Introducing Vinci — NFT backed DeFi protocol

5 min readFeb 14, 2022

Vinci Protocol is an NFT-backed DeFi protocol designed to boost Liquidity with a lending platform and simultaneously hedge Volatility with NFT-backed derivative products.

Introduction

NFTs are now trending worldwide as they break records in both price and volume. Buying an NFT can be profitable, but holding these assets is highly risky because of the high Volatility and Low Liquidity. So imagine that you could unlock the value of your NFTs without selling a single piece in your collection; that is exactly what Vinci Protocol delivers. NFT holders can deposit their NFTs on the Vinci platform as collateral to take out loans in some of the most popular crypto tokens. Meanwhile, money lenders will earn yields by providing Liquidity. The Vinci lending protocol allows borrowers to use NFT assets as collateral.

However, the prices of NFT assets are more volatile than other currencies, which would bring more risk. The Vinci lending pool uses an isolated market framework to minimize the risk. Here each market is entirely separate, meaning the risk of NFT assets within one lending market has no effect over the risk of another lending market. It is a significant advantage of Vinci over traditional lending markets. Each lending market corresponds to a lending pool in the Vinci lending protocol. Each pool allows one NFT collection as collateral and multiple tokens as loan assets. The loan assets in a pool may have different interest rates from loan assets in other pools due to the various risks of NFT collections.

One of the benefits of this design is that lenders can lend their funds to a specific NFT collateral collection, allowing them to manage risks themselves. In addition, the borrowers’ health factors in different pools are calculated separately, which means if one collateral NFT’s floor price dropped significantly, NFT collateral in other pools would not be liquidated. We will dive a bit more in-depth into the Vinci lending protocol and explain how some actual modules of the protocol work.

Problem

High Volatility — massive price changes, sometimes over 2000% but no solutions
Low Liquidity — every seller needs a buyer

Vinci’s Solution

Hedge the Volatility Risk of NFTs
Vinci is the first innovative platform that will provide perpetual contracts for NFT asset holders to hedge the market price volatility or liquidation risk from the lending market.
Deep Liquidity with Low Costs
Vinci will launch a grand market maker incentive program to build deep Liquidity and provide low trading costs with limited gas fees, in addition to trading commissions for traders.

Architecture

Vinci will deliver the generalized solutions for NFT lending and perpetual trading through the following architecture:

Compatible with Different Smart Contracts: These are generalized solutions that will allow access to different smart contract platforms, including EVM contracts for EVM-compatible chains like Ethereum and BSC, WASM contracts, and Substrate contracts, for the Polkadot Ecosystem.
NFT-backed Lending and Renting Platform: serves as the permissionless money market with NFT assets as the collateral. NFT holders can list their borrowing needs on the Vinci platform, which will enable money lenders to respond to their requirements and liberate Liquidity.
Decentralized NFT-backed Perpetual DEX: serves as the fully non-custodial and decentralized perpetual market for NFT assets. NFT holders can deposit NFT assets, including collectables and GameFi items, as collateral to open perpetual contracts to hedge the Volatility of the NFT floor price.
Extreme Efficiency and Trader-friendly VinciVM: serves as the technical base layer of Vinci Protocol. It consists of an off-chain Market Maker Engine and an on-chain Settlement Engine. VinciVM is the core component and can be easily deployed on multiple NFT ecosystems to deliver an extremely efficient and low-cost trading UI/UX

Key Features

Vinci Protocol aims to be a pioneer by introducing new and innovative Liquidity and derivative platform for the NFT world and a lending market and perpetual contracts.

Hedge the Volatility Risks of NFTs: Vinci is the first innovative platform to provide perpetual contracts for NFT asset holders to hedge the market price volatility or liquidation risks from the lending market.
Deep Liquidity with Low Costs: Vinci will launch a grand market maker incentive program to build deep Liquidity and provide low trading costs with limited gas fees, in addition to trading commissions for traders.
Fully Permissionless & Non-custodial: Vinci offers a permissionless and non-custodial solution for traders, without any centralized party influencing the market volatility and interfering with users’ funds by manual operations the way centralized exchanges usually do.
Institutional-grade Trading Experiences: Vinci will provide trading APIs, a wide range of order functions, and deep Liquidity (ensured by Market Maker Engine) to create institutional-grade trading experiences for traders.

Participants

NFT Lenders: NFT Lenders are the ones who lend money to the NFT Borrowers.
VCI Stakers: VCI stakers stake VCI tokens in the Vinci Vault and share the trading fees from the Vinci market.
NFT Borrowers: NFT Borrowers are the ones who deposit their NFT assets as collateral to borrow money.
Speculators: Speculators, unlike hedgers, look for opportunities to take on risks in the hope of making returns through the price volatility of the NFT market.
Market Makers: Market Makers use Vinci’s trading API to provide proficient Liquidity by sending cryptographically-signed off-chain order messages to the Vinci market.
NFT Hedgers: NFT Hedgers are traders who are looking to protect themselves from the risk involved in NFT price movements. They look for opportunities to pass on this risk to those who are willing to bear it.

Tokenomics

The $VCI token will facilitate the Vinci metaverse and serve as both a governance token and a utility token with the following primary functions :

Incentives — $VCI plays the role of rewards for traders and market makers.

Trading Fee Discounts — Any trader who holds $VCI tokens will be eligible for a discount on the trading fees.

Governance — $VCI token holders can create and vote on proposals. Token holders can vote for the protocol upgrades and ecosystem parameter changes.

Staking to Share Trading Fees — All $VCI holders can stake $VCI tokens to the Vinci Vault to share the trading fees generated by the Vinci protocol.

Supplying Vinci Insurance Vault — 20% of $VCI tokens will be supplied to the Vinci Insurance Vault to prevent insolvency by unprofitable liquidations and smart contract hacks.

Access to the Lending Market — Lenders and Borrowers need to pay VCI tokens to use the lending market and perform various actions, such as depositing NFT as collateral, listing loan demands and loan offers, and so on.

Token Distribution

The total supply of VCI tokens is 1 billion, with the distribution plan as follow :

We are incredibly proud of this Vinci platform and can’t wait to watch it grow with the most amazing fans in the crypto community. Here’s to levelling up and many more years of Vinci Protocol.

It is great to have you all as part of the community at such an early stage. Stay tuned with us via below social media channels for this long journey.