted to the convertibleBaseAsset, they can be used in the Shortfall contract to auction off the pool's bad debt. Note that just as each pool is isolated, the risk funds for each pool are also isolated: only the associated risk fund for a pool can be used when auctioning off the bad debt of the pool.
When a borrower's shortfall (total borrowed amount converted to USD is greater than the total supplied amount converted to USD) is detected in a market in the Isolated Pools, Venus halts the interest accrual, writes off the borrower's balance, and tracks the bad debt.
Shortfall is an auction contract designed to auction off the convertibleBaseAsset accumulated in RiskFund. The convertibleBaseAsset is auctioned in exchange for users paying off the pool's bad debt. An auction can be started by anyone once a pool's bad debt has reached a minimum value (see Shortfall.minimumPoolBadDebt()). This value is set and can be changed by the authorized accounts. If the pool’s bad debt exceeds the risk fund plus a 10% incentive, then the auction winner is determined by who will pay off the largest percentage of the pool's bad debt. The auction winner repays the bid percentage of the bad debt in exchange for the entire risk fund. Otherwise, if the risk fund covers the pool's bad debt plus the 10% incentive, then the auction winner is determined by who will take the smallest percentage of the risk fund in exchange for paying off all the pool's bad debt.
The main configurable (via VIP) parameters in the Shortfall contract , and their initial values, are:
minimumPoolBadDebt- Minimum USD bad debt in the pool to allow the initiation of an auction. Initial value set to 1,000 USDwaitForFirstBidder- Blocks to wait for first bidder. Initial value sets to 100 blocksnextBidderBlockLimit- Time to wait for next bidder. Initial value set to 100 blocksincentiveBps- Incentive to auction participants. Initial value set to 1000 bps or 10%
Users can receive additional rewards through a RewardsDistributor. Each RewardsDistributor proxy is initialized with a specific reward token and Comptroller, which can then distribute the reward token to users that supply or borrow in the associated pool. Authorized users can set the reward token borrow and supply speeds for each market in the pool. This sets a fixed amount of reward token to be released each block for borrowers and suppliers, which is distributed based on a user’s percentage of the borrows or supplies respectively. The owner can also set up reward distributions to contributor addresses (distinct from suppliers and borrowers) by setting their contributor reward token speed, which similarly allocates a fixed amount of reward token per block.
The owner has the ability to transfer any amount of reward tokens held by the contract to any other address. Rewards are not distributed automatically and must be claimed by a user calling claimRewardToken(). Users should be aware that it is up to the owner and other centralized entities to ensure that the RewardsDistributor holds enough tokens to distribute the accumulated rewards of users and contributors.
The PoolLens contract is designed to retrieve important information for each registered pool. A list of essential information for all pools within the lending protocol can be acquired through the function getAllPools(). Additionally, the following records can be looked up for specific pools and markets:
- the vToken balance of a given user;
- the pool data (oracle address, associated vToken, liquidation incentive, etc) of a pool via its associated comptroller address;
- the vToken address in a pool for a given asset;
- a list of all pools that support an asset;
- the underlying asset price of a vToken;
- the metadata (exchange/borrow/supply rate, total supply, collateral factor, etc) of any vToken.
These contracts help algorithmically determine the interest rate based on supply and demand. If the demand is low, then the interest rates should be lower. In times of high utilization, the interest rates should go up. As such, the lending market borrowers will earn interest equal to the borrowing rate multiplied by utilization ratio.
Each asset that is supported by a pool is integrated through an instance of the VToken contract. As outlined in the protocol overview, each isolated pool creates its own vToken corresponding to an asset. Within a given pool, each included vToken is referred to as a market of the pool. The main actions a user regularly interacts with in a market are:
- mint/redeem of vTokens;
- transfer of vTokens;
- borrow/repay a loan on an underlying asset;
- liquidate a borrow or liquidate/heal an account.
A user supplies the underlying asset to a pool by minting vTokens, where the corresponding vToken amount is determined by the exchangeRate. The exchangeRate will change over time, dependent on a number of factors, some of which accrue interest. Additionally, once users have minted vToken in a pool, they can borrow any asset in the isolated pool by using their vToken as collateral. In order to borrow an asset or use a vToken as collateral, the user must be entered into each corresponding market (else, the vToken will not be considered collateral for a borrow). Note that a user may borrow up to a portion of their collateral determined by the market’s collateral factor. However, if their borrowed amount exceeds an amount calculated using the market’s corresponding liquidation threshold, the borrow is eligible for liquidation. When a user repays a borrow, they must also pay off interest accrued on the borrow.
The Venus protocol includes unique mechanisms for healing an account and liquidating an account. These actions are performed in the Comptroller and consider all borrows and collateral for which a given account is entered within a market. These functions may only be called on an account with a total collateral amount that is no larger than a universal minLiquidatableCollateral value, which is used for all markets within a Comptroller. Both functions settle all of an account’s borrows, but healAccount() may add badDebt to a vToken. For more detail, see the description of healAccount() and liquidateAccount() in the Comptroller summary section below.
The Comptroller is designed to provide checks for all minting, redeeming, transferring, borrowing, lending, repaying, liquidating, and seizing done by the vToken contract. Each pool has one Comptroller checking these interactions across markets. When a user interacts with a given market by one of these main actions, a call is made to a corresponding hook in the associated Comptroller, which either allows or reverts the transaction. These hooks also update supply and borrow rewards as they are called. The comptroller holds the logic for assessing liquidity snapshots of an account via the collateral factor and liquidation threshold. This check determines the collateral needed for a borrow, as well as how much of a borrow may be liquidated. A user may borrow a portion of their collateral with the maximum amount determined by the markets collateral factor. However, if their borrowed amount exceeds an amount calculated using the market’s corresponding liquidation threshold, the borrow is eligible for liquidation.
The Comptroller also includes two functions liquidateAccount() and healAccount(), which are meant to handle accounts that do not exceed the minLiquidatableCollateral for the Comptroller:
-
healAccount(): This function is called to seize all of a given user’s collateral, requiring themsg.senderrepay a certain percentage of the debt calculated bycollateral/(borrows*liquidationIncentive). The function can only be called if the calculated percentage does not exceed 100%, because otherwise nobadDebtwould be created andliquidateAccount()should be used instead. The difference in the actual amount of debt and debt paid off is recorded asbadDebtfor each market, which can then be auctioned off for the risk reserves of the associated pool. -
liquidateAccount(): This function can only be called if the collateral seized will cover all borrows of an account, as well as the liquidation incentive. Otherwise, the pool will incur bad debt, in which case the functionhealAccount()should be used instead. This function skips the logic verifying that the repay amount does not exceed the close factor.
- NodeJS - 12.x
- Solc - v0.8.25 (https://github.com/ethereum/solidity/releases/tag/v0.8.25)
yarn install
yarn test
npx hardhat coverage
REPORT_GAS=true npx hardhat test
- To run fork tests add FORK=true, FORKED_NETWORK and one ARCHIVE_NODE var in the .env file.
npx hardhat deploy
- This command will execute all the deployment scripts in
./deploydirectory - It will skip only deployment scripts which implement askipcondition - Here is example of a skip condition: - Skipping deployment script onbsctestnetnetworkfunc.skip = async (hre: HardhatRuntimeEnvironment) => hre.network.name !== "bsctestnet"; - The default network will be
hardhat - Deployment to another network: - Make sure the desired network is configured in
hardhat.config.ts- AddMNEMONICvariable in.envfile - Execute deploy command by adding--network <network_name>in the deploy command above - E.g.npx hardhat deploy --network bsctestnet - Execution of single or custom set of scripts is possible, if:
- In the deployment scripts you have added
tagsfor example: -func.tags = ["MockTokens"]; - Once this is done, adding
--tags "<tag_name>,<tag_name>..."to the deployment command will execute only the scripts containing the tags.
- In the deployment scripts you have added
Deployed contract abis and addresses are exported in the deployments directory. To create a summary export of all contracts deployed to a network run
$ yarn hardhat export --network <network-name> --export ./deployments/<network-name>.json
In order to verify the source code of already deployed contracts, run:
npx hardhat etherscan-verify --network <network_name>
Make sure you have added ETHERSCAN_API_KEY in .env file.
npx hardhat accounts
npx hardhat compile
npx hardhat clean
npx hardhat test
npx hardhat node
npx hardhat help
REPORT_GAS=true npx hardhat test
npx hardhat coverage
TS_NODE_FILES=true npx ts-node scripts/deploy.ts
npx eslint '**/*.{js,ts}'
npx eslint '**/*.{js,ts}' --fix
npx prettier '**/*.{json,sol,md}' --check
npx prettier '**/*.{json,sol,md}' --write
npx solhint 'contracts/**/*.sol'
npx solhint 'contracts/**/*.sol' --fix
MNEMONIC="<>" BSC_API_KEY="<>" npx hardhat run ./script/hardhat/deploy.ts --network testnet
Documentation is autogenerated using solidity-docgen.
They can be generated by running yarn docgen
https://github.com/compound-finance/compound-protocol/tree/a3214f67b73310d547e00fc578e8355911c9d376
- Website : https://venus.io
- Twitter : https://twitter.com/venusprotocol
- Telegram : https://t.me/venusprotocol
- Discord : https://discord.com/invite/pTQ9EBHYtF
- Github: https://github.com/VenusProtocol
- Youtube: https://www.youtube.com/@venusprotocolofficial