Today Venus officially announces another milestone for its V4 upgrade: Isolated Pools, which add important extensibility and scalability to onboard the next generation of digital assets onto the protocol. Thanks to the community’s initiative and hard work, this deployment includes governance approved listings of 15 new assets, nearly doubling the quantity of markets supported on Venus up until now. 

So what does this mean exactly for everyday DeFi users, present and future?

As a liquidity protocol that makes digital assets available via collateralization and on chain debt, Venus has a key constraint in the availability of supporting new assets: risk management and volatility. Indeed, crypto as an asset class has been notoriously volatile making the safe collateralization of digital assets difficult to manage when the liquidity of tens of thousands of users, and in the billions of dollars is at stake.

Thanks to Isolated Pools, Venus now adds several new important use cases to its protocol. Firstly, Venus can now segregate the risk of these assets away from the core pool of the protocol, essentially setting aside the riskier assets for users with greater appetite for them. This means that hundreds of digital assets will have the opportunity to enable a new use case as on chain debt and/or collateral. This innovation is what makes enabling the long tail of assets possible for DeFi.

Secondly, Isolated Pools introduce a segregated environment for assets that, instead of being too volatile, are far less volatile than traditional cryptocurrency assets. These digital assets represent the tokenization of real world assets (RWA) that have been increasingly validated as an important contributor to DeFi growth (to the tune of 9 figures). These new collaterals may have originated as business receivables, real estate, and more. With Isolated Pools, Venus adds the capability to host these in a risk adjusted environment with any additional controls needed to support the onboarding of these assets.

Thirdly, by introducing new pools, the risk management and functionality of each pool can be thematically tailor made for any given asset class or profile. The introduction of pools registered to Venus like DeFi, Liquid Staking Tokens, GameFi, and so on, represent the first phase of new possibilities where the collateralization and ‘debtification’ of assets on chain is more finely tuned for every segment of digital asset.

Isolated Pools is an important new addition to Venus Protocol and this marks just the beginning of what can be achieved with it. We’re excited for the community to contribute to this journey and make DeFi more global and more accessible with every new asset and pool introduced along with this initiative.