BENQI is a decentralized, non-custodial liquidity market protocol launched on Avalanche. It lets users lend, borrow, and earn interest using their digital assets. Liquidity providers can generate passive returns, while borrowers can access loans in an over-collateralized way.

BENQI works to solve these challenges by offering a Liquidity Market Protocol on a platform designed to be both highly scalable and decentralized. Built with an emphasis on simplicity, usability, and low fees, BENQI is intended to broaden access to decentralized finance through permissionless lending and borrowing, where users can:

Supply to and withdraw from a shared liquidity market immediatelyBorrow from a liquidity market right away, using supplied assets as collateralView live and transparent interest rates at any time, reflecting an asset’s supply and demand

Using the protocol

To participate, users deposit a preferred asset that the protocol supports. Depositors can earn interest depending on market demand for borrowing, and deposited assets can also be used as collateral to borrow other assets. The interest generated from deposits helps offset the interest that accrues from borrowing.As the platform expands, additional token pools will be introduced. Early additions are determined by the core team, and once governance moves to a Decentralized Autonomous Organization (DAO), new pools will be approved through community votes and proposals using the QI governance token.

Storage of funds

Smart Contracts manage the funds.Depositors/Lenders receive tokenized, yield-bearing tokens (QiTokens). These tokens allow users to withdraw from the pool whenever they need. QiTokens are transferable and can be traded like other Avalanche crypto-assets.

Risks

Within the blockchain ecosystem, no protocol can be regarded as entirely risk-free. Potential protocol risks may include Smart Contract risks and Liquidation risks. The team has sought to reduce these risks by completing audits and keeping the protocol public and open sourced.

BENQI (QI) token

The QI token is a native Avalanche asset that supports the full BENQI ecosystem, including the Treasury and future versions of the protocol.

QI is used to vote and determine outcomes of proposals via BENQI Improvement Proposals (BIPs). Governance starts with the founding team and is expected to transition to a Decentralized Autonomous Organization (DAO). In the DAO, QI token holders can submit proposals and vote on matters that guide the protocol’s direction.