What is BENQI (QI)?
👋 New to this? Just start reading at the top — it begins in plain English and gets more detailed as you scroll. Jump to any level:
🟢 The simple version
Plain English — no jargon. Start here.
BENQI is Avalanche's leading DeFi protocol combining a money market (lend and borrow AVAX, ETH, stablecoins) with liquid staking (sAVAX — stake AVAX and get a liquid token you can use in DeFi while earning staking rewards).
Two products, one protocol
BENQI has two distinct products. BENQI Liquidity Market (BLM) is an Aave-style lending protocol on Avalanche: you supply assets (AVAX, WETH, USDC, USDT, BTC.b) and earn interest, or use them as collateral to borrow other assets at variable rates. This is how DeFi lending works on most chains.
BENQI Staked AVAX (sAVAX) is Avalanche's liquid staking solution. Instead of locking AVAX in a validator (which requires technical setup and locks liquidity), you deposit AVAX into BENQI and receive sAVAX — a yield-bearing token that appreciates in value against AVAX as staking rewards accrue. sAVAX remains liquid: you can sell it, use it as collateral in BLM, or provide liquidity in DEX pools.
Why sAVAX matters for the Avalanche ecosystem
Before sAVAX, AVAX staking required running a validator (min 2,000 AVAX, ~$30–60K+) or delegating to one with a minimum. sAVAX removes both barriers: any amount of AVAX can be staked with instant liquidity. This dramatically expands Avalanche's staked supply and gives AVAX utility as yield-bearing DeFi collateral — similar to what Lido's stETH did for Ethereum.
Is QI legal in India?
Yes. QI qualifies as a Virtual Digital Asset (VDA) under Indian law. 30% tax on gains and 1% TDS applies. Always consult a tax professional.
🟡 A bit more detail
For when you want to go a little deeper.
sAVAX mechanics and the exchange rate
sAVAX is a non-rebasing liquid staking token: rather than your balance increasing, the exchange rate between sAVAX and AVAX increases over time. One sAVAX was worth ~1.0 AVAX at launch and increases to ~1.08 AVAX as rewards accumulate. This makes sAVAX better for DeFi composability (protocols don't need to handle rebasing balances) but slightly harder to reason about intuitively (your balance stays the same, but each token is worth more AVAX).
BENQI deploys the pooled AVAX to a diversified set of validators on the Avalanche P-Chain. Staking rewards (currently ~7–9% APY on Avalanche) flow back into the pool, increasing the sAVAX/AVAX exchange rate. There is no slashing on Avalanche (validators lose their right to validate but not their deposited AVAX), making sAVAX safer than Ethereum LSTs in the slashing sense.
BENQI is almost entirely Avalanche-native. If Avalanche loses market share to Ethereum L2s or Solana — which has been happening — BENQI's TVL and QI token demand decline proportionally. BENQI's fate is tied to Avalanche's ecosystem health. Live data: CoinGecko
BENQI vs Aave on Avalanche
Aave v3 is also deployed on Avalanche and competes directly with BENQI Liquidity Market. Aave generally has higher TVL globally and deeper liquidity for large borrows. BENQI's advantage is native integration with sAVAX — you can deposit sAVAX as collateral in BLM and borrow stablecoins against it, a loop that makes BENQI and sAVAX synergistic in a way Aave can't replicate for sAVAX holders.
🟣 The full technical picture
For the technically curious.
Key facts
- Token: QI (governance + protocol revenue)
- Chain: Avalanche C-Chain (primarily)
- Product 1: BENQI Liquidity Market — Aave-style lending/borrowing
- Product 2: sAVAX — Avalanche liquid staking token
- sAVAX type: Non-rebasing (exchange rate appreciates vs AVAX)
- sAVAX APY: ~7–9% (Avalanche staking rewards)
- No slashing: Avalanche validators don't lose staked AVAX for misbehaviour
- sAVAX composability: Used as BLM collateral, DEX liquidity, yield loops
- vs Aave: BLM competes with Aave v3 Avalanche; BENQI wins for sAVAX integration
QI token utility
QI holders can stake veQI (vote-escrowed QI) to participate in governance and earn a share of protocol revenue — fees from BLM interest spread and sAVAX management fees. The veQI model (similar to Curve's veCRV) requires locking QI for up to 4 years for maximum voting power and revenue share, creating long-term alignment between governance participants and protocol health. QI emissions also incentivise BLM suppliers and borrowers as liquidity mining rewards.