Benqi is a decentralized money market built on the Avalanche network for permissionless lending and borrowing.
Benqi's lending protocol consists of a decentralized system of lending pools. Users deposit assets they want to lend into a liquidity pool and borrowers draw from the pool when they want to take out a loan. Benqi borrowers must first supply assets before they can borrow. Given the high volatility of crypto assets, borrowers must post more collateral than the value of the loan, or commonly referred to as overcollateralization. Interest rates on Benqi are driven by market supply and demand. To facilitate this activity, Benqi issues QiTokens to lenders that reflect accruing interest on the underlying token.
Benqi's lending platform currently charges a reserve factor that allocates a share of borrowers' fees to the protocol. Each supported asset has a reserve factor that determines how much goes into the reserve.
You earn lending fees on Benqi by depositing their idle crypto assets to be used by borrowers looking for leverage. Benqi also offers ongoing protocol incentives in its native QI token to bootstrap demand.