Is Benqi Safe?
Risk Grade: B- (29/100)
Benqi is rated as moderate risk — some novel mechanisms, generally well-understood.
Lower risk — well-established Avalanche native with a clean record, but sAVAX leverage loops create hidden liquidation cascades during AVAX drawdowns
The largest lending and liquid staking platform on the Avalanche blockchain, where you can earn interest on deposits or stake AVAX for the sAVAX token. It manages $300M in deposits with over 23 million AVAX staked. Its B grade reflects a mature Compound-fork design with no major exploits, offset by circular liquidation risks from using sAVAX as collateral in its own lending markets.
TVL
$113M
Mechanisms
6
Interactions
5
Value Grade
B-
Key Risks for Benqi Users
sAVAX can lose its peg to AVAX during a crash because unstaking takes 14 days. If you need to sell immediately, you take a discount, which triggers liquidations that push the price down further
People borrow AVAX against sAVAX, then stake it again for more sAVAX, creating leverage loops. When AVAX drops, these loops unwind all at once and the selling pressure cascades through every level
The top 25 holders control 96.4% of sAVAX. If a few large players decide to exit at the same time, the token's liquidity evaporates and retail holders are left with no buyers
Top Risk Factors
- •sAVAX liquid staking introduces de-peg risk where sAVAX trades at discount to AVAX during stress events
- •Heavy Avalanche ecosystem dependency means QI token value and TVL are tightly coupled to AVAX performance
- •sAVAX used as collateral in lending markets creates circular liquidation risk during AVAX drawdowns
How Benqi Compares to Peers
Benqi ranks #11 of 90 Lending protocols (top quartile — safer than most). At a risk score of 29/100, it's 8 points safer than the sector average of 37/100.
Adjacent peers: Scallop (B-, 28/100) is ranked just safer, and Aave Aptos (B-, 29/100) is ranked just riskier.
See the full Lending sector leaderboard or the Benqi vs Aave Aptos comparison.
Common Questions about Benqi
Plain-English answers based on Benqi's scores across Hindenrank's 8 risk dimensions. The highest-scoring (riskiest) dimension is Vitality Risk (7/10).
Has Benqi ever been hacked or exploited?
Benqi has no recorded incidents in Hindenrank's track record dimension (scored 0/15). This is the strongest possible signal on this dimension, but the protocol may simply be too new or too small to have been stress-tested.
How much money is at stake in Benqi?
Benqi currently holds more than $113M in user deposits. A protocol of this size typically has deeper liquidity, more eyes on the code, and more attention from auditors — but it also means a single failure has a much larger blast radius.
What's the worst-case scenario for Benqi?
Hindenrank has identified specific collapse scenarios for Benqi. The most prominent: "sAVAX De-peg Liquidation Spiral". The trigger condition is AVAX price drops 40%+ within 48 hours while sAVAX trades at >5% discount to AVAX due to redemption queue saturation. Reading through the full scenario list on the protocol page is the single best way to understand the actual failure modes — generic "smart contract risk" is rarely the thing that takes a protocol down.
Is Benqi regulated or insured?
Benqi has low regulatory exposure on Hindenrank's framework (3/10). The protocol is structured in a way that minimizes counterparty and jurisdiction concentration, though regulatory risk in crypto can change rapidly. No DeFi protocol carries FDIC-style insurance — even with low regulatory risk, depositors are not protected in the way bank customers are.
What are the biggest red flags for Benqi?
Hindenrank's retail-focused risk audit flagged: sAVAX can lose its peg to AVAX during a crash because unstaking takes 14 days. If you need to sell immediately, you take a discount, which triggers liquidations that push the price down further People borrow AVAX against sAVAX, then stake it again for more sAVAX, creating leverage loops. When AVAX drops, these loops unwind all at once and the selling pressure cascades through every level The top 25 holders control 96.4% of sAVAX. If a few large players decide to exit at the same time, the token's liquidity evaporates and retail holders are left with no buyers
Should beginners deposit into Benqi?
Benqi is rated B-, which is acceptable for users who understand the protocol's mechanism. Beginners should read the full risk breakdown and only deposit after they can articulate the top three failure modes. If you cannot explain how the protocol works, do not deposit.
How does Benqi compare to safer Lending alternatives?
Benqi is one protocol in Hindenrank's Lending coverage. The safest Lending protocols on the leaderboard tend to share three traits: a long incident-free track record, conservative mechanism design, and high-quality public documentation. Compare Benqi against the full Lending ranking before committing capital.
For the full 8-dimension score breakdown, the radar chart, and dependency graph, see the Benqi risk report.
Read the Full Benqi Risk Report
This protocol has 2 collapse scenarios. 2 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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