BENQI Describes Itself As

BENQI is a decentralized suite of financial protocols built on the Avalanche network, consisting of: BENQI Markets, BENQI Liquid Staking, and Ignite. Launched in 2021, BENQI allows users to lend, borrow, and earn interest on their digital assets, in addition to liquid staking for AVAX, Avalanche’s native token.

Project Function

BENQI offers three primary services:

1) BENQI Markets: This liquidity market allows users to lend, borrow, and earn interest on their digital assets in a permissionless manner. Depositors can provide liquidity to the protocol and earn yield, while borrowers are able to borrow over-collateralized loans. Features include:

• Instant liquidity supply and withdrawal
• The ability to borrow against supplied collateral
• Transparent, real-time interest rates based on supply and demand dynamics

2) BENQI Liquid Staking: An Avalanche-based liquid staking solution, BENQI Liquid Staking allows for the tokenization of staked AVAX, where users can maintain liquidity over their staked assets while still earning staking rewards. This enables users to freely transfer their staked AVAX, use it as collateral, or engage with other DeFi protocols, improving capital efficiency. Unlike traditional staking methods, this product allows users to stake on Avalanche’s Contract Chain (C-Chain) without needing complex cross-chain transfers.

3) Ignite: Ignite is designed to bootstrap Avalanche validators and Avalanche L1 blockchains. It aims to lower economic barriers to entry, enabling a wider range of participants to launch validators or blockchains. Ignite offers two distinct services:

• Pay As You Go (PAYG): A rental model that minimizes capital requirements by allowing users to rent AVAX for validation purposes.
• Stake: A service that lets users stake AVAX and QI to launch validators without fees, with rewards distributed pro rata based on the staked AVAX.

Token Utility

The native token of the BENQI ecosystem, QI, has several important roles within the protocol:

1. Governance: QI token holders have governance rights through BENQI Improvement Proposals (BIPs). The protocol seeks to assume a fully decentralized model, transitioning to a Decentralized Autonomous Organization (DAO). Holders of QI will be able to propose and vote on key decisions that influence the platform's direction, such as updates to the protocol or changes to fee structures.
2. Incentives and Rewards: QI tokens are used to incentivize participation across the platform, including liquidity provision, staking, and borrowing.
3. veQI (vote-escrowed QI): QI can be staked for veQI, which grants holders additional voting power for delegating AVAX within BENQI Liquid Staking. This empowers users to influence validator selection by directing AVAX delegations toward specific validators, increasing their stake and chances of earning rewards.
4. Collateralization: QI tokens can also be used as collateral within the BENQI ecosystem, particularly through Ignite's Stake service, where a mix of AVAX and QI is required for validator staking.

The total supply of QI is capped at 7.2 billion tokens. 

About the Founders

• BENQI was founded by Rome Blockchain Labs Inc., a firm focused on decentralized finance software development, and 
• Dan Mgbor - Leading Operations.  Previously Technology Consultant for a Multinational IT Service and Consulting Company. 
• Hansen Niu - Leading Strategy.  Leading Strategy. Background in engineering, previously an Investment Lead at a Family Office.
• Jason Tuang - Leading DeFi. Background in Finance, previously a big 4 accounting firm. 

Strategic Investors

BENQI received $9 million in funding from prominent strategic investors, including Ascensive Assets, Dragonfly Capital, Mechanism Capital, Arrington XRP Capital, Spartan Group, and Ava Labs. This backing has been instrumental in the project's growth and integration within the Avalanche ecosystem.

Risks of QI

Like an investment in other crypto assets, there are some general risks to investing in QI. These include:  (i) volatility risk and liquidity risk, (ii) short history risk, (iii) demand risk, (iv) forking risk, (v) code defects, (vi) regulatory risk, (vii) electronic trading risk, and (viii) cyber security risk. For additional information of these and other general risks associated with crypto assets and Uphold’s platform, please refer to the Risks Specific to Holding Digital Assets statement.

In addition to these general risks, an investment in QI is subject to the following specific risks:

• BENQI operates using smart contracts, which have an association with vulnerabilities and security breaches. Despite undergoing successful audits by well-regarded third-party entities, it is essential to acknowledge the existence of inherent risks. 

We emphasize that this Crypto Asset Statement is not an exhaustive description or summary of all risks associated with QI. Investors should conduct their own research and perform their own assessment before trading any crypto asset to determine the appropriate level of risk for their personal circumstances.

The QI community and BENQI founding team are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of QI have no recourse to the QI community, BENQI founding team, or Uphold if QI declines in value for any reason.

Changes to applicable law may adversely affect the use, transfer, exchange, or value of any of your crypto assets, and such changes may be sudden and without notice.

Uphold’s Evaluation Process

Prior to listing QI on the Uphold Platform, Uphold performed due diligence on QI and determined that QI is unlikely to be a security or derivative under relevant securities legislation. Uphold’s analysis including reviewing publicly available information on the following: 

• The creation, governance, usage, and design of QI, including ensuring the source code is open-source, audited and peer reviewed, security, and roadmap for growth in the developer community. 
• The supply, demand, maturity, utility, and liquidity of QI.
• Any marketing materials put forward by the BENQI social team including on, Twitter, Medium blog, LinkedIn posts, Discord and Telegram channels.
• Material technical risks associated with QI, including any code defects, security breaches and other threats concerning QI and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them.
• Legal and regulatory risks associated with QI, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of QI. 

General

Uphold has prepared this Crypto Asset Statement based on publicly available information. Although Uphold has taken steps to obtain information from apparently reliable sources, information contained in this Crypto Asset Statement may be inaccurate, incomplete or out-of-date. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.

Uphold users should read the Risks Specific To Holding Digital Assets statement for additional discussion of general risks associated with crypto assets made available through the Uphold platform.  

Canadian residents, please note that Uphold has filed an application for registration in certain Canadian jurisdictions but has not yet obtained registration. Until such time as Uphold obtains registration, Uphold has agreed to abide by the terms of an undertaking available at the following link. Please also review the Uphold Canada – Crypto Risk Statement for additional discussion of general risks associated with the crypto assets made available through Uphold Platform. Please be aware that statutory rights of action for damages or rescission in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under securities legislation in the other provinces and territories of Canada do not apply in respect of this Crypto Asset Statement or other disclosures on the Uphold website and Risks Specific To Holding Digital Assets statement. 

Last updated on October 10, 2024.