Source: App.Benqi

They have adopted the Linear Rate Model at the beginning. Recently, Benqi has switched to the Jump Rate Model in order to incentivize liquidity when in a high utilisation rate (which is similar to Aave’s interest rate model).

Source: Docs.Benqi

Benqi’s QI token is native on the Avalanche blockchain. QI currently has 2 main utilities: 1) Staking and 2) Liquidity Mining. As of 3rd Feb 2022, QI has 1.36 million circulating supply. It is valued at $0.057 and ranked 470 in market cap according to coingecko.In total, there are 72 million of QI tokens. 45% has been allocated for liquidity mining program, 25% were sold via token sale, 15% was allocated for Treasury, 10% was allocated for the team and the final 5% was allocated for exchange liquidity.

Source: Benqinomics

The vesting schedule of QI is spreaded from August 2021 to June 2027. They will have a more aggressive vesting from May 2022 to Sep 2022 where the Foundation and team will unlock their QI tokens.

Source: Binance Research

Just 1 month after their launch, they have become the 1st protocol on Avalanche to hit $1 billion in total value locked(TVL) and 13,000+ unique users. As of 3rd February 2022, Benqi ranked 2nd in TVL on Avalanche and 17th in the whole DeFi space according to DeFi Llama.

With the outstanding achievements of Benqi, this research will be discussing the challenges for them and their upcoming enhancements in order to keep up their dominance.

During the DeFi sensation, a lot of users have flocked into the Ethereum blockchain for the hottest DeFi protocols like Curve, Uniswap, Aave, Compound, etc. The TVL on Ethereum grows with the amount of gas fee.Being a proof-of-work blockchain with only 15 TPS, the congestion has resulted in high gas fees for the users. The below data is pulled from Etherscan and used 100,000 Gwei as an average gas fee per transaction. During the 2nd half of 2020 till Q1 of 2021, the average gas fee is $9.62. From Q2 2021 till now, gas fee on Ethereum took another leg up to $32.33 on average thanks to the NFT craze in the crypto space.

Source: EtherScan

Even though many DeFi applications on Ethereum have incorporated layer 2 solutions like Arbitrum, Optimism and Polygon, the gas fee on Ethereum is still relatively high compared to other layer 1 blockchains. Therefore, many users have opted for other DeFi applications on Ethereum’s competitors like BSC, Avalanche and Solana. Pulling the chain historic TVL from DeFi Llama and Ethereum’s gas fee on Etherscan, we can see whenever Ethereum’s gas fee is high (May, September, November), Ethereum’s competitors’ TVL increased drastically. With DeFi users opting for alternate chains to get higher yields with lower gas fees, Benqi can benefit from the infrastructure provided by Avalanche since it allows users with a much lower gas fee than Ethereum.

Source: Etherscan and Defi Llama

Avalanche and Benqi are one of the beneficiaries of the high congestion of Ethereum. What takes Avalanche and Benqi to the next level is the $180 liquidity mining program launched in August 2021, Avalanche Rush. Benqi is the 1st protocol to receive the DeFi incentive scheme. $3M of AVAX has been allocated as liquidity incentives on 10th Aug 2021 for Benqi users who lend and borrow crypto assets. On 4th Oct 2021, Benqi received an additional $4M worth of AVAX from the program. In total, the $7M funding can help Benqi to attract more DeFi users to use the protocol given the additional return. From the below chart, Benqi has captured a lot of funding locked in their protocol since launched on 19th Aug 2021. In just 6 days, their TVL has reached $1B. They have been the dominating DeFi application on Avalanche and their DeFi dominance on Avalanche has reached 60% on 26th Aug 2021.

Source: Defi Llama

However, their dominance and TVL has dropped significantly on 4th Oct 2021, which is the same day that Aave is deployed on Avalanche. In the next section, we will be sharing the challenges faced by Benqi and one of which is the fierce competition from existing DeFi giant, Aave.

Avalanche Rush has been a very useful catalyst to attract DeFi users and quality DeFi applications to use the Avalanche network. According to DeFi Llama, the TVL of Avalanche has grown from $0.17B to $11.8B (65X) during 1st Aug 2021 to 31st Dec 2021. One of the major factors is the deployment of 2 blue chip DeFi giants, Aave and Curve. As a direct competitor to Benqi, Aave was allocated $20M AVAX for their users on Avalanche. By comparing the allocated fund $20M vs $7M, Aave can provide their users with a more attractive return than Benqi’s.

1 week after Aave’s launch, Benqi has dropped 20% in TVL. Shortly after, Aave took Benqi’s place to be the largest DeFi application on Avalanche. As of 30th Jan 2022, Aave has almost 1 time TVL more than Benqi’s ($2.37B vs $1.22B).

Source: DeFi Llama

On the flip side, even though Benqi suffers a dip in TVL in the short run, landing blue chip DeFi giant can actually help Benqi in the long run. From the chart below, Benqi’s launch did not help in growing the number of Avalanche users as the number of unique addresses on C-Chain did not increase much. Most of the users of Benqi before 5 Oct 2021 are original users in the Avalanche network.

Source: DeFi Llama and SnowTrace

On the other hand, Aave can help the Avalanche ecosystem to grow thanks to its existing presence on Ethereum. According to Dune Analytics, there are 445k cumulative users on Aave as of 30 Jan 2022. By providing a cheaper gas fee and additional return on Aave Avalanche, DeFi users may potentially shift to the Avalanche network from Ethereum.

Source: Dune Analytics

After Aave’s launch on Avalanche, the number of unique addresses has increased 660% in 4 months. With more users to the Avalanche network, Benqi could have a larger exposure to more new users on the Avalanche network. Since the TVL dip on 5 Oct 2021, Benqi regains the momentum while the number of unique addresses on Avalanche C-Chain rise.

Even though the current Ethereum network is very congested, it is expected to improve once Ethereum 2.0 has launched. There are 3 main phases of Ethereum 2.0, Phase 0, “Beacon Chain” has already been launched in Dec 2020. Phase 1, “The Merge” is expected to launch in Q2 2022. By then, Ethereum mainnet will merge with Beacon Chain and officially switch the consensus mechanism from Proof of work to Proof of Stake. The final phase will be sharding, in which Ethereum will launch 64 shard chains to improve scalability. After the whole upgrade, Ethereum is expected to be able to process up to 25,000 transactions per second with rollup solutions. Compared to Avalanche, which supports 4,500 TPS, Ethereum 2.0 will have an edge over the current state of Avalanche in terms of transaction speed. In addition, their high gas fee issue which scared DeFi users away could be alleviated by then. After Ethereum 2.0 has officially launched, Avalanche users, including Benqi’s may switch their funds back to the apps on Ethereum.

Apart from the huge upgrade coming from Ethereum, other layer-1 competitors could also be a threat to Avalanche. Avalanche has seen a tremendous growth in TVL from Aug 2021 to Oct 2021, which has overtaken Polygon as the 3rd largest blockchain in TVL aside from Ethereum.

Source: DeFi Llama

The result can be attributed to the success of the Liquidity incentive program, Avalanche Rush. However, this strategy could be mirrored by other competitors. Near launched a $800M fund, Harmony launched a $300M fund, Fantom launched a $314 fund. During late Jan 2022, Fantom even surpassed Avalanche in TVL briefly. Therefore, Benqi’s competitors are not limited to the applications on Avalanche, but also from DeFi applications on other blockchains. Therefore, Benqi’s development will also be partially dependent on Avalanche’s growth in the future.

Given all the challenges Benqi is facing, they also have a few enhancements to diversify their offerings and provide a better experience to the users on Avalanche.

Benqi will launch a Liquid Staking feature for Avalanche users to stake AVAX on the Avalanche C-Chain. Currently, the mechanism of Avalanche requires users to stake their AVAX on P-Chain in order to earn staking rewards. While P-Chain does not support smart contract functionalities, users will not be able to utilise their staked funds via interacting with different DeFi applications. Benqi’s liquid staking will allow users to stake tokens on C-Chain and get a sAVAX token. Users can then lend out the sAVAX token on Benqi for additional yields. On 3rd Feb 2022, Benqi announced a collaboration with Anchor Protocol, a borrowing and savings platform on Terra, which gives sAVAX token an additional utility. Users can earn additional yield by depositing sAVAX on Anchor and even use sAVAX as collateral to borrow UST.

The eventual goal for Benqi is to become a DAO, where QI token holders can vote and raise Benqi improvement proposals. The main areas for voters to vote on includes:

Benqi’s progression to a DAO can give QI token an extra utility, where holders can participate in the governing process of the protocol. The additional utility of QI can help the price action. In the long run, if QI’s value increases, the team can have more resources to develop the protocol.

Avalanche’s ecosystem is growing rapidly together with Benq’s. Benqi might face challenges from direct competition on the Avalanche network, or even from the DeFi applications on other blockchains. The future of Benqi is exciting especially with their upcoming liquid staking feature. The opportunity is huge but it will be depending on the functionality of the new feature as well as the future development of Avalanche.

This report is meant for informational purposes only. It is not meant to serve as investment advice.

There is a major catch unfortunately — impermanent loss. As traders buy and sell the underlying assets, the composition of the pool changes. If one of the assets gets sold more than bought, then the pool’s balance of that asset grows, whereas the other, more valuable asset gets drained from its reserves. You end up owning more of the asset that’s declined in price and less of the one that’s appreciated. Impermanent loss is the measure that quantifies this effect. It compares the value of the assets in the pool to the value of the assets had they been held outside the pool.

Let’s illustrate this with a concrete example. (Skip this bit if numbers do your head in.) Assume you have 1000 USDC and $1000 worth of ETH. Let’s say the price per ETH is $4000, so that you hold 0.25 ETH. You add these assets to the Uniswap ETH/USDC pool in a ±50% range around the current pool price. After some time has passed, you come back to check how you’re doing. The market price has fallen to $3000 per ETH, and there is less USDC and more ETH in the pool. To be precise, you will find that you now have 270 USDC and 0.46 ETH. This means that your portfolio, which initially was worth $2000, is now worth $1652. Ouch! But hold on, is this actually a problem? After all, your initial portfolio, had you not committed it to the pool, would have been worth less anyway because the price of ETH has fallen. If you do the maths, you’ll find that had you hodled your initial portfolio outside the pool, it would now be worth $1750. Your impermanent loss is $98, or 5.6%.

The frustrating thing about impermanent loss is that it’s always a loss. No matter whether the price goes up or down, and no matter by how much. The only exception is when the price returns to its initial level. At that point the assets in the pool are in the same proportions again as in the initial portfolio, and the impermanent loss is zero.

If you are now thinking to yourself that calling the loss ‘impermanent’ because of this one special case must be a bad joke, then that’s an understatement. It’s mockery. Your loss becomes permanent if the price never returns to its initial value or you withdraw your assets before it does.

So why would anyone provide liquidity, if almost certainly they end up with an impermanent loss? Traders get charged a small fee for each swap that they execute, which is passed on to LPs. This cash flow from trading fees constitutes a yield that LPs earn. But don’t be fooled by high headline APYs that many platforms advertise. Liquidity provision is only profitable if trading fees earned exceed the IL incurred. Whether or not this is the case depends on trading activity and market price movement. You don’t know either in advance, but you can get a feeling for what the economics are by looking at what happened historically, for example in the past week, month or year. A more advanced approach would be to build a quantitative model that describes the price process of the underlying asset pair and the expected trading activity, and form an opinion based on this.

Liquidity provision is only profitable if trading fees earned exceed the impermanent loss incurred

In Uniswap V2, everyone was on a level playing field. All you could do was pick a pool. In V3, you have to choose a price range over which to provide liquidity. By concentrating your liquidity around the current market price, you earn more trading fees per unit of liquidity, all else being equal. Great, you might think, a higher return on my capital. But guess what, you aren’t the only one trying to juice your returns. All liquidity providers aim to maximise the amount of fees they earn, so you can only increase your share of the trading fee pie if you provide liquidity in a narrower price range than others. However, as you tighten the range, your IL risk grows bigger. Providing liquidity becomes a competitive game in which professional market makers that crunch data in real-time and have 24/7 operational capabilities have the upper hand.

Is this the end of the road for the average hodler who was hoping to earn a yield on their cryptos as an LP? Fortunately not. We’ve done the heavy lifting that professional LPs would do, such as understanding the dynamics of AMMs like Uniswap, building and calibrating models, backtesting based on historical data, and so on. But instead of keeping the results to ourselves and running a secretive market making operation, we will open source it all and write a suite of smart contracts that is free to use for anyone. All you’ll need to do is deposit your assets with Akiu, and they will automatically be deployed on Uniswap and rebalanced in such a way that positions stay in-range, and provide protection against impermanent loss. As a result, you can remove your liquidity at any time without nasty surprises — with Akiu, APYs are WYSIWYG.

A: Money Tree was in development almost for the entire 2021. I was originally inspired by the innovations that led to a rise in the popularity of GameFi projects in the blockchain space. I felt that blockchain provided a unique framework for developing games in a fundamentally different way.

Many of the existing GameFi and NFT projects are somehow centralized. This goes against the core principle behind blockchain. I began to design Money Tree as an all-in-one platform that runs on the blockchain with no external dependencies to provide players with a transparent environment where all processes can be verified independently. Money Tree has intercorrelated DeFi, GameFi, & NFT capabilities that function in a new way. Players keep 100% of the prizes in our statistically fair games. They can even interact with the platform directly through the blockchain via BSCScan.com.

Q: What are the differences between the Money Tree NFT game and current popular NFT games? Do players need to pass KYC to play it? Is there an age requirement to join the game?

A: Given the decentralized design of Money Tree, there are no KYC or age requirements to play.

Users can connect their wallets to our website to begin using the GameFi dApps as well as the NFTs. The Money Tree NFTs have unique characteristics and utility over and above scarcity.

Money Tree NFTs are deflationary. They can be burned and combined to upgrade to a rarer NFT. There is a total of 1 million unique NFTs of all rarities, with 30k of legendary NFTs.

All the NFTs can be staked to “grow $MONEY” in the staking dApp. The NFT owners get weekly dividends in $MONEY tokens derived from the transaction taxes and the revenue generated from NFTs and loot boxes purchased on the website.

All the Money Tree NFTs are stored on IPFS to remain immutable. They come with metadata, including attack, health, and magic stats. These stats will be used in a peer-to-peer NFT battle game that will be released later this quarter.

Q: How many games do you have, and what is the team behind your games? How exactly can users earn money playing your games?

A: I have designed Money Tree in a way that allows new games to connect to the platform relatively easily. Since the launch, we have had multiple statistically fair games of chance available on the platform.

These games include Gridlock, similar to traditional roulette games but without the number 0. Eliminating the number 0 effectively removes the “house-edge” from the game. Theoretically, users can play an infinite number of games, and their overall balance will average out.

All of the currently available Money Tree games are designed with the same philosophy. The odds of winning are always mathematically proportional to the prizes received.

I developed all the games. They are hosted on the blockchain with no external inputs, which gives players the ability to verify the integrity of the transactions. Money Tree works closely with Chainlink to utilize the VRF capability and provide a true source of randomness.

We are working on other games, including an NFT battle game. We aspire to have a fully decentralized arcade available in the Metaverse.

Q: Tell us about your NFT staking, please. Do you have your NFT?

A: We have a collection of 1 million unique deflationary NFTs that can be staked to claim weekly MONEY tokens through the “Grow MONEY” dApp. Users can stake their NFTs for as long as they want to continue generating dividends.

Staking locks NFTs for one week. Then, they can be unstaked. The weekly dividends for staked NFTs are generated from the buy & sell tax and the revenue from all Money Tree NFTs sold. Just stake your Money Tree NFT and earn MONEY from all future NFT sales.

Our NFTs can be burned and upgraded. Two combined NFTs of the same type get users a rarer one. The rarer the NFT staked, the more dividends it generates. 16 common NFTs give the same dividends as 1 legendary NFT. This is the statistically fair vision of Money Tree.

Q: NFT games are becoming common nowadays, but many vanish because they lack a profitable economic model. What economic structure did you develop to make your game profitable for users in the long term? How will you keep users incentivized?

A: The existing NFT collections offer value from their scarcity, not their utility. With every released NFT collection, the expectations of the end-user increase. We are beginning the rise of NFT 2.0, where the NFT doesn’t just record ownership but provides additional benefits to owners. Our staking functionality was released two weeks ago and became popular. Over 10k Money Tree NFTs are actively staked.

Our NFTs are also unique because of a seemingly large supply at launch. However, it will constantly decrease due to the burning mechanism. Eventually, there will be only 30k legendary NFTs left.

We use a proxy contract for our NFTs to continue adding new functionality. In the NFT battle game, users will have the chance to win MONEY or BNB from each other. Also, they will have the ability to bet the NFTs themselves. We would also like to connect Money Tree NFTs with the 3D assets within the metaverse.

Q: What features are you mostly relying on? NFT, gamification, or DeFi? What do you think will bring you success?

A: Money Tree is really designed to be correlated with DeFi, GameFi, & NFTs simultaneously. It’s important that users can choose how to use our platform.

Holders of MONEY can purchase tokens and benefit from the weekly passive income in BNB & MONEY tokens. All holders of MONEY are automatically added to a free weekly BUSD lottery, where they can win without doing or paying anything.

Players can engage actively with our GameFi dApps where they get a chance to win even more prizes and increase their number of NFTs and tokens. Users can also choose how to interact with their NFTs. They can stake, collect, or trade them on our marketplaces on Lootex.io, NFTrade.com, & tofuNFT.com.

The DeFi, GameFi, and NFT processes are all built to work closely together. The maximum benefit from the Money Tree platform is achieved through the utilization of all 3.

Q: How many turns a day can be made in the Money Tree game? Is there a bonus mechanism? The current issue of token inflation causes many projects difficulties. Does Money Tree have a buyback, burn mechanism, or a strategy to limit this problem?

A: Users can play Money Tree games whenever they want. Players can place positions and tokens in the individual games throughout the day. The results are run on-chain once a day at 11 pm UTC. The results are recorded on the blockchain and announced across our socials.

Depending on the game, users will either get their rewards directly to their wallets automatically or have to take them from the website or BSCScan.com. All processes run on the blockchain, so the prizes and dividends will never expire. They can be claimed whenever users want.

We occasionally host bonus promotions, such as our recent New Year’s 50% NFT loot boxes sale.

The Money Tree token is deflationary. When an NFT is purchased, 10% of the sum is permanently burned. Money Tree uses a true burn to reduce the overall supply and take the tokens out of circulation. We don’t send tokens to a “burn address” like many other projects. Money Tree launched with a 1B initial supply, and more than 6% has been burned through since the launch.

4. Finished downloaded, a new tab appears with a happy little fox face that follows the cursor. and we can get started.

5. “I agree” then “Create password” (Note: you’ll have to remember your password because MetaMask is unable to retrieve it for you in the event that you forget.)

6. In the next step, MetaMask will display the Secret Backup Phrase in the form of a series of 12 words. (Note: a set of 12 words that contains all the information about your wallet. Secret code to access your wallet. Similar to your password, if you lose it, MetaMask cannot recover it for you)

7. The next step MetaMask asks you to enter the Phrase backup secret you get on the previous page.

8. Now you got your MetaMask Wallet! If you want to rename your Wallet, you can do it by long-tapping “Account”

9. That’s it you’ve just created MetaMask Wallet, If anything is unclear please do not hesitate to reach out to us on telegram or you can ask below in the comment!

10. Website: www.bountiehunter.io

11. Telegram: https://t.me/bountiehunterofficial

12. Twitter: https://twitter.com/bountie_hunter

13. Instagram: https://www.instagram.com/bountiehunter.io/

14. Facebook: https://www.facebook.com/bountiehunter.io/

15. Medium: https://medium.com/@bountiehunter.io

16. 
    

The entire game is managed by the Binance Smart Chain Smart Contract, which generates random numbers based on house inputs and blockchain data (block hashes). Any party may audit the contract and inspect any transaction to ensure that neither AP3 DApp nor malicious players are interfering with the outcome.

No, since the contract keeps track of the hash of the secret number, the house cannot change the number after the bet is approved. When the block hash is combined with the numbers, the outcome is completely random. Validators are unable to craft winning bets. However, due to the block hash part, AP3 DApp cannot influence bet outcomes. This is a well-known “commitment scheme” that allows AP3 DApp to provide gambling-grade random number generation, allowing for large bets, jackpots, and fast settlements while remaining completely transparent.

Get the complete Kerberos Course here.

Another attack Kerberos is prone to is known as the replay attack. An attacker monitors the network and makes a copy of the messages between the KDC and the client as they are being exchanged. The copied message can then be replayed back to KDC by the attacker at a later time. For instance, say Laila, after receiving the TGT from the Authentication Server, requests for a service ticket to talk…