Proposal: Enable BNB as a Prime Market on Venus Protocol
Summary
This proposal advocates adding BNB as a Venus Prime market asset, extending the Prime program’s boosted rewards to BNB lending and borrowing on Venus Protocol. BNB is the native token of BNB Chain and a top-3 crypto asset by market capitalization (>$90B) . It plays a central role in the BNB Chain DeFi ecosystem, serving as gas and a primary store of value for users. On Venus, BNB has consistently been one of the largest and most utilized assets, accounting for up to ~39% of total collateral in mid-2024 and often leading in borrow demand. However, BNB is not yet included in the Prime incentive markets (currently USDT, USDC, BTC, ETH). Enabling BNB as a Prime market would align incentives with its importance: Prime users (those who stake XVS for a Prime soulbound token) would earn boosted rewards on BNB, encouraging more BNB deposits, stable utilization, and deeper liquidity on Venus.
In summary, adding BNB to Venus Prime is a strategic move to leverage BNB’s prominence in the ecosystem. It would reward BNB suppliers/borrowers with extra incentives, make Venus more attractive to BNB holders, and likely increase Venus’s TVL and fee revenue. Given BNB’s historical performance on Venus (high TVL, episodic surges in borrow volume, and significant contribution to protocol revenue), the return on investment (ROI) for including BNB in Prime appears very compelling. This proposal details the rationale and expected benefits, using on-chain data from BNB Chain and Venus to support the case.
Rationale
Importance of BNB in the BNB Chain Ecosystem
BNB is the cornerstone of the BNB Chain ecosystem. As the native coin of BNB Chain, it is used for transaction fees, staking, and is widely held by participants. BNB consistently ranks among the top crypto assets by market cap (3rd largest excluding stablecoins as of Q1 2024) , reflecting its broad market presence. This ubiquity translates into extensive DeFi usage: BNB is a base pair in many liquidity pools and a popular collateral/borrow asset across BNB Chain protocols. BNB Chain’s DeFi activity has been on the rise (e.g. BNB Chain DeFi TVL grew 67% QoQ in early 2024 amid a broader market rally ), and BNB’s value accrual is tightly interwoven with this growth.
Within Binance’s ecosystem, BNB also powers programs like Binance Launchpool, where users stake BNB to earn new token rewards. This has made BNB a highly sought-after asset during new project launches, linking CeFi initiatives to on-chain demand. In short, BNB is to BNB Chain what ETH is to Ethereum – a fundamental asset that underpins network activity and DeFi liquidity. Any major Venus initiative (like Prime) that seeks to focus on “most liquid markets” would be remiss not to include BNB, given its importance.
Historical BNB Lending Performance on Venus
On Venus Protocol, BNB has demonstrated strong and growing usage, underscoring its suitability as a Prime market asset. Total BNB supplied (deposited) and borrowed on Venus have been among the highest of all assets on the platform. Table 1 below provides a snapshot of BNB’s key lending metrics in recent periods, illustrating its prominence and growth:
| Quarter (2024) | BNB Supply (TVL) | BNB Borrowed (Outstanding) | Utilization Rate (Borrow/Supply) |
|---|---|---|---|
| Q2 2024 | ~$887 million (largest asset) | ~$116 million (est.) | ~13% (moderate) |
| Q3 2024 | ~$862 million (remained #1) | ~$31.6 million (post-spike low) | ~4% (post-event) |
| Q4 2024 | ~$720 million (2nd largest) | ~$291 million (sharp rise) | ~40% (healthy) |
Table 1: BNB market size and utilization on Venus Protocol over recent quarters. (Q2 2024 borrow figure is an estimate derived from the 72.7% QoQ decarease noted in Q3 .)
Several trends emerge from these figures:
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BNB Supply (TVL): BNB deposits on Venus grew rapidly from late 2023 into 2024. For context, BNB’s supplied value jumped from about $404M in Q4 2023 to $739M in Q1 2024 , then to ~$887M by Q2 2024 . This growth made BNB the single largest collateral asset on Venus by early-mid 2024 . Even after a slight dip in Q3, BNB still accounted for ~39% of Venus’s total collateral that quarter . By Q4 2024, BNB’s TVL moderated to ~$720M (28.7% of total) as BTC-based assets surged in value, but BNB remained a core pillar of Venus’s liquidity. This persistent high supply indicates strong user trust in Venus for holding BNB, an essential factor for a Prime asset.
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BNB Borrowing & Utilization: Demand to borrow BNB has been volatile but at times extremely high. In Q1 2024, BNB was the most borrowed asset on the platform by issuance, with $629M in BNB loans originated that quarter (110% QoQ growth) – surpassing even stablecoins. However, outstanding BNB borrows fluctuated due to users often borrowing BNB for short-term opportunities (discussed below in Launchpools) and then repaying. For example, at end of Q3 2024, only $31.6M BNB was on loan after a wave of repayments, yielding a low utilization of ~4%. Yet just weeks prior, BNB borrow volume had spiked to ~$572M during that quarter . By end of Q4 2024, BNB loans outstanding soared back to $291M (utilization ~40%), reflecting a renewed surge in demand (attributed to a December mini-bull run) . These swings show that BNB can attract massive borrow demand, albeit in bursts. As a Prime asset, BNB’s utilization could stabilize at higher levels, because Prime incentives would encourage more continuous lending of BNB (keeping supply “stickier” even during external events) and potentially reward borrowers as well.
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Interest Rates and Yields: BNB’s interest rate on Venus follows the standard jump-rate model, which responds to utilization. During normal periods (utilization in, say, the 10–40% range), BNB suppliers earn a moderate APY and borrowers pay a moderate rate. Across all assets, deposit APYs on Venus have had a median around ~5% in stable periods , and BNB has been a contributor to Venus often offering higher APYs than competitors on BNB Chain . In times of high BNB demand, interest rates have spiked dramatically – benefiting suppliers. For instance, in early 2024 BNB deposit APY occasionally reached double digits (20%+) during peak borrowing bouts . These attractive yields underscore why many users supply BNB to Venus. By making BNB a Prime market, such users would get additional reward boosts (funded by Venus’s revenue share to Prime), making BNB’s effective APY even more appealing and likely drawing in further deposits.
In summary, BNB’s track record on Venus – rapid TVL growth, topping collateral charts, and capacity for large-scale borrow utilization – strongly supports its inclusion in Prime. It is a proven, high-liquidity market on Venus. Prime status would reinforce this success by incentivizing even more BNB liquidity and usage in a sustainable way (since Prime rewards come from actual protocol revenue, not just emissions ).
BNB in Launch Pools: Impact on User Activity & Liquidity
One of the most striking aspects of BNB’s usage on Venus is how Binance Launchpool events drive short-term demand spikes. Binance Launchpool allows users to stake BNB (and other tokens) to farm new token rewards; whenever a new project’s pool opens, it creates a surge in demand for BNB. Many users who lack enough BNB borrow it from Venus, while others withdraw their BNB from Venus to stake in the Launchpool, causing a liquidity crunch. These dynamics have a profound impact on Venus’s BNB market – and they highlight BNB’s unique significance in stimulating user activity.
BNB Borrow Rate Spikes During Launchpool Events: The figure above (by Chaos Labs) illustrates the dramatic fluctuations in BNB’s borrow interest rate on Venus (blue line, % APR) alongside total BNB supplied (black line) and borrowed (gray line) over early 2024. We observe multiple sharp episodes where BNB borrow demand skyrocketed (gray line jumping upwards), coinciding with spikes in the borrow rate well above 40–50% APR and simultaneous dips in BNB supply (black line) as funds were pulled out. These correspond to the timing of Launchpool events. For example, on April 12, 2024, when a new Launchpool opened, the amount of BNB borrowed on Venus leapt from ~153k BNB to 925k BNB within mere hours – an over 6x increase – causing the borrow APY to shoot up (approaching ~60% annualized) . On average, during such events, BNB borrowed can jump 10-20× from baseline levels . Notably, borrowers during Launchpools have proven rate-insensitive (willing to pay high interest for a few days) because the yield from farming new tokens often outweighs the cost . Each Launchpool typically lasts under a week, and during that period Venus’s BNB market operates near or above its utilization “kink”, with extremely high interest rates . Afterwards, borrowers return BNB and supply rebounds.
These Launchpool-driven cycles demonstrate two key points: (1) BNB is capable of attracting intense, short-term liquidity demand like no other asset on Venus, and (2) Venus has become a critical source of liquidity for BNB holders looking to capitalize on external opportunities. By including BNB in Prime, Venus can better harness this phenomenon. Prime incentives (such as higher yield for Prime BNB suppliers) would encourage more users to keep BNB deposited even during Launchpool periods, making liquidity “stickier.” In fact, a Prime reward boost could counteract some of the opportunity cost of not withdrawing BNB for Launchpool, keeping Venus’s supply more resilient. Likewise, those who do withdraw might be enticed to quickly return and deposit again to continue earning boosted rewards. On the borrowing side, Prime status could potentially be used to offer borrowers slight incentives or at least ensure that Venus’s BNB interest model is optimized (as was discussed in a past interest rate proposal) to handle these surges . The net effect would be a smoother experience: Venus can accommodate huge BNB demand spikes while Prime BNB suppliers reap extra rewards from the high interest and revenue generated.
In short, BNB’s role in Launchpools underlines its significance in driving user activity and liquidity flows. It brings many users to Venus (to borrow or supply) during high-profile events. Incorporating BNB into Prime would amplify the positive side of this activity (higher revenues and APYs when demand spikes) and mitigate the negatives (liquidity volatility), by rewarding loyal BNB depositors and better aligning with how users actually use BNB.
Comparison with Existing Prime Assets (BTC, ETH, USDT, USDC)
Venus Prime was initially focused on four markets: BTC, ETH, USDT, and USDC . These were chosen for being highly liquid, blue-chip assets across DeFi. BNB is an equally compelling asset that meets the same criteria – and in the context of BNB Chain, arguably outshines some of those markets in terms of usage. A comparison of BNB’s Venus metrics versus current Prime assets highlights why BNB should be added:
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Depth of Market: BNB’s collateral pool on Venus is comparable to or larger than those of Prime assets. As of Q4 2024, for example, BNB’s supplied value ($720M) was greater than that of any single stablecoin on Venus and second only to BTC’s collateral ($957M) . BNB constituted ~29% of Venus’s total TVL, whereas ETH’s share was only ~5% (roughly $128M supply as of Q3 2024) . Even the major stablecoins (USDT, USDC) collectively held a similar share to BNB. This means BNB liquidity on Venus is at least as critical as the liquidity of the assets already in Prime.
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Borrow Demand and Utilization: BNB has demonstrated periods of higher utilization than most Prime assets. In Q4 2024, BNB’s outstanding borrows ($291M) were the highest of any asset, slightly above USDT’s ($280M) and far above ETH’s ($99M) . BNB’s utilization (40% at Q4-end) was significantly higher than BTC’s (~10%) and on par with or above typical stablecoin utilization. This indicates BNB generates substantial interest income and actively contributes to Venus’s revenue when enabled. By contrast, assets like BTC, while having large supply, often see much lower borrow utilization on Venus (many deposit BTC as collateral but fewer borrow it), meaning the active revenue-generating use of BTC is less than that of BNB. Including BNB in Prime would channel incentives to an asset that can immediately convert rewards into more protocol activity (through both lending and borrowing upticks).
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User Base and Strategic Value: BNB is the native asset of the chain Venus started on, so many Venus users already hold BNB and use it regularly. Adding BNB to Prime is a user-centric move – it directly benefits a large segment of Venus’s user base (BNB suppliers and borrowers) by increasing their rewards. In contrast, Prime’s inclusion of ETH and BTC is partly forward-looking (to attract cross-chain users as Venus expands multi-chain). While those are important, BNB’s inclusion addresses the core BNB Chain community that Venus originated from, reinforcing loyalty there. It sends a message that Venus rewards the BNB community for their contributions (which have been enormous, as shown by BNB being a top asset on the platform).
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Risk and Quality: BNB is a proven, high-market-cap asset with deep liquidity on and off chain. From a risk perspective, it is on par with other Prime assets (it’s less volatile than many smaller-cap coins and has a long track record). Venus’s risk framework already supports BNB with appropriate collateral factors and interest rate parameters (which have been actively managed, e.g. adjusting for Launchpool volatility ). Thus, there is no significant additional risk in elevating BNB to Prime status. If anything, doing so could improve risk distribution by encouraging more diversified collateral (keeping BNB liquidity high and stable on Venus helps ensure the protocol can handle large BNB loans and liquidations if needed).
In summary, BNB matches or exceeds the criteria set by existing Prime markets in terms of liquidity, usage, and importance. Its omission from Prime is likely an artifact of the initial launch scope, rather than a deliberate assessment that BNB is less worthy. Given the data, it’s clear that BNB is as “Prime” as BTC or ETH, especially within the BNB Chain realm. Aligning Prime incentives with BNB’s market will strengthen Venus’s competitive position in BNB-based DeFi and ensure Prime truly covers all major assets on the platform.
ROI (Return on Investment and Value Proposition)
Enabling BNB as a Prime market asset is expected to yield significant benefits for the Venus Protocol and its community, far outweighing the costs (which are mainly the allocation of some reward share to BNB market participants). Below we outline the key value propositions and ROI considerations:
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Increased User Incentives & Engagement: By adding BNB to Prime, Venus will unlock boosted reward APRs for BNB lenders and borrowers who are Prime users (XVS stakers). This creates a strong incentive for BNB holders to use Venus over other platforms. We anticipate an influx of BNB deposits (and retention of existing deposits) as users seek to maximize their yield with Prime boosts. Even a modest increase in BNB deposits – say +10% (~$70–80M) – would drive additional interest earnings and make Venus’s BNB market more robust. Historically, when Venus offered higher APYs than competitors, it saw a 16% uptick in deposits and record user activity . ROI: More engaged users, higher retention, and an expanded depositor base in the BNB market.
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Sticky Liquidity & Deeper Market Depth: One core benefit of Prime is that it encourages long-term behavior (since Prime status requires 90-day XVS staking commitments) . If BNB is a Prime asset, those Prime holders providing BNB liquidity are less likely to withdraw it on a whim, because they value the ongoing boosted rewards. This makes BNB liquidity “stickier”, reducing volatility in available supply. The ROI here is qualitative but crucial: deeper liquidity means tighter borrow/supply dynamics and less drastic interest swings, which improves the platform’s stability and attractiveness. For example, during past Launchpool events, BNB supply dropped and rates spiked wildly ; with more Prime-committed BNB, future spikes would be tempered by a larger steady pool of BNB that remains on Venus earning rewards. A deeper BNB pool also allows more borrowers to be served without slippage in interest rates, effectively increasing Venus’s lending capacity and market depth.
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Higher Protocol Revenue & XVS Value Accrual: More BNB activity (loans taken and given) directly translates to higher interest accrual and thus higher protocol revenues. We saw this in Q4 2024 – when BNB borrowing jumped 821%, Venus’s protocol-side revenue nearly doubled QoQ to $19.7M . BNB was a major contributor to that revenue spike, being the fastest-growing portion of the borrow portfolio. By making BNB a Prime asset, Venus incentivizes maintaining that high level of activity consistently. Every additional dollar of interest paid by BNB borrowers is split between suppliers and the protocol (treasury, XVS buyback, Prime rewards) , bolstering Venus’s finances. Importantly, Prime stakers themselves benefit from this via the revenue distribution: a portion of Venus’s revenue is used to buy back XVS and reward governance stakers and Prime token holders . Thus, if BNB Prime inclusion drives, say, an extra few million in annual interest, 20%+ of that could feed back to XVS/Prime stakers, increasing their ROI for staking. This creates a virtuous cycle: more BNB usage → more revenue → more rewards to XVS stakers → more demand to stake XVS (to get Prime) → reduced XVS float and stronger token value, which is good for the community and governance. In summary, the financial ROI of adding BNB to Prime includes higher fee income and an enhanced value proposition for XVS, Venus’s governance token.
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Competitive Edge & User Acquisition: In the broader market, other lending protocols on BNB Chain (or CeFi platforms like Binance itself) also service BNB. By offering Prime boosting BNB, Venus can differentiate itself as the go-to venue for BNB holders. This can attract new users who might otherwise use competitors. Venus already holds a leadership position as the top lending platform on BNB Chain , and building on that by rewarding BNB usage will cement user loyalty. The ROI here is measured in market share: capturing a larger slice of BNB’s DeFi activity. If, for example, Venus can pull even a fraction of the BNB that sits idle in exchange accounts or bring over users from smaller BNB lending pools, the protocol’s TVL and influence grow. Additionally, Prime status for BNB could be used in marketing Venus Prime to BNB’s huge community (many of whom may not yet be Venus users). Every BNB holder is a potential Venus Prime user once this change is made – representing a sizable expansion of the Prime program’s reach.
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Alignment with BNB Chain Growth: BNB Chain’s ecosystem continues to expand (with new rollups like opBNB, increased DEX volumes, etc.). BNB itself is at the center of this growth. By integrating BNB into Prime now, Venus positions itself to ride the wave of BNB Chain’s expansion. More projects and use-cases for BNB will only increase demand for borrowing and leveraging BNB. Venus can capture that value under the Prime framework, ensuring the benefits flow to the Venus community. The ROI is long-term: Venus stays relevant and central in the BNB Chain landscape, with BNB Prime market acting as a key liquidity hub that supports things like new launches, trading strategies, and yield opportunities on BNB Chain. Essentially, it future-proofs Venus’s business by fully embracing the chain’s native asset in its premier rewards program.
In terms of costs or risks: the main “cost” is allocating Prime reward share to BNB market participants, which is actually just sharing existing revenue, not printing new tokens. Venus Prime is designed to be sustainable (using protocol revenue instead of inflation) . The current revenue pie would be split to include BNB markets – a justified move given BNB’s outsized revenue contribution. Any dilution of rewards to current Prime markets is likely minimal and offset by the increase in total revenue that BNB’s inclusion will bring. Furthermore, bringing more XVS into staking (from BNB whales who stake to get Prime benefits) can strengthen governance and decentralization, which is an intangible ROI in terms of ecosystem health.
Overall, the value proposition of making BNB a Prime asset is clear: it amplifies what is already a core strength of Venus (the BNB market) and turns it into an engine for growth, rewards, and user retention. The expected benefits — higher liquidity, usage, and revenue — directly benefit the protocol and its stakeholders.
Conclusion
Enabling BNB as a Venus Prime market asset is a natural next step for Venus Protocol’s evolution. BNB lies at the heart of BNB Chain’s DeFi activity and has proven to be one of the most significant markets on Venus in terms of both TVL and user demand. By incorporating BNB into the Prime rewards program, Venus can better serve its community of BNB holders and borrowers through enhanced incentives, while also strengthening the protocol’s liquidity and revenue base. The historical data – from BNB’s dominance in Venus’s collateral pools to the intense borrow demand during Launchpool events – all point to the same conclusion: BNB is a prime asset and should be treated as such.
This proposal offers a win-win for users and the protocol. BNB users will enjoy boosted yields and more opportunities to put their BNB to work, and in return Venus will likely see higher engagement, stickier deposits, and greater fee generation that feeds back into XVS value. It aligns with Venus’s mission of being the top money market on BNB Chain by fully embracing the chain’s native token in its premier incentive program. Comparisons with existing Prime markets show that BNB meets every qualification and, in many aspects, is on par with BTC/ETH and more critical than even stablecoins in driving Venus’s usage.
We therefore recommend that the Venus DAO approve the inclusion of BNB as a Prime market asset. Concretely, this would mean updating the Venus Prime configurations to add BNB to the list of markets where Prime stakers receive boosted rewards and possibly adjusting any relevant parameters to accommodate the change. Once implemented, Venus can publicize the addition of BNB to Prime, likely attracting a new wave of interest from the large base of BNB users.
In conclusion, making BNB a Prime asset solidifies Venus Protocol’s position in the BNB Chain ecosystem, rewards the community that has contributed the most to Venus’s growth, and sets the stage for sustained expansion of the platform. This strategic move will harness BNB’s full potential within Venus, driving greater liquidity and utility for years to come. The market can be bootstrapped with 100 BNB for swift enablement.
Let’s upgrade BNB to Prime and unlock the next level of growth for Venus Protocol.Sources:
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Venus Protocol – State of Venus Reports (Messari, 2023-2024)
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Venus Community Forum – BNB Launchpool Interest Rate Analysis (Chaos Labs, May 2024)
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Venus Protocol Documentation – Venus Prime Overview
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BNB Chain Q1 2024 Report (Messari) and BNB Chain ecosystem stats
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Venus Platform on-chain statistics (TVL, market sizes, utilization rates)
ring the BNB market to prime baby! Let’s give Venus what it deserves the best. Fully support this initiative. Let’s get this rollin ASAP! Critical VIP please!