BENQI is a decentralized finance (DeFi) protocol built on the Avalanche blockchain, offering a suite of services including liquid staking, lending, borrowing, and validator bootstrapping. It aims to provide accessible and efficient DeFi solutions within the Avalanche ecosystem, becoming a prominent application by Total Value Locked (TVL) on the network. ^[1]

Overview

BENQI operates as a comprehensive DeFi hub on Avalanche, designed to facilitate various financial activities for users. The protocol's core offerings include a lending and borrowing platform, a liquid staking solution for AVAX, and tools for bootstrapping Avalanche validators. BENQI's objective is to simplify participation in decentralized finance by addressing common barriers such as high capital requirements and technical complexities associated with running blockchain infrastructure.

The protocol has established itself as a leading application on Avalanche, distinguished by its deep liquidity and extensive integrations across the broader DeFi landscape. Its primary products are designed to provide utility and yield opportunities for digital assets, particularly AVAX, the native token of the Avalanche network. ^{[1] [6] [2] [7]}

Technology

BENQI's architecture is built on the Avalanche C-Chain, leveraging its high throughput and low transaction fees. The protocol comprises four main products, each serving a distinct function within the DeFi ecosystem: BENQI Liquid Staking, BENQI Markets, Ignite, and Node Voting ^[1].

BENQI Liquid Staking (BLS)

BENQI Liquid Staking allows users to stake their AVAX tokens and receive sAVAX, a liquid staking token. This sAVAX continually accrues value in AVAX and can be utilized across various DeFi protocols, including BENQI's own lending and borrowing platform, to earn additional yield while maintaining liquidity. A key feature of BLS is the ability for users to stake directly from the Avalanche C-Chain, eliminating the need to bridge assets to the P-Chain ^[2]. The sAVAX token is designed to be widely integrated throughout the Avalanche DeFi ecosystem, providing flexibility for users to engage in other decentralized applications ^[1].

BENQI Markets (BLM)

BENQI Markets is a decentralized lending and borrowing protocol where users can supply their crypto assets to earn interest or borrow funds through over-collateralized loans. The platform provides a user interface for monitoring all positions. It features two primary market types:

• Core Markets: These are designed for highly liquid assets such as AVAX and USDC, serving as the main lending and borrowing pools.
• Avalanche Ecosystem Markets: These markets support a broader range of assets, including long-tail cryptocurrencies and tokenized real-world assets (RWAs). They incorporate specialized risk management frameworks to prevent volatility or liquidity issues in one market from affecting others, offering greater flexibility for DeFi participants ^{[2] [1]}.

Ignite

Ignite is a solution developed by BENQI to simplify the process of launching and operating Avalanche validators and Subnets. It addresses the technical complexities and significant upfront capital typically required for validator deployment. Ignite offers two main options:

• Pay-As-You-Go (PAYG): This option allows users to run a validator by paying a weekly fee, without requiring a large upfront AVAX stake. It is suitable for short-term use cases, such as MEV (Maximal Extractable Value) solvers.
• Stake: Users can stake QI tokens and cover hosting fees to run automated validators, earning QI rewards without needing to manage technical details ^{[2] [1]}.

Node Voting

Node Voting is a governance feature that enables holders of BENQI Miles tokens to support specific validators on the Avalanche network. This mechanism influences how AVAX from BENQI’s Liquid Staking Pool is delegated to validators. The liquid staking pool allocates AVAX with a 35/65 delegation split: 35% is delegated based on community votes via BENQI Miles, while the remaining 65% is randomly allocated to all validators meeting minimum criteria. BENQI Miles can be accrued through a "Flex Option," where miles accumulate gradually as users stake their QI, with full benefits after a specified period. A "Lock Option" is a planned feature that would allow instant mile accrual upon staking, but with a delayed exit period for unstaking ^{[2] [1]}.

Tokenomics

The native governance and utility token of the BENQI ecosystem is QI. It plays a crucial role in the protocol's decentralized governance and various utility functions.

• Governance: QI token holders can vote on BENQI Improvement Proposals (BIPs), which dictate the future direction and changes to the protocol. Holding QI tokens is also a prerequisite for initiating new proposals ^[3].
• Utility: QI tokens are distributed through a liquidity mining program to incentivize users to provide liquidity. Additionally, QI can be staked on BENQI Liquid Staking to receive veQI, a utility token that enables additional AVAX staking delegations to high-performing Avalanche validators ^[3].

Security

BENQI prioritizes security through rigorous audits and maintaining a public, open-source codebase to ensure transparency and mitigate risks. While no blockchain protocol is entirely risk-free, BENQI acknowledges potential smart contract and liquidation risks. To address these, the protocol partners with leading security firms for continuous monitoring and protection ^[1].

BENQI's security partners include:

• Chaos Labs: Provides risk management and analytics ^[2].
• Hexagate: Offers real-time prevention solutions ^[2].
• Immunefi: Operates a bug bounty program for the protocol ^[2].
• zeroShadow: Contributes to security measures ^[2].

Partnerships

BENQI has formed strategic partnerships to enhance its ecosystem and expand its offerings. Its foundational partnership is with Avalanche, the blockchain on which the protocol is built, including a joint $3 million liquidity mining initiative launched in August 2021 to accelerate DeFi growth on the network.

In addition to its core platform, BENQI has collaborated with other projects within the Avalanche ecosystem. For instance, it launched initial Isolated Markets with Trader Joe and Coq Inu Avax in July 2024, expanding its lending and borrowing capabilities to a wider range of assets. The protocol also integrated its sAVAX liquid staking token with Anchor Protocol and Terra Money in February 2022, further increasing the utility and interoperability of sAVAX across different DeFi platforms. ^[5]