KuCoin AMA With BENQI — Algorithmic Liquidity Market Protocol on Avalanche
Dear KuCoin Users,
Time: August 18, 2021, 12:00-13:15 (UTC)
KuCoin hosted an AMA (Ask-Me-Anything) session with BENQI in the KuCoin Exchange Group in line with the launch of its protocol and world premiere listing of its QI token on KuCoin.
BENQI is a decentralized 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.
Official Website: https://benqi.fi
Dexter Lee — DeFi Lead for the BENQI Protocol
Dexter has been actively involved in the Decentralized Finance space since 2018. He brings an extensive amount of experience from navigating and participating in early DeFi movements. Dexter holds a Bachelor of Engineering degree and believes that the future is firmly in Web3.0's hands, but DeFi, at its current stage, will have to evolve itself to cater to institutional and regulatory requirements.
Jason Tuang — DeFi Lead for the BENQI Protocol
Since 2016, after learning about blockchain and its potential to reshape industries and finance, Jason has immersed himself in the space. Jason is an ex-Big4 accountant and MBA, and alongside the team, helps shape BENQI’s strategy to be a key infrastructure piece on Avalanche’s DeFi ecosystem.
Ben Middleton — Partner at Ascensive Assets (Lead Strategic Investor of BENQI)
Ben was a successful high stakes poker player for over eight years before turning his hand to the cryptocurrency market. He applied his knowledge of game theory and risk management, which he built from his career in poker, to become a successful cryptocurrency trader and angel investor. More recently, he has been spending his time in the DeFi sector, in which he is an investor and active participant in numerous DAOs that specialize in DeFi and Web3 startup investments.
Q&A from KuCoin
Q&A With DeFi Leads for the BENQI Protocol
Q: To start this AMA off, please introduce the BENQI project and the team.
Dexter: Firstly, we would like to thank KuCoin for hosting this AMA. The BENQI protocol is an algorithmic liquidity market protocol. Similar to liquidity markets like Compound and AAVE, users are able to lend and borrow assets in a permissionless manner through the platform’s liquidity pools while being able to earn interest on their assets.
There are 7 of us on the BENQI team, located around the world: Canada, USA, Finland, UK, Malaysia, and Australia, so we cover all time zones. The team consists of like-minded individuals with unique skill sets from TradFi to DeFi that provide thorough coverage across different aspects of the BENQI protocol. We all have one thing in common though, and that we believe in the technological advancement of Avalanche.
Q: How does lending and borrowing work on BENQI? What are some ways users can participate? Also, how does liquidation work on BENQI?
Dexter: The BENQI protocol will function similarly to most lending and borrowing protocols out there. We’ve designed the user interface to be as simple as possible for users to lend and borrow assets on the platform. Standard dashboards and stats will also be available on the platform.
Here are some images of the platform.
As there will be Liquidity Mining incentives on the platform when it launches, new users are encouraged to try out the platform. Liquidity Mining rewards will be allocated to users who supply/lend assets to the platform and also to users who decide to borrow from the platform.
The BENQI protocol is an over-collateralized borrowing market, so users are only able to borrow assets using their supplied assets as collateral. Liquidations will be based off an asset’s Collateral Factor. Should the total amount borrowed assets cross the Collateral Factor of the provided collateral, user assets will be liquidated to keep the protocol solvent.
Q: Can you share more about your near future plans, such as your protocol's official launch?
Dexter: The BENQI protocol will be launched on the same day of the world premiere listing of the QI token on KuCoin on August 19, 2021.
Please keep an eye on our official social channels to keep updated:
Telegram Announcement: https://t.me/benqifinance_Announcements
Additionally, the BENQI team has future additions and improvements to the BENQI protocol in mind on the path towards Avalanche Subnets.
Q: Can you talk about the tokenomics and distribution of QI?
Dexter: The total supply of the QI token is capped at 7,200,000,000.
There will be 326M QI circulating at listing with a circulating supply market cap of around $3M to start.
The Public Sale price was issued at $0.009, and the majority of tokens have been set aside for liquidity and community incentives.
I'll pass the remaining questions to my partner, Jason.
Q: What are the BENQI’s advantages compared to other lending protocols such as Maker, Liquity, and AAVE?
Jason: Lending protocols such as Maker and Liquity offer their own stablecoin as the borrowing portion of the protocol. BENQI functions similarly to AAVE in that we do not have our own native stablecoin but instead offer a pool of assets for users to be able to lend and borrow from.
We believe that a secure and growing network requires multiple markets/platforms to succeed by keeping rates and yields optimized throughout the ecosystem. As a new project in an exciting ecosystem, we are also likely to have better incentives to begin with and will be completely focused on supporting DeFi on Avalanche.
Our macro focus is to build out on our concepts of connecting to TradFi activities through cross collateralization via a novel model of KYC and AML compliance made possible via Avalanche Subnets, working with industry leaders to evolve DeFi credit infrastructure and to remain continually focused on bridging the gap between TradFi and DeFi!
Q: We noticed that BENQI recently established cooperation with many platforms and projects such as Chainlink and Gauntlet. Can you talk more about these partnerships?
Jason: Yes! As a lending and borrowing platform, the safety of the protocol and its users are our main priority.
Chainlink currently secures billions of dollars in DeFi across multiple chains and has been live and flawlessly functioning through multiple market stresses. By establishing an early integration with Chainlink, we ensure users’ safety on their assets without being unfairly liquidated.
Gauntlet is a leading data science company within the DeFi space that secures $18bn worth of assets on DeFi protocols such as Sushiswap, AAVE, and Compound. By having them on board with us, we will be able to take the necessary steps forward in improving capital efficiency without the risks of insolvency. Similar to their role within AAVE and Compound’s governance, Gauntlet will also be actively involved in the governance of the BENQI protocol.
We’re also currently working with Halborn on our tech audits to ensure the smart contracts are properly audited and tested before launching. There will also be a bug bounty challenge for white hat hackers!
Q: How does BENQI see the future of the Avalanche ecosystem or that of DeFi protocols on Avalanche?
Jason: Being builders fully focused on the Avalanche ecosystem, the BENQI team is highly optimistic on the Avalanche ecosystem’s growth and potential. The breakthrough consensus and subnet framework offered by Avalanche ensures long-term scalability for projects looking to build on the network.
Prior to middleware integrations like Chainlink, most of the DeFi activities were only DEX trading and yield compounding protocols. The arrival of the new Avalanche bridge coupled with Chainlink price feeds on Avalanche has also enabled the functionality of new DeFi projects within the network.
With the current NFT craze clogging up the Ethereum network, we could see the significant developer and user movement going cross-chain to Avalanche, creating a catalyst for the explosion of DeFi activity.
Q&A With BENQI’s Strategic Investor — Ascensive Assets
Q: Thank you for coming on to this AMA. Can you introduce yourself and what your team and fund is focused on in this space?
Ben: Hi, I’m Ben, Partner at Ascensive Assets. We’re a private investment firm focused purely on the digital asset industry. We began the fund in late 2019, focusing on investing in Ethereum-based DeFi projects and had some initial success with projects like Frax Finance, ArcherDao (now Eden network),and YGG. We’ve since moved to a multi-chain future thesis, so we began deploying into promising projects on other layers 1s such as BENQI.
Q: How does BENQI align with your investment thesis?
Ben: Of all the different products and services available to DeFi users, money markets have found the most product-market fit. The Avalanche ecosystem is clearly lacking such a financial building block, but BENQI will soon correct this and expand outside of this ecosystem. BENQI has the vision to not only achieve that but eventually allow crypto native users to get fiat loans on their crypto assets and exposure to investment opportunities in traditional finance.
Q: Where do you see the general cryptocurrency space heading?
Ben: Short term: Up, medium term: Up, long term: Up Only...jokes aside, we’re definitely betting on money flowing into the space long term. I think we’re heading for a multi-chain future where we’ll see certain chains specializing in different areas. I see Avalanche being the go-to compliant blockchain for more conservative non-crypto money to dip their toes in and Ethereum being more focused on interoperability and building complex financial primitives. The wonderful thing about working in this space is that there are always new projects and ideas being thought of each day, so, to some extent, we’re learning along with everyone else.
Free-Ask from KuCoin Community
Q: I love this project for placing importance on the community aspect. It’s something that I think is lacking in a lot of projects. How can we, early investors, really help the project grow before it launches? From providing liquidity to general participation, what different roles are there when it goes live?
Dexter: Hi there, thank you for the question.
The protocol will be launching on the same day as the token goes live on KuCoin. Users will be able to participate in the protocol by supplying liquidity to the protocol.
There will be Liquidity Mining incentives in the form of QI and AVAX. We've recently announced a joint collaboration with Avalanche to distribute AVAX as liquidity mining incentives to early users of the protocol.
Users will also be able to earn QI by supplying LP liquidity on our partner DEX, the Pangolin DEX.
Q: Can you share what sort of innovative effect of protocol BENQI introduces to ease the supply of QI tokens?
Jason: Thanks for this question. We are very aware of the supply of QI with the LM event. Hence, we will have ongoing monitoring of the inflation with our partners and Gauntlet to ensure that the LM program achieves its objectives. In fact, we have a hard review during and after the first 90 days to ensure we are on track, and if not, the LM program will be amended.
Q: Where do you see the general cryptocurrency space heading? How do I sell this?
Ben: I touched on this earlier, but I think upwards is the answer. If you want to take advantage of this, find some blue-chip DeFi projects you believe in and be prepared to weather dips and even hodl when they go up a lot. People often take profit too early on long-term bets and regret it later.
Q: Can you tell us what is the utility of your token? What makes your project different from other projects?
Dexter: Similar to the current model of AAVE and Compound, QI is a governance token that will empower holders to enact governance decisions over the BENQI protocol. QI holders can propose and vote on changes to various parameters of the protocol.
The founding team will be bootstrapping the initial iteration of BENQI. Further, through progressive decentralization, governance will be transitioned to a DAO consisting of token holders and on/off-chain mechanisms. At that point, QI holders will be incentivized to dynamically steer the protocol towards its optimum state through effective governance.
Our focus in the mid to long term is on bridging institutional assets onto DeFi. By being deployed on Avalanche, we'll be able to take advantage of the Avalanche Subnets where institutional needs can be catered to via KYC/AML-compliant validators. It is important to note that there's currently no blockchain that has this technology yet, so we are happy to be steering this with the help of the Ava Labs.
Q: A little question, how soon will BENQI support Avalanche native tokens (PNG, PEFI, SNOB, YAK)? We know that they will not be supported initially for various reasons such as price history, liquidation dynamics, SC, counterparty risk. So the next question is, what motivates BENQI to start accepting these coins?
Jason: This is an excellent question!
As a foundational DeFi layer, BENQI has been working very closely with many ecosystem projects on Avalanche to support them where we can. However, there are some of the factors that you have mentioned that are essential and that we pay great attention to. On top of what you mentioned are Chainlink integration for a reliable price oracle and liquidity depth on Pangolin or any DEX on Avalanche.
Q: The DeFi space has been subject to some big exploits. Even established projects have suffered such setbacks. What measures does the BENQI protocol team take to minimize or eliminate the risk of being exploited?
Dexter: Good question. Thank you.
The team at BENQI is well aware of the exploits happening in the space and have taken great measures with security and audits. We're working with Halborn on our audits. They are one of the few cybersecurity companies that have been working with Ava Labs from the beginning and have worked with blue-chip DeFi protocols such as Polygon and SushiSwap.
The other critical area for exploits in lending protocols is on the price feeds. Two notable incidents were the Maker and Compound liquidations because of a market-wide crash. By learning from that and establishing an early integration with Chainlink, we'll be able to access highly secure and reliable price feeds to ensure users will not be unfairly liquidated or exploited via flash loans.
Q: Would you like to let us know any special reason for choosing Avalanche platform?
Jason: The Avalanche network has an innovative consensus mechanism that allows for high TPS without sacrificing decentralization. We wanted to add value on the network by providing a key DeFi piece to the ecosystem, and we will be the first to launch a lending protocol on this network!
Q: Did you consider community feedback/requests during the creation of your product in order to expand on fresh ideas for your project? Many projects fail because the target audience and clients are not understood. So I'd like to know who your ideal consumer is for your product?
Dexter: Thank you for the question.
We were actively asking for feedback during the creation of the liquidity mining incentives and when the testnet app went live. We're glad that we did so and are very happy with the results because of that.
The liquidity mining incentive, as a result, has a clearer purpose, and the protocol user interface is much more intuitive for the everyday user.
Q: Do you have tutorial videos so we can get to know your project more clearly, or do you have a YouTube channel or something? Can you share it with us?
Jason: Yes, we will be releasing that shortly. So please do follow us, so you don't miss it when it’s released:
Dexter: Thank you once again, guys!
Thanks KuCoin for hosting this AMA. We look forward to the World Premiere Listing on KuCoin and the launch of our protocol.
KuCoin and BENQI have prepared a total of 2,000 USDT to give away to AMA participants.
1. Free-ask section: 75 USDT
2. AMA quiz: 1,500 USDT
3. Participation Rewards: 425 USDT
. . .
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