Vee Finance series: Part 1

Market context

With cryptocurrency, the end of 2020 witnessed a superboom when DeFi (Decentralized Finance) becomes a huge giant in the blockchain industry, attracting a large number of newcomers to the market.

According to statistics on Defi Dashboard of Defillama.com on January 1, 2020 the TVL (USD) has increased from $603.22M USD to $223.26B recently. It shows that the money flow is pouring into DeFi.

Total TVL January 1, 2020 to October 19, 2021 (Source:
Total TVL January 1, 2020 to October 19, 2021 (Source: defillama)

Interest Per Year index and Debt Outstanding in 1 year (USD) Source:
Interest Per Year index and Debt Outstanding in 1 year (USD) Source: Defi Pulse

The cash flow mainly moved to 2 categories including AMM and Lending, especially “Lending and Borrowing".

At this point, the top 1 ranking of DeFi lending is Aave (AAVE), an open source and non-custodial protocol to earn interest on deposits and borrow assets, with $16.78B TVL, up to 13.51% this week, including 5.2% by lending and the rest - 9.8% is borrowing, the IPY index and Outstanding index are $710.60M and $7.243, respectively.

Top 2 is Compound (COMP), an algorithmic money market protocol on Ethereum allowing users to earn interest or borrow assets against collateral, reaching $11.51B TVL, up to 12,06% this week with 4.5% for lending, 6.3% for borrowing, the IPY and Outstanding are $459.36M and $7.339B, respectively.

Top 3 is MakerDAO - a decentralized credit platform on Ethereum that is available for stable coin DAI. Participants can use Maker to open a Vault, lock in collateral (for example ETH or BAT) and generate DAI as debt against that collateral. MakerDao reaches $15.28B TVL including the rate of lending < 0.1% and the borrowing occupies 0.9%, the IPY index is $65.98M, Outstanding is $7.302B.

NOTE: Interest Per Year (IPY), Interest Per Year (IPY) is the speed at which interest is accruing in DeFi. IPY is calculated by multiplying the current borrow rate by the total outstanding debt.

Lending Tokens Market Cap Today (Source:
Lending Tokens Market Cap Today (Source: Intotheblock)

DeFi lending aims to offer crypto loans in a trustless manner without intermediaries and allows users to enlist their crypto coins on the platform for lending purposes, this can explain why people recently are crazy for DeFi lending. A borrower can directly take a loan through the decentralized platform known as P2P lending and the lending protocol enables lenders to earn interest. Among all of the decentralized applications (DApps), Defi has the highest lending growth rate and is the most prevalent contributor for locking crypto assets.

The underlying technology for defi lending is Blockchain; Defi utilizes all its unique features and performs exceptionally well compared to traditional lending.

Defi lending offers complete transparency with easier access to assets for every money transfer process without involving any third-party.

It provides the most straightforward borrowing process; the borrower needs to create an account on the DeFi platform, have a crypto wallet and open smart contracts.

Defi offers a censorship-free environment, meaning there is no preferential treatment while ensuring immutability.

Defi lending benefits both lenders and borrowers. It offers margin trading options, allows long-term investors to lend assets and earn higher interest rates.

It will also enable users to access fiat currency credit to borrow loans at lower rates than decentralized exchanges. Moreover, the users can sell it on a centralized exchange for a cryptocurrency and then finally lend it to decentralized exchanges.

Defi Lending work (Source: Internet)
Defi Lending work (Source: Internet)

To put it simply, DeFi has certain outstanding features, and it inspires developers to create more and more promising projects. One of the hidden gem projects when it comes to DeFi is Vee Finance, a project created to connect traditional finance to DeFi.

What is Vee.Finance

Vee Finance is a DeFi lending platform for traditional financial and crypto users, built on Avalanche blockchain.

Vee desires to fill the gap between traditional finance and DeFi. It provides users with better digital asset management services.

Vee.Finance's goal is to reduce barriers for traditional users to participate in DeFi and optimize the efficiency of global asset allocation.

How VEE work

Vee Finance uses the protocol, users supply their preferred asset that is accepted by the protocol. Users will be able to earn interest based on the asset's market demand for borrowing.

Additionally, supplied assets can be used as collateral to allow the user to borrow other assets. Interest earned by supplying funds offsets the accumulated interest rates from borrowing.

Funds are administered by smart contracts. Suppliers/Lenders will be given tokenized yield-bearing tokens (veTokens) which will be used to withdraw funds from the pool on-demand when required.

Besides, Vee Finance supports users to take advantage of asset bridges to buy cryptocurrency with fiat. It is also considered as an asset bridge between Ethereum and Avalanche.

The bridge has 3 functions, including:

  • Ethereum - Avalanche: Vee provide a bridge by locking assets in Ethereum and transfer them into your Avalanche/MetaMask wallet
  • Fiat - Avalanche: Buy crypto currencies with debit card or credit card with USD/AUD/EUR in third parties.
  • CEX - Avalanche: Centralized exchanges also provide an easy way to get AVAX, which is the platform currency for Avalanche. You can use AVAX to pay for transaction fees and deposit AVAX into Vee.Finance directly.

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