Swap vETH at the Best Rate

What is vETH?

vETH is not a version of Ether: it is an interest-bearing claim on Ether deposited into Venus, the money market protocol that has anchored lending on BNB Chain since 2020. When a user supplies ETH, the protocol mints vETH against it; when they redeem, the vETH is burned and the underlying comes back with accrued interest. The supply of vETH therefore tracks deposits, not a schedule.

The conversion between the two happens at an exchange rate the market recalculates as interest accrues. Because vETH uses eight decimals against the underlying's eighteen and starts from a low initial rate, one vETH corresponds to a small, slowly growing slice of one ETH, which is why its market price looks nothing like Ether's.

How vETH works

Venus pools deposits so borrowers can take overcollateralized loans against them. Borrow demand sets the interest rate through a rate model, borrowers pay that rate, and the exchange rate of vETH to ETH rises as the interest compounds into the pool, which is how suppliers earn without any rebasing of balances.

A vETH balance can also be collateral: enabling it lets the holder borrow other assets in the core pool up to a collateral factor that governance sets. Fall below the required ratio and liquidators repay part of the debt in exchange for the collateral at a discount. The underlying ETH in this market is BNB Chain's bridged Ether, the token at address 0x2170 that Binance issues against Ether held on Ethereum.

Who builds vETH

Venus launched in 2020, built by the team behind the Swipe payments project, and was distinctive for launching its XVS governance token with no allocation to founders or developers, handing control to token holders from the start. Development has continued under that governance since, with major upgrades like the isolated pools and risk overhaul of Venus V4.

How vETH is governed

vETH's parameters are governed by XVS holders, not by vETH holders. Staked XVS voting power creates and decides Venus Improvement Proposals across three lanes, normal, fast-track and critical, each with its own timelock, and those votes set the ETH market's interest rate model, collateral factor, caps and pause status. A guardian role can pause individual market actions in emergencies.

What people use vETH for

People hold vETH for what it does inside Venus rather than as a standalone asset, though as a BEP-20 it can move and trade like any other token.

• Earning the supply side of Venus' ETH interest market.
• Collateralizing loans of stablecoins, BNB or other core pool assets.
• Redeeming for the underlying ETH plus accrued interest at any time the pool has liquidity.
• Transferring a productive ETH position between wallets as a single token.

vETH risks and considerations

vETH stacks several layers of risk: Venus smart contract risk, the interest rate model, liquidation mechanics if used as collateral, and the custodial bridge behind BNB Chain's ETH token, which is a Binance-issued representation rather than native Ether. Redemption also assumes the pool holds enough un-borrowed liquidity at that moment.

Venus has managed real stress before. In June 2023 a very large BNB position tied to the 2022 BNB Chain exploit hovered near liquidation on the platform, and the chain's core team stood ready to absorb it to avoid cascading damage. Governance has since added risk controls, but a money market is only as safe as its worst collateral day.