The proposal aims to upgrade Venus Protocol to an efficient chain-agnostic lending platform, using LayerZero’s Omnichain messaging services.
Venus Protocol-LayerZero Multi-Chain Lending
A new governance proposal for the leading decentralized lending and borrowing money market on BNB Chain, Venus Protocol, to partner with LayerZero Labs has been presented to the Venus Community.
The partnership aims to upgrade Venus Protocol into an efficient cross-chain money market using LayerZero’s Omnichain messaging services.
The co-founder of LayerZero Labs, Ryan Zarick, presented the proposal to the Venus community. Venus Protocol announced the proposal on Twitter on Sept. 19.
How Would LayerZero Upgrade Venus?
LayerZero Labs provides cross-chain messaging, enabling smooth interoperability between different blockchains using an Oracle-Relayer messaging mechanism. The mechanism allows a user-protocol on one chain to communicate and reach a consensus with another protocol on a different chain without the need to bridge tokens between the two chains.
For example, let’s say that a Venus user has funds on BNB Chain but wants to yield-farm on Ethereum. Currently, the user would typically need to:
Deposit assets as collateral on BNB Chain, and borrow funds on BNB Chain.
Bridge the funds from BNB Chain to Ethereum with bridging fees, swap to the appropriate asset on Ethereum with swap fees, then deposit into the farm on Ethereum.
To pay back the loan, the user will go through the reverse process: swap back on Ethereum Chain with a fee, bridge back to BNB Chain, pay back the loan and recover the collateral.
The procedure requires multiple actions on the user’s part, wastes time, and involves a higher level of risk because of the need to interact with various smart contracts. Deploying LayerZero’s Omnichain messaging infrastructure on Venus will enable Venus users to have collateral on one chain and borrow and use assets on another chain while bypassing bridging and swaps with the fees. The integration will work at the backend, and users will not need to interact with any other interface apart from Venus’.
LayerZero’s tech is live on 10 chains, including Ethereum, Polygon, Arbitrum, Optimism, BNB Chain, Avalanche and Fantom. Audits are in progress towards deploying on 16 other chains as well.
If the proposal is approved, it would mean that users of Venus Protocol would have lending exposure to many chains through LayerZero, potentially offering cheaper cross-chain lending and borrowing. It would also reduce lending complexity for users.
Ultimately, users could take advantage of the abundant Decentralized Finance (DeFi) benefits available on other chains. For more details about the proposal, HERE is a link to it.
What is Venus Protocol:
Venus Protocol is a decentralized marketplace for lenders and borrowers with borderless stablecoin. Venus is one of the largest algorithmic money market and synthetic stablecoin protocols on the BNB Chain. The Binance-backed protocol became famous around the DeFi following their hint of a massive incoming burn by founder Joselito and its Venus Reward Token VRT rewards for $XVS token holders.
Where to Venus Protocol:
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