Overview
BENQI Markets enable users to earn interest on their deposits and borrow against their holdings. This means they can maintain their exposure to potential asset appreciation while accessing additional capital to enter new positions.
For example, a user may wish to enter a new position but lacks available funds and does not wish to sell their existing $AVAX tokens.
They could:
- Deposit $AVAX into the BENQI protocol as collateral
- Borrow $USDC or another asset against their lent $AVAX
- Use the borrowed asset to enter positions
Imagine they used borrowed funds to purchase $BTC.
If both $BTC and the collateralized $AVAX appreciate in price, they could repay their $BTC loan and still maintain ownership of their $AVAX holdings. This approach allows the user to profit from the appreciation of both assets while maximizing capital efficiency. Once the loan is repaid, they can reclaim their $AVAX collateral and retain any additional gains from the $BTC investment.
Core Markets & Avalanche Ecosystem Markets
There are two core types of lending markets:
- Core Markets: BENQI's primary lending and borrowing pools are designed for highly liquid assets such as AVAX and USDC, offering lower risk and stable returns.
- Avalanche Ecosystem Markets (decommissioned): These markets focused on long-tail crypto assets and RWAs, with carefully crafted risk parameters designed to ensure that volatility or liquidity issues in one market did not affect the others. They are now decommissioned: all assets in them have been paused and collateral factors set to 0.