State of Venus Q3 2024

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Key Insights

  • Venus demonstrated financial resilience in Q3’24, starting the quarter with bad debt at $5,332.35 and reducing it by 83.5% to $879 (0.04% of TVL). Bad debt has remained below $10,000 throughout the year, a figure notably lower than most competitors, reflecting improved liquidation processes and effective risk management.
  • TVL remained steady at $2.19 billion QoQ, maintaining its sixth-place position among comparable lending protocols.
  • XVS Staking increased by 4.29% QoQ, rising from 7.04 million to 7.32 million, showing consistent user engagement and growing trust in the protocol.
  • Protocol revenue decreased by 58.5% to $11.0 million, while supply-side revenue declined by 69.7% to $1.6 million, reflecting reduced borrowing demand and the tapering of launchpool activities. However, these numbers are indicative of overall market sentiment during Q3’24 and are not specific to Venus alone.
  • Community initiatives like Vanguard Vantage and Venus Stars supported governance improvements, while partnerships like Gomble Games and several additional partners expanded XVS utility and ecosystem diversity.

Introduction

Venus (XVS) is a borrow/lend protocol built on BNB Chain, recently launching on Ethereum in Q2 2024. At its core, Venus enables users to deposit various cryptoassets, which can then be borrowed. Unlike traditional financial systems, Venus employs a unique algorithmic approach, where central entities often set interest rates. The interest rates for borrowing and lending on Venus are dynamically adjusted based on a jump rate model and a whitepaper rate model. These models leverage the utilization ratio, which is the proportion of deposited assets that have been borrowed.

The utilization ratio is a critical component of the Venus Protocol. As borrowing demand rises, the ratio and interest rates increase. Conversely, lower demand decreases both, maintaining balance by incentivizing lenders in high demand and borrowers when demand wanes.

The Venus Protocol is governed by its DAO community and is enabled by the XVS governance token. Tokenholders can propose and vote on governance decisions. Furthermore, they can stake their tokens in a specialized vault to receive financial incentives, following the Venus tokenomics model. This model allocates a portion of the protocol’s revenue to stakers through a buyback and redistribution mechanism, rewarding active participation in governance. For a full primer on Venus, refer to our Initiation of Coverage report.

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Key Metrics

Performance Analysis

Financial Overview

Network Overview

Total Value Locked (TVL)

Total Value Locked (TVL) represents the total value of assets deposited into Venus Protocol across its supported markets. It serves as a key indicator of the platform’s size, liquidity, and overall user trust.

Venus saw a slight decrease in TVL, from $2.21 billion at the end of Q2’24 to $2.19 billion at the end of Q3’24, reflecting a 0.95% reduction QoQ. Despite this decline, Venus’s TVL remains on a generally positive uptrend. Most chains experienced moderate changes, with BTC experiencing the least change, only increasing 0.3%, USDT increasing 4.1%, and USDC increasing 7.2%. BNB retained its position as the largest collateral asset at $862.3 million, a 2.8% QoQ decrease, followed by Venus BTC at $662.7 million.

Two notable outliers emerged during the quarter. The “Other” category grew by 25.3%, increasing from $82.9 million at the end of Q2’24 to $103.8 million in Q3’24, potentially driven by the rising adoption of smaller collateral assets. In contrast, ETH saw a 21.7% decrease, dropping from $165.2 million in Q2’24 to $128.3 million in Q3’24, despite peaking at $232.0 million earlier in the quarter. The decline in ETH is likely due to market adjustments following the introduction of Venus Prime Boost and shifting user allocations within the protocol. This suggests that while Ethereum adoption is still growing, it may take additional time and incentives to stabilize collateral usage patterns.

Total Value Borrowed (TVB)

Total Value Borrowed (TVB) represents the aggregate value of all assets borrowed from Venus Protocol across its supported markets. It serves as a key metric for evaluating the protocol’s utilization and overall demand for its lending services. Unlike TVL, which measures deposits, TVB reflects the borrowing activity that drives revenue generation and lending efficiency.

Traditionally, TVB has shown significant fluctuations driven by shifting market demands and trading activity. Venus ended Q3’24 with $456.0 million, a 30.7% decline from $658.0 million QoQ, after peaking at $990.0 million during the quarter. BNB, known for its volatility due to its broad market exposure and varying regulatory frameworks, saw a 72.7% decrease QoQ, ending the quarter at $31.58 million after a notable spike earlier in Q3’24 to $571.68 million. USDC was the sole asset with growth, increasing 5.7% QoQ to $91.9 million, following its appeal as a stable and liquid borrowing asset, coming in second to USDT, which ended the quarter with $256.1 million, a modest 0.3% decrease QoQ.

User Activity

User activity refers to the total volume of user-driven transactions on Venus Protocol, including asset deposits, withdrawals, loan repayments, and new borrows. These activities directly impact metrics like Total Value Locked (TVL) and Total Value Borrowed (TVB), offering a clear picture of the protocol’s utilization and user engagement trends.

Deposits fell 41.9% from $127,354 in Q2’24 to $74,000 in Q3’24. Withdrawals experienced the steepest decline, dropping 49.3% QoQ to $68,000. In contrast, repayments grew 13.9%, while borrows showed a slight 0.7% decrease QoQ. The spike in activity during Q2’24 was driven by higher APYs and anticipation around Ethereum’s launch. With Ethereum now launched and market speculation subsiding, user activity is returning to levels seen in late 2023. Over time, clearer trends will emerge as activity stabilizes.

Daily Active Users

The average daily number of users declined by 35.5%, from 939 in Q2’24 to 605 in Q3’24. This metric can fluctuate QoQ due to outliers, such as sudden surges in user activity, which may skew the average over time.

Revenue Metrics

In the context of Venus Protocol, revenue is categorized into two primary types: protocol revenue (often referred to as “fees”) and supply-side revenue (commonly referred to as “revenues”). These metrics provide insight into the financial performance of the protocol and its participants.

  • Protocol Revenue (Fees): This represents the portion of total revenue retained by the protocol itself. Protocol revenue includes fees collected from borrower interest payments and penalties accrued during liquidations. It is retained to support protocol operations, governance, and treasury reserves.
  • Supply-Side Revenue (Revenues): This refers to the revenue earned by users who supply assets to the protocol. Supply-side revenue is generated from interest paid by borrowers and distributed to lenders as compensation for providing liquidity.

Within Venus, interest revenue is the interest paid by borrowers on loans, which is split between supply-side and protocol revenue. Liquidation revenue arises when borrowers fail to maintain the required collateral ratio, triggering liquidations that generate additional funds for the protocol. Liquidation revenue typically contributes entirely to protocol revenue, as it stems from penalties rather than interest payments.

Staked XVS

XVS staking on Venus allows tokenholders to participate in the protocol’s governance and earn rewards. By staking XVS, users gain voting power to influence Venus Improvement Proposals (VIPs), which guide protocol development, treasury management, and risk parameters. Additionally, staked XVS contributes to the protocol’s buyback and redistribution mechanism, enabling stakers to receive a share of the protocol’s revenue.

Staking XVS on Venus increased by 4.29% QoQ, rising from 7.04 million in Q2’24 to 7.32 million in Q3’24. The dollar value of staked XVS grew 52.82% from $272.16 million in Q2’24 to $415.93 million in Q3’24, driven primarily by the rise in the token’s price. However, the dollar value growth is less significant as it reflects price fluctuations rather than an increase in staking participation. The key takeaway is the consistent rise in the number of XVS tokens staked, which demonstrates steady user engagement and confidence in Venus’s staking mechanisms, governance, and incentives.

Introducing Bad Debt Metrics

Bad debt refers to the portion of outstanding loans on a protocol that cannot be repaid, typically due to failures in the liquidation process. Lending platforms like Venus rely on a Loan-to-Value (LTV) threshold, which ensures a borrower’s collateral maintains sufficient value to cover their debt. If an account’s LTV breaches the allowable ratio, liquidators—such as bots—step in to sell the collateral and repay the debt. However, in cases where liquidations are delayed or fail (e.g., due to sudden market crashes, low liquidity, or blockchain congestion), the collateral may not cover the borrowed amount, leaving the protocol with unrecoverable losses classified as bad debt.

Starting Q3’24, the bad debt metric will be tracked for Venus to provide a clearer view of the protocol’s financial health and resilience in managing lending risks. This measure will offer insight into the effectiveness of the protocol’s risk management and its ability to safeguard lender and platform funds.

Venus saw a significant decline in bad debt during Q3’24, starting the quarter at $5,332.35 and ending at $879.71, an 83.5% reduction. This sharp decrease reflects improved risk management and liquidation processes during the quarter. With $2.19 billion in TVL at the end of Q3’24, the ratio of bad debt to TVL stands at just 0.04%, highlighting the protocol’s strong financial health. The reduction in bad debt could be attributed to stabilized market conditions and more efficient collateral management, minimizing the risk of unliquidated positions.

Qualitative Analysis

Protocol Updates

Venus Prime Boost Launch

On July 16, 2024, Venus Protocol launched Venus Prime Boost on Ethereum Mainnet via VIP-339, following the earlier approval of VIP-334. This deployment expanded Venus’s presence beyond BNB Smart Chain, opBNB, and Arbitrum One. It involved transferring 47.88 ETH, 0.23 BTC, 14,000 USDC, and 14,000 USDT—totaling $200,000—to ensure liquidity and stability on Ethereum.

Venus Prime Boost introduced isolated lending markets, enabling specialized pools to optimize asset utility and reduce risk exposure. The upgrade also enhanced capital efficiency, offering users greater flexibility in borrowing and lending while increasing yield potential.

A key component of the launch was the Prime Token system. Users staking 1,000 XVS for 90 days could mint a Revocable Prime Token, boosting rewards in selected markets. The development of an Irrevocable “OG” Prime Token is planned to reward long-term supporters.

Cross-Chain Token Management

Venus Protocol managed XVS token distribution and transfers across multiple networks in Q3 2024. VIP-335, approved on July 3, 2024, resumed XVS emissions on Ethereum, allocating 112,000 tokens for distribution. VIP-341 followed, enabling unlimited XVS transfers across networks and authorizing 22,500 XVS to the XVS Store contract.

VIP-358 introduced specific limits for XVS transactions on zkSync Era, including a $20,000 cap per transaction, a daily transfer limit of $100,000, and a mintable token limit of 500,000 XVS. Venus Protocol’s cross-chain strategy extended operations to Ethereum, zkSync Era, and Optimism, aiming to increase user base and liquidity while maintaining interoperability across blockchain ecosystems.

Risk Fund Accessibility

On August 29, 2024, VIP-357 was approved with 99.8% community support, enhancing Venus Protocol’s ability to manage security risks. The proposal allows the Risk Funds to be accessed via Fast-Track, Critical, and Normal VIP tracks, enabling swift resource allocation.

A significant feature is the authority to liquidate the BNB Exploiter’s account through any VIP track, reflecting Venus’s proactive approach to addressing past security incidents. The upgrade also permits adjustments to liquidation fees and retention of seized BNB, bolstering the protocol’s risk management capabilities.

Governance

Venus Protocol governance revolves around the XVS token, a BEP-20 token that grants holders voting power to participate in decision-making. Tokenholders can stake XVS on the Venus application to create and vote on Venus Improvement Proposals (VIPs), which guide the protocol’s development and operations. Governance encompasses treasury management, collateral parameters, stablecoin minting fees, and more.

Venus Improvement Proposals (VIPs) serve as the mechanism for implementing changes within the protocol. They are categorized based on their scope, ranging from adjustments to token emissions and liquidity to the introduction of new features and integrations. Each XVS token equals one vote, and decisions require community approval through on-chain voting. Q3’24 introduced 44 new VIPs, of which 43 were executed and 1 was defeated.

Key VIPs Q3’24:

  • VIP-333: This proposal introduced the Vanguard Vantage Program, allocating $542,000 to establish a dedicated team focusing on ecosystem growth. The initiative aims to enhance governance through stakeholder collaboration, conduct sentiment checks for community feedback, and develop partnerships with DEXs and other networks. Additionally, it promotes the use of LP tokens and yield-bearing assets as collateral, driving user engagement and protocol expansion.
  • VIP-334: Facilitated the transfer of $200,000 in tokens, including ETH, BTC, USDC, and USDT, from the Venus Treasury to the Ethereum Mainnet in preparation for the Venus Prime Boost launch.
  • VIP-339: Building on VIP-334, this proposal officially launched Venus Prime Boost on Ethereum. Key features included isolated lending markets for specialized pools, improved capital efficiency, and the introduction of the Prime Token system. The Revocable Prime Token incentivizes long-term XVS staking, while the upcoming Irrevocable “OG” Prime Token aims to reward dedicated supporters.
  • VIP-345: This proposal added ezETH (Renzo Protocol) as a collateral asset to the Liquid Staked ETH pool on Ethereum. By expanding the range of supported assets, Venus aims to attract a broader user base and increase liquidity within the platform.
  • VIP-346: Allocated over $230,000 in stablecoins for audits, retainers, liquidity management, and gas refunds. Significant recipients included Certik, Chainalysis, and Chaos Labs.
  • VIP-349: Allocated $193,000 in USDT and 200,000 VAI to fund the Venus Stars Ambassador Program for 2024–2025. This program focuses on increasing global outreach through ambassador stipends, event marketing, and community initiatives, enhancing user education and protocol visibility across multiple blockchains.
  • VIP-356: This proposal established Venus Protocol’s presence on zkSync Era, a Layer-2 scaling solution. Actions included transferring Venus Treasury ownership on zkSync to the Guardian wallet and configuring key oracles. The integration, further supported by VIP-358, introduced a LayerZero bridge for XVS transfers, improving cross-chain liquidity and accessibility.
  • VIP-357: Improved the protocol’s ability to allocate Risk Funds by enabling access through Fast-Track, Critical, and Normal VIP tracks. This flexibility strengthens Venus’s capacity to manage security threats and liquidate problematic accounts, such as the BNB Exploiter, to mitigate risks effectively.
  • VIP-364: Reduced XVS emissions on BNB Chain markets to zero while reallocating 1,200 XVS per month to governance incentives.
  • VIP-369: Allocated 36,000 XVS tokens for zkSync Era incentives and liquidity, including 6,000 XVS for vault rewards and 30,000 XVS for market emissions.
  • VIP-374: Enabled the deployment of Venus on Optimism, configuring LayerZero bridge contracts for cross-chain XVS transfers. Ownership of the XVSVault on Optimism was also transferred to the Guardian wallet, setting the stage for further network growth.

Partnerships and Integrations

zkSync Era Integration

Venus Protocol expanded to Layer-2 solutions with its integration into zkSync Era, approved through VIP 356 on Aug. 26, 2024. This proposal authorized the transfer of Venus Treasury ownership on zkSync to the Guardian wallet and approved oracle configurations, establishing the groundwork for the network’s operations.

VIP 358, passed on Aug. 29, 2024, further advanced the integration by implementing a bridge contract for transferring XVS tokens between zkSync Era and other networks, including BNB Smart Chain, Ethereum, Arbitrum, and opBNB. The bridge leverages LayerZero’s Omnichain Fungible Token V2 standard to enhance cross-chain liquidity and accessibility.

ResilientOracle System Implementation

As part of its V4 upgrade, Venus Protocol introduced the ResilientOracle system on Aug. 12, 2024. This system enhances security by addressing vulnerabilities in single-source price oracles. It aggregates data from multiple sources, including Chainlink, RedStone, Pyth Network, and Binance Oracles, to cross-validate price data and improve reliability.

Each vToken market now employs a main, pivot, and fallback oracle for price validation, minimizing risks of oracle failures or manipulation. Governance mechanisms allow real-time configuration and integration of new oracles via (VIPs).

Audited by OpenZeppelin, Peckshield, Certik, and Hacken, the ResilientOracle system is deployed across Ethereum, OpBNB, Arbitrum, and BNBChain, showcasing its cross-chain adaptability and robust security framework.

ChainPatrol Integration

On July 19, 2024, Venus Protocol integrated ChainPatrol’s security services following unanimous community approval. The one-year contract, valued at $3,000, provides Venus with tools for active threat monitoring, rapid response, and a dedicated security dashboard.

Key features include:

  • Real-time threat alerts via bots on Discord, Telegram, and Slack.
  • Domain and social media takedown services to counter social engineering attacks.
  • Security dashboard for threat tracking, metrics, and takedown reports.

This integration strengthens Venus Protocol’s defenses, improving its ability to mitigate risks and protect user assets.

On-Chain Initiatives and Community Engagement

Vanguard Vantage Launch

Venus Protocol launched the Vanguard Vantage Program via VIP-333 to support its growth in business development, governance, and ecosystem expansion. With an annual budget of $542,000, the program introduced a five-member team focused on increasing user adoption, building partnerships, and strengthening community engagement.

Key initiatives include:

  • Enhancing governance through stakeholder collaboration.
  • Conducting sentiment checks for community input.
  • Establishing a gated delegator community for exclusive updates and events.
  • Partnering with decentralized exchanges (DEXs) and new networks.
  • Promoting LP tokens and yield-bearing assets as collateral.

Venus Stars Program

The Venus Stars Program, renewed via VIP-349, allocated 193,000 USDT and 200,000 VAI, the Venus Protocol stable coin backed 1-1 with USD, (Venus Stable Coin) from the Venus Treasury to the Venus Community Wallet for its annual budget. Covering the period from July 2024 to June 2025, the funds will be used for ambassador stipends, event marketing, travel, promotional materials, and community outreach. Any unused budget will roll over to the next period.

This initiative aims to enhance the Venus community by providing educational resources, structured support for moderators and ambassadors, and promoting active participation within the ecosystem.

Gaming Partnerships

Venus Protocol partnered with Gomble Games, a Telegram-based game on the BNB Network, to integrate XVS as an in-game currency. The partnership includes:

  • A 10% discount on purchases made with XVS.
  • Burning 5% of XVS used in Gomble’s EggDrop feature.
  • Future staking opportunities for WORM token holders to earn $winG.

To support this collaboration, Gomble Games received a $10,000 Gitcoin Grant. This partnership bridges DeFi and gaming, showcasing new use cases for the XVS token while promoting broader ecosystem adoption.

Closing Summary

Q3’24 marked a period of adjustment for Venus Protocol, with Total Value Locked declining slightly to $2.19 billion and Total Value Borrowed falling 30.7% to $456 million. Despite these decreases, Venus demonstrated strong financial resilience, reducing bad debt by 83.5% to $879.71, or just 0.04% of TVL, reflecting improved liquidation processes and risk management. Staking activity also grew 4.29% QoQ to 7.32 million, highlighting steady user participation even amidst broader market fluctuations.

Venus’s focus on long-term growth was evident through initiatives like Vanguard Vantage and Venus Stars, which aimed to enhance governance, community engagement, and ecosystem expansion. Partnerships such as zkSync Era and Gomble Games integration further diversified use cases for XVS and strengthened the protocol’s position in the DeFi landscape. These efforts showcase Venus’s adaptability and commitment to maintaining its leadership as the market evolves.

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