State of Venus Q1 2025

Key Insights

• Staked XVS grew 2.2% but dropped 39.3% in USD terms. Staking participation remained stable for the third consecutive quarter.
• Average daily users increased 13.8% QoQ to 886.8 for the third straight quarter of growth, continuing a consistent uptrend in user engagement.
• Daily active borrows rose 26.6% to 31,128, with notable spikes in late March. The increase suggests sustained demand for leverage despite broader market uncertainty.
• TVL declined 9.2% QoQ to $2.28 billion, driven primarily by reduced BTC and ETH collateral. Stablecoin deposits helped offset some of the decline.
• Protocol revenue fell 21.0% QoQ to $15.58 million, while supply-side revenue dropped 21.6% to $2.60 million. The decrease occurred despite the rise in borrow activity, indicating lower average borrow sizes or compressed rates.

Introduction

Venus (XVS) is a borrow/lend protocol built on BNB Chain, and recently launched on Base in Q4 2024. At its core, Venus enables users to deposit various cryptoassets as collateral, allowing them to borrow other assets based on their collateral value. Unlike traditional financial systems where central authorities manually set interest rates through policy decisions, Venus employs an algorithmic interest rate model that adjusts automatically based on real-time supply and demand dynamics for each asset. The interest rates for borrowing and lending on Venus are dynamically adjusted based on a jump rate model and a whitepaper rate model. These models leverage the utilization ratio, which is the proportion of collateralized deposited assets against the borrowed assets.

The utilization ratio is a critical component of the Venus Protocol. As borrowing demand rises, the ratio and interest rates increase. Conversely, lower demand decreases both, maintaining balance by incentivizing lenders in high demand and borrowers when demand wanes.

The Venus Protocol is governed by its DAO community and is enabled by the XVS governance token. Tokenholders can propose and vote on governance decisions. Furthermore, they can stake their tokens in a specialized vault to receive financial incentives, following the Venus tokenomics model. This model allocates a portion of the protocol’s revenue to stakers through a buyback and redistribution mechanism, rewarding active participation in governance. For a full primer on Venus, refer to our Initiation of Coverage report.

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Key Metrics

Performance Analysis

Financial Overview

Network Overview

Total Value Locked (TVL)

Total Value Locked (TVL) represents the total value of assets deposited into Venus Protocol across its supported markets. It serves as a key indicator of the platform’s size, liquidity, and overall user trust.

Venus Protocol’s TVL declined from $2.51 billion at the end of Q4’24 to $2.28 billion at the end of Q1’25, representing a 9.2% decrease QoQ. This contraction coincided with turbulent market conditions in March stemming from renewed tariff fears and financial market volatility following Trump’s election win.

BTC-backed collateral saw the largest impact, dropping 24.8% QoQ to $673.3 million. Its share of total TVL fell from 36.3% to 29.6%. BNB remained relatively stable at $658.4 million, down 0.9%, but increasing its market share by 28.9%.

Stablecoin-backed collateral showed resilience amid broader uncertainty. USDT rose 5.3% to $434.0 million, with market share climbing to 19.1%. USDC posted the most significant gain, increasing 45.0% to $184.1 million and raising its share from 5.1% to 8.1%. ETH declined sharply to $88.5 million, down 39.7%, erasing gains made in the previous quarter, its share fell to 3.9%.

The “Other” (which is all projects outside of the top 5) category grew 6.0% to $237.3 million, reflecting continued adoption of newer collateral assets following recent integrations and listings.

The volatility-driven retreat in BTC and ETH collateral during Q1’25 was partially offset by the stablecoin inflows and diversification across smaller assets. Venus maintained a broad asset composition despite the external macro pressures that defined the quarter.

Total Value Borrowed (TVB)

Total Value Borrowed (TVB) represents the aggregate value of all assets borrowed from Venus Protocol across its supported markets. It serves as a key metric for evaluating the protocol’s utilization and overall demand for its lending services. Unlike TVL, which measures deposits, TVB reflects the borrowing activity that drives revenue generation and lending efficiency.

Borrowing activity on Venus Protocol declined in Q1’25, with total value borrowed (TVB) falling from $854.5 million in Q4’24 to $631.8 million, reflecting a 26.1% decrease QoQ. The slowdown followed the December rally and came amid broader market uncertainty tied to tariff concerns and volatility around Trump’s re-election.

BNB borrowing declined 40.8% to $172.3 million after spiking in Q4’24. Despite the drop, BNB remained the largest borrowed asset, accounting for 27.3% of TVB. USDT borrowing also saw a contraction, falling 15.4% to $248.0 million, though it captured a larger share of total borrowing at 39.3%.

ETH borrowing fell sharply to $38.2 million, an 86.1% decline, erasing most of its Q4’24 gains. BTC borrowing dropped 68.1% to $40.1 million, reflecting decreased appetite for leverage in volatile conditions. USDC borrowing declined 22.0% to $97.8 million, though its share of total borrowing rose to 15.5%.

The “Other” category contracted by 72.2% to $34.4 million, reflecting a broad-based reduction in borrowing across smaller assets.

The sharp pullback in borrowing during Q1’25 highlights a shift in user behavior. Risk appetite waned following the short-lived bull run and macro-driven headwinds. Stablecoins retained a larger share of borrowing, suggesting continued demand for defensive positioning amid uncertainty.

User Activity

User activity refers to the total volume of user-driven transactions on Venus Protocol, including asset deposits, withdrawals, loan repayments, and new borrows. These activities directly impact metrics like TVL and TVB, offering a clear picture of the protocol’s utilization and user engagement trends.

Despite the decline in total value borrowed, several user activity metrics on Venus Protocol increased QoQ, signaling sustained engagement even as users adjusted to shifting market conditions.

• Deposits rose 16.7% QoQ to $177,274, reflecting continued inflows amid volatility.
  
• Withdrawals increased 65.2% QoQ to $269,508, likely as users de-risked positions following the December rally and in response to macro uncertainty.
  
• Repayments climbed 5.0% QoQ to $80,628, indicating steady debt management behavior despite reduced borrowing volumes.
  
• Borrows grew 8.7% QoQ to $82,426, suggesting more frequent but smaller borrowing activity.
  
• Liquidations jumped 40.8% QoQ to $3,107, coinciding with sharp price swings in March linked to election volatility and tariff fears.

While TVB declined in Q1’25, the uptick in user-level interactions points to an active and responsive user base navigating a more cautious environment.

Daily Active Users

The average daily number of users on Venus Protocol rose to 886.8 in Q1’25, up from 779 in Q4’24. This marks a 13.8% QoQ increase and reflects steady growth in user engagement despite shifting market conditions.

Revenue Metrics

In the context of Venus Protocol, revenue is categorized into two primary types: protocol revenue (often referred to as "fees") and supply-side revenue (commonly referred to as "revenues"). These metrics provide insight into the financial performance of the protocol and its participants.

• Protocol Revenue (Fees): This represents the portion of total revenue retained by the protocol itself. Protocol revenue includes fees collected from borrower interest payments and penalties accrued during liquidations. It is retained to support protocol operations, governance, and treasury reserves.
• Supply-Side Revenue (Revenues): This refers to the revenue earned by users who supply assets to the protocol. Supply-side revenue is generated from interest paid by borrowers and distributed to lenders as compensation for providing liquidity.

Within Venus, interest revenue is the interest paid by borrowers on loans, which is split between supply-side and protocol revenue. Liquidation revenue arises when borrowers fail to maintain the required collateral ratio, triggering liquidations that generate additional funds for the protocol. Liquidation revenue typically contributes entirely to protocol revenue, as it stems from penalties rather than interest payments.

Protocol-side revenue decreased 21.0% QoQ, from $19.7 million to $15.6 million, while supply-side revenue fell 21.6%, from $3.3 million to $2.6 million. The decline occurred despite higher borrowing activity, suggesting a shift in borrow composition or lower yield generation during the quarter.

Staked XVS

XVS staking on Venus allows tokenholders to participate in the protocol’s governance and earn rewards. By staking XVS, users gain voting power to influence Venus Improvement Proposals (VIPs), which guide protocol development, treasury management, and risk parameters.

Additionally, staked XVS contributes to the protocol’s buyback and redistribution mechanism, with 20% of the protocol’s revenue allocated to buying back XVS tokens for distribution to vault stakers. This ensures that stakers receive a share of the platform’s earnings while also supporting token demand. Beyond direct rewards, the Venus Prime Program offers additional incentives by providing enhanced APYs and exclusive benefits for long-term participants, further aligning staking with the protocol’s sustainability.

Staked XVS on Venus rose 2.2% QoQ, increasing from 7.7 million to 7.9 million in Q1’25. In contrast, the dollar value of staked XVS fell 39.3%, decreasing from $70.60 million to $42.88 million, driven by a 40.7% decline in token price from $9.10 to $5.40 QoQ. Staking participation remained consistent in token terms for the third consecutive quarter, indicating stable engagement with Venus’s staking and governance processes.

Bad Debt Metrics

Bad debt refers to the portion of outstanding loans on a protocol that cannot be repaid, typically due to failures in the liquidation process. Lending platforms like Venus rely on a Loan-to-Value (LTV) threshold, which ensures a borrower’s collateral maintains sufficient value to cover their debt. If an account's LTV breaches the allowable ratio, liquidators, such as bots, step in to sell the collateral and repay the debt. However, in cases where liquidations are delayed or fail (e.g., due to sudden market crashes, low liquidity, or blockchain congestion), the collateral may not cover the borrowed amount, leaving the protocol with unrecoverable losses classified as bad debt.

Bad debt on Venus Protocol declined from $36.7k at the end of Q4’24 to $32.0k at the end of Q1’25, representing a 12.6% QoQ decrease. The bad debt-to-TVL ratio remained low at 0.0014%, unchanged from the previous quarter when rounded to four decimal places. While the decline indicates improved liquidation outcomes or reduced volatility-driven stress, the overall level of bad debt remains immaterial relative to the protocol’s $2.28 billion in TVL at the end of Q1.

Qualitative Analysis

Protocol Updates

Cross-Chain Asset Integration

In Q1’25, Venus Protocol continued its cross-chain expansion by launching new markets across Ethereum, Base, and zkSync. These integrations were part of a broader effort to improve liquidity depth, expand collateral options, and give users more flexibility in managing leveraged positions.

On Ethereum, the protocol introduced support for Dinero’s apxETH and weETHs, increasing the variety of liquid staking assets available for use as collateral. On Base, Venus proposed a market for wsuperOETHb, a wrapped version of staked Ethereum that caters to users seeking yield exposure on a scalable L2 environment. The expansion continued on zkSync with the addition of wUSDM, a wrapped stablecoin pegged to the U.S. dollar. This move was intended to broaden access to stable assets within zkSync’s growing ecosystem and support users seeking more efficient capital deployment options.

Interoperability Enhancements

Venus Protocol advanced its governance and contract architecture to support a more unified multichain framework. This restructuring began with a series of proposals aimed at transferring control of protocol contracts from Guardian wallets to a standardized Normal Timelock system across supported networks.

The process started with VIP 433, which shifted governance control for Optimism and opBNB. VIP 436 and VIP 438 followed with the same adjustments for Ethereum, Arbitrum, and zkSync. All proposals passed unanimously. These changes laid the foundation for a single governance interface that operates seamlessly across networks. By aligning permissions and contract management under a unified model, Venus improved operational consistency and positioned itself for more coordinated multichain development and risk oversight.

Technological Advancements

Venus introduced a range of product enhancements in Q1’25 aimed at improving user experience and interface clarity. A new feature launched on January 29 highlighted markets offering special incentives, such as XVS emissions or ZK token rewards under the Ignite Campaign. Tooltips provided breakdowns of these benefits, helping users understand where yield opportunities existed across different markets.

On March 14, Venus extended this functionality by integrating external reward data from Merkl campaigns directly into its application interface. This update made it easier for users to track their earnings across platforms without leaving the Venus environment. These interface improvements reflected the protocol’s ongoing effort to simplify the user journey and increase transparency.

Gasless transactions also continued to be supported on zkSync through the integration with Zyfi.org’s paymaster system. This feature allowed users to interact with the protocol without needing to hold ETH for gas, removing a key barrier for onboarding new participants on Layer 2 networks.

Yield Optimization Strategies

During the quarter, Venus Protocol played a role in more advanced yield generation mechanisms within the broader DeFi ecosystem. On March 12, SolvProtocol introduced a BNB Smart Chain strategy that included Venus as a foundational component. Users deposited BTC as collateral on Venus, borrowed BNB, and cycled assets through a sequence of swaps and staking activities to maximize returns.

In addition to its role in this strategy, Venus also launched fixed yield offerings such as PT clisBNB APR25, which matures on April 24. These instruments enabled users to lock in returns while participating in parallel campaigns such as Binance Launchpool and HODLer airdrops. Together, these yield strategies reflected Venus’s integration with wider DeFi systems and its ability to support users engaging in more sophisticated financial operations.

Governance

Venus Protocol governance revolves around the XVS token, a BEP-20 token that grants holders voting power to participate in decision-making. Tokenholders can stake XVS on the Venus application to create and vote on Venus Improvement Proposals (VIPs), which guide the protocol’s development and operations. Governance encompasses treasury management, collateral parameters, stablecoin minting fees, and more.

Venus Improvement Proposals (VIPs) serve as the mechanism for implementing changes within the protocol. They are categorized based on their scope, ranging from adjustments to token emissions and liquidity to the introduction of new features and integrations. Each XVS token equals one vote, and decisions require community approval through on-chain voting.

Decentralized Decision Making

Venus Protocol maintained a strong governance cadence throughout the quarter. Community engagement remained high, with tokenholders regularly voting on strategic updates related to incentives, risk settings, and new market launches. Proposals were generally well received, and community alignment was reflected in consistently high approval rates.

One notable example was VIP 432, which adjusted Prime incentives for the new quarter and received near-unanimous support. Governance activity was accompanied by weekly updates on social channels, providing transparency around proposal outcomes and signaling upcoming initiatives. This communication strategy helped reinforce Venus’s emphasis on decentralized coordination and informed participation.

VIP-449 marked the deployment of Venus on Unichain, expanding the protocol's multichain presence. VIP-457 introduced XVS rewards on Unichain, incentivizing user participation on the new chain. Furthermore, VIP-471 implemented emissions adjustments across all supported chains, aligning incentives and emission schedules protocol-wide.

Partnerships and Integrations

In Q1’25, Venus Protocol deepened its network of collaborations across the DeFi landscape, working alongside key ecosystem partners to drive platform adoption and broaden its functional reach. Continued engagement with zkSyncIgnite and Arbitrum Grants supported Venus’s presence across major L2 environments, enabling infrastructure development and incentivizing user activity through programmatic support.

A notable development during the quarter was Venus’s partnership with Bitget Wallet, which aimed to expand decentralized finance yield opportunities on BNB Chain. This integration allowed users to access Venus Protocol directly through the Bitget Wallet interface, streamlining onboarding and simplifying the process of deploying assets across supported markets. The collaboration also introduced new opportunities for mobile-native users to engage with lending and borrowing functions in a self-custodial environment.

Venus also expanded its ecosystem reach through integrations with Harvest Finance, Balancer, Lista DAO, Coin98, and other leading DeFi platforms. These collaborations enabled new incentive campaigns, such as Thena’s Serpent's Fortune, SolvBTC.BNB, and Rivo Points, designed to attract new users and deepen liquidity across supported networks. Each integration and campaign helped reinforce Venus’s position as a core infrastructure player in the evolving DeFi landscape.

Strategic Vision: Vanguard and the Pre-V5 Quantum Singularity Proposal

In Q1 2025, the Vanguard team unveiled the "Pre-V5 Quantum Singularity Proposal," outlining eight strategic initiatives aimed at redefining Venus Protocol's trajectory. Key components include the acquisition of a 33% stake in Thena.fi to bolster liquidity and DAO-to-DAO collaborations, the launch of Venus Prime v2 to enhance cross-chain efficiency, and the establishment of the Venus Foundation to support long-term XVS token stability. Additionally, the proposal emphasizes the integration of AI-driven portfolio optimization, the introduction of real-world asset (RWA) initiatives utilizing the VAI stablecoin, and the development of a permissioned platform catering to accredited investors. These initiatives collectively aim to position Venus as a comprehensive DeFi SuperApp on the BNB Chain, bridging decentralized finance with traditional financial systems.

Onchain Initiatives and Community Engagement

In Q1 2025, Venus Protocol conducted a user research program to collect input on its next product release. The initiative invited users to share their experiences through a submission form. Selected participants were offered a $200 reward. All responses were kept confidential and used for research purposes. The protocol continued to publish weekly updates on social media, covering governance proposals, integrations, and development progress.

Venus increased its visibility through targeted marketing and communications campaigns. The team hosted a series of AMAs with prominent DeFi partners,including ZKsync Ignite, Rivo.xyz, Lombard, Mountain Protocol, and Yearn Finance, helping to educate users and strengthen ecosystem relationships. Additionally, Venus participated in major industry events such as ETH Denver, highlighted in side events and panel discussions. Community surveys, regular updates, and features in industry media further reinforced Venus’s reputation as an open, user-centric platform.

Closing Summary

Venus Protocol closed Q1’25 with a moderate contraction in TVL, a rebound in user engagement, and ongoing protocol expansion across multiple chains. TVL declined 9.2% QoQ to $2.28 billion, driven by a pullback in BTC and ETH collateral during a volatile macro environment marked by post-election uncertainty and tariff concerns. Borrowing activity also fell, with total value borrowed (TVB) down 26.1% QoQ to $631.8 million, though stablecoins captured a growing share of market activity.

Despite the TVB decline, protocol usage remained strong. Daily active borrows rose 26.6% QoQ to 31,128, with notable spikes in late March indicating periodic demand surges. Deposits, borrows, and liquidations all increased QoQ, and average daily users climbed 13.8% to 886.8. Bad debt decreased 12.6% QoQ to $31,971.98, with the debt-to-TVL ratio holding flat at 0.0014%.

On the financial side, protocol-side revenue dropped 21.0% QoQ to $15.58 million, while supply-side revenue declined 21.6% to $2.60 million. Staked XVS increased 2.2% in token terms to 7.9 million but dropped 39.3% in USD value, reflecting market price shifts.

Qualitatively, Venus expanded its multichain presence with new markets on Ethereum, Base, and zkSync, introduced UI enhancements, and integrated cross-protocol reward data. Governance remained active, with several key VIPs passed, and partnerships such as the integration with Bitget Wallet broadened access and utility. Together, these developments reflected steady user participation and protocol adaptation during a period of elevated market uncertainty.