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Unlocking the Potential - Chapter 5: Bifrost Tokenomics and vTokens Application Scenarios
Unlocking the Potential - Chapter 5: Bifrost Tokenomics and vTokens Application Scenarios
Tokenomics The native token of the Bifrost protocol is the Bifrost Native Coin (BNC). BNC is used as the gas fee and governance token for the Bifrost Polkadot and Kusama chains. Holders of BNC can engage in protocol governance by submitting proposals and voting. This includes: Modifying protocol parameters Approving treasury expenditures Deciding on new feature implementations We will empower vBNC with governance rights in the future, in line with other vToken Voting mechanisms. The total supply of BNC is capped at 80,000,000, with no mechanism for additional issuance. Bifrost is set to launch BNC 2.0, a new tokenomic model designed to create a sustainable and attractive economic framework for the protocol. This model introduces a protocol revenue-sharing mechanism, enhancing BNC’s utility and value and transforming it into a yield-bearing asset. Long-term holders will benefit from fair income distribution through these mechanisms. Bifrost’s new Tokenomics will be released soon, stay tuned! vToken Application Scenarios What can vTokens be used for? vTokens have diverse applications across the Polkadot ecosystem. They offer substantial base yields, are tradable within a unified liquidity pool, and can be quickly redeemed through peer-to-peer matching. Additionally, vDOT and vKSM inherit the governance rights of the underlying assets and and offer other advantageous features. As the Liquid Staking Token (LST) sector evolves, competition among LST protocols has shifted from basic feature comparisons to ecosystem-level contests. The focus is now on additional yield opportunities and whether LST protocols can provide diversified yield strategies to cater to various risk appetites. To address this, Bifrost has developed dedicated application pages for each type of vToken on its dApp, highlighting their specific use cases and benefits. Below is the scenario page for vDOT: On this page, Bifrost aggregates various application scenarios for vDOT and offers a comprehensive library of yield strategies under the “Earn” category to meet the needs of yield maximizers. One noteworthy yield strategy for LSTs is leveraged staking. This involves combining LST and lending protocols to amplify staking returns, albeit with higher liquidation risks. Bifrost has developed Loop Stake to support leveraged staking, which allows users to set up to 4x leverage. Leveraged staking requires liquidity from lending pools, and Loop Stake will remain open to aggregate cross-chain liquidity, offering users the best lending rates. By leveraging Polkadot’s XCM messaging and Bifrost’s cross-chain architecture, Loop Stake can remotely access liquidity from lending pools on other parachains, such as the DOT/vDOT lending pools on Interlay Lend and Hydration Omnipool. However, considering that the growth in leveraged staking demand is a gradual process, Loop Stake initially created a local lending pool on Bifrost to provide lending liquidity, with plans to gradually expand in the future. In the DeFi sector, “Farming as a Service” is gaining traction. DeFi protocols now offer a single source of yield and a series of combined yield strategies. This simplifies the process, enhances capital efficiency, and provides greater flexibility. Loop Stake is just the beginning. Bifrost plans to introduce more combined yield strategy products, expanding options for vToken holders. For more information about Loop Stake, please read: Bifrost launches LoopStake - Supercharge Staking Rewards through Leverage Staking
Research
2024 / 07 / 19 10:00
Unlocking the Potentail - Chapter 4: How Bifrost Maintain its Protocol Neutrality
Unlocking the Potentail - Chapter 4: How Bifrost Maintain its Protocol Neutrality
Governance and Neutrality of Bifrost Protocol After removing the sudo keys in September 2021, Bifrost adopted a tricameral governance system based on Polkadot Gov1.0. Following Polkadot’s transition from Gov 1.0 to OpenGov, Bifrost has completed its own governance upgrade. It now employs fully decentralized governance through OpenGov, allowing $BNC and $vBNC holders to participate in decision-making via referendum proposals. Customizing the principles and mechanisms of Polkadot OpenGov, Bifrost has tailored and customized its governance to fit its business needs. This customization is mainly reflected in the establishment of 8 tracks that are highly relevant to Bifrost’s operations. For more details, please read Bifrost Governance Tracks. How Does Bifrost Elect Validators For vTokens? First and foremost, to maintain neutrality, Bifrost does not run its own nodes. All validator sets for vTokens are elected through governance voting. Among the 8 governance tracks, the most commonly used one is for the election of validator sets. The validator set for vTokens is divided into two parts: the Validator White List (VWL) and the Validator Boost List (VBL). The VWL is created based on a set of clear evaluation criteria and confirmed through referendum proposals. The VBL consists of nodes that apply proactively and are approved by community voting. The SLP protocol will only delegate staked assets to nodes listed in these two lists. Validator Whitelist List VWL validators are scored according to the defined scoring rules. Validators with a score above the threshold will automatically obtain the VWL qualification without actively applying. The main factors that affect the score include: Validator decentralization: The geographic and jurisdictional distribution of the node set should be relatively balanced and diverse. Validator reputation include the central information of the validator under the chain, the duration of the validator, the number and period of the validator’s disconnection, etc. Security risk: Our model will consider the number and severity of Slash in the validator history Validator leverage ratio: When we allocate voting rights, we will consider the self-delegate amount of the validator to avoid excessive leverage of the validator (referring to the proportion of the validator self-delegating in the total delegation); Yield: Including the historical income performance of the validator and the Staking income commission ratio provided to the client. Based on these factors, Bifrost periodically evaluates and selects eligible validator sets, which are then confirmed through referendums. Validator Boost List The VBL is reserved for nodes that provide additional value. Nodes can apply to the Bifrost community through governance proposals. Once a referendum is passed, the node can officially enter the VBL. We expect VBL validators to provide added value to the SLP protocol or vToken holders to promote the long-term development of the protocol. The value provided can be in any of the following forms: Provide liquidity for vToken / Token trading pairs Provide exposure and user promoting opportunities, or promote user education and guidance, and increase vToken minting volume. Facilitate the integration of vTokens in DeFi applications Provide other forms of benefits to vToken holders For more details on the selection of the SLP node set, you can refer to this article:VET - Validator Election Track Based on Bifrost OpenGov for The Multichain How Does Bifrost Maintain Neutrality? Bifrost maintains neutrality by avoiding interference with the chain’s governance. This ensures decentralized decision-making remains intact, empowering the community to control the protocol. This neutrality is evident in the following forms: Decentralization in Validator Elections When electing validator sets, Bifrost considers the decentralization factor. This is not only for its own security but also to minimize its impact on the distribution of validators within the PoS chain. The validator elections are voted on by token holders, ensuring full decentralization of the selection process. Governance Participation An important right for token holders is participating in governance. For instance, holding or staking DOT allows users to participate in the governance of Polkadot through OpenGov. When users delegate their DOT to Bifrost through liquid staking, Bifrost indirectly captures a portion of these governance rights. However, Bifrost fully returns these governance rights to stakers through the vToken voting mechanism. Both vDOT and vKSM holders can use their vTokens to participate in the governance of Polkadot and Kusama. This is a unique approach not seen in other liquid staking protocols. The principle behind the vToken voting mechanism is that when holders use their vTokens to vote, the vToken governance module maps these votes using the staking tokens in the pool. Currently, this mechanism is implemented with vDOT and vKSM. Conclusion Bifrost’s commitment to maintaining protocol neutrality is evident through its comprehensive and decentralized governance framework. By transitioning from Polkadot Gov1.0 to OpenGov, Bifrost empowers $BNC and $vBNC holders to actively participate in decision-making via referendum proposals. This ensures that the community retains control over the protocol, fostering a truly decentralized environment. Bifrost’s neutrality is further emphasized in its approach to validator elections for vTokens. By not running its own nodes and relying on governance voting to elect validator sets, Bifrost minimizes its influence and promotes a fair, balanced selection process. The Validator White List (VWL) and Validator Boost List (VBL) ensure that only qualified nodes are selected based on rigorous criteria, maintaining the integrity and security of the network. Additionally, Bifrost’s unique vToken voting mechanism allows token holders to participate in governance, distinguishing it from other liquid staking protocols. This mechanism ensures that governance rights are fully returned to stakers, reinforcing Bifrost’s commitment to neutrality. In summary, Bifrost’s meticulous governance structure, fair validator election process, and innovative voting mechanisms collectively uphold its status as a neutral and equitable LST protocol. These efforts ensure that the community remains at the heart of Bifrost’s operations, fostering a decentralized and transparent ecosystem.
Research
2024 / 07 / 13 10:00
Unlocking the Potential - Chapter 3: An Overview of Bifrost’s Security Model
Unlocking the Potential - Chapter 3: An Overview of Bifrost’s Security Model
In the world of DeFi, Liquid Staking has surpassed decentralized exchanges (DEXs) to achieve the highest Total Value Locked (TVL). Liquid Staking Token (LST) protocols manage substantial assets, significantly impacting the security and functionality of their underlying Proof-of-Stake (PoS) chains. Bifrost’s cross-chain architecture enhances the interoperability and efficiency of DeFi applications. However, effective cross-chain communication and seamless user experiences require a robust security framework. Bifrost addresses this need with a comprehensive security model that protects staked assets and maintains network integrity. Key Aspects of Bifrost’s Security Model Polkadot’s Shared Security The Bifrost Polkadot and Bifrost Kusama chains are parachains of Polkadot and Kusama, respectively. Their security and resistance to reorganization are protected by the relay chain. As widely known, Polkadot employs a shared architecture where the relay chain randomly assigns validators to parachains and verifies their blocks. The blocks of the relay chain will include the blocks of the parachain, providing data availability for the parachains. This mechanism is the foundation of Polkadot’s shared security. Parachains do not require running validators, nor do they need to increase validator numbers to promote decentralization. Instead, they operate with a limited number of collator nodes. The role of collator nodes functions similarly to the Sequencer in Ethereum L2, which is responsible for collecting and ordering transactions in the parachains. The number of collators does not need to be excessive; it only needs to ensure network availability and make transactions less prone to censorship. Currently, the Bifrost Polkadot chain has over 32 collator nodes, which is more than sufficient to maintain robust network performance. Cross-chain Communication Based on XCMP and XCM In Bifrost’s cross-chain architecture, there’s a significant involvement of cross-chain communication. The security of cross-chain bridges is a well-known challenge in the blockchain space. So, how does Bifrost ensure the security of cross-chain communication? The answer lies in the cross-chain communication mechanism of Polkadot. Polkadot aims not only to create a platform for shared security but also to achieve seamless cross-chain interoperability. Polkadot accomplishes this through the Cross-Chain Message Passing (XCMP) protocol and the Cross-Consensus Message (XCM) format. How XCMP works: Cross-chain messages enter the Egress (exit queue) of the sending chain. Collators of the target chain collect these messages from the Egress of other chains and place them into their Ingress (entry queue). Messages are included in the relay chain’s blocks and finalized, then executed by the target chain. In summary, XCMP ensures fast, secure, ordered, and cost-effective cross-chain message delivery between Polkadot parachains. When XCMP is used for communication between parachains, XCM is used to ensure that these chains can understand each other’s messages and know how to execute them. Polkadot’s vision for XCM extends beyond the cross-chain communication within Polkadot. It aims to be adopted by a broader range of heterogeneous blockchains. Therefore, it is named the Cross-Consensus Message format. For a more in-depth interpretation of the operational mechanisms of XCMP and XCM, Bifrost provides detailed insights in this article: How Bifrost Supports vMOVR and vGLMR Based on XCM. However, Bifrost also acknowledges that heterogeneous cross-chain infrastructure is currently not mature. Therefore, it has not opted for a radical approach to fully implement the cross-chain architecture but instead retained the SLP modules on Ethereum and Kusama. Nevertheless, as the cryptocurrency industry develops, secure and reliable heterogeneous cross-chain solutions are expected to emerge. Non-custodial Mechanism and Rigorously Audited Code Bifrost adopts a fully decentralized approach to manage staked assets. All processes are completed through decentralized contracts or runtime, without any human intervention and the need to trust any third party, including the Bifrost development team. Furthermore, Bifrost’s on-chain code is open source, allowing for public scrutiny and vulnerability reporting. The code has been rigorously audited by multiple security firms, including Beosin, Slowmist, and TokenInsight. Since its inception in 2019, Bifrost has maintained a flawless security record, demonstrating its resilience in terms of code security. Secure Validator Set and Slash Protection Apart from the risks of intentional misconduct and code vulnerabilities, users’ staked assets may also face the risk of slashing. Staked assets essentially serve as collateral for running nodes. If a node engages in improper behavior that disrupts the network, a portion or all of the malicious node’s staked funds may be slashed by the network. An LST protocol that selects validators irresponsibly can expose LST asset holders to slashing losses, which could manifest as a decrease in the exchange rate between LST and the original token. To minimize users’ exposure to slashing losses, Bifrost has implemented several measures: Rigorous Validator Selection: Bifrost evaluates validators not only based on profitability but also by considering factors such as the node’s leverage ratio (self-staking ratio) and historical credibility. Detailed criteria and methods for selecting validators will be discussed in the next chapter. Proactive Node Switching: In the event of a slashing risk, Bifrost can immediately switch nodes to prevent further losses, a capability that individual stakers typically lack. vToken Vault: Bifrost has established an insurance pool called the vToken Vault, allocating 5% of the protocol’s income to it. If slashing occurs, this pool compensates users for their losses. If no slashing occurs, the amount in the vToken Vault accumulates over time. The more funds accumulated, the stronger the compensation capability. For a more detailed explanation of how Bifrost distributes, mitigates, and compensates for slashing risks, refer to How Bifrost provides an insurance mechanism for vToken holders against the Slash risk. Conclusion Bifrost’s security model is a testament to its commitment to protecting staked assets and ensuring the reliability of its network. By leveraging Polkadot’s shared security, implementing a non-custodial approach, conducting rigorous code audits, and establishing robust slash protection mechanisms, Bifrost provides a secure environment for DeFi activities.
Research
2024 / 07 / 04 10:00
The Bifrost Fellowship: Insights Into the Roles and Responsibilities of Sub-fellowships
The Bifrost Fellowship: Insights Into the Roles and Responsibilities of Sub-fellowships
What is Bifrost Fellowship Referencing the Polkadot Technical Fellowship, Fellowship is a self-governing body of experts and developers of Polkadot, Kusama, and Parachain protocols. It operates on-chain through fellowship referenda and off-chain through the community discussion repository The Bifrost Fellowship aims to foster the long-term development and growth of the Bifrost Protocol by considering its long-term roadmap from various perspectives. This might include discussions, research, and implementation from diverse standpoints. For instance: Efficient use of treasury, screening of effective supporting/integration schemes, strategic channelling of liquidity incentives, etc. Strategic vToken deployment plans to discover broader ecosystem integrations and development. How to increase brand awareness, organization, and planning of marketing and community activities. Discussion and research on new technology releases, how to combine with Bifrost and integration, etc. Guide the community to participate in OpenGov and improve the activity of governance. The fellowship will include members with a diverse range of expertise and experience. This includes developers with technical skills, founders and builders of other DeFi and Web3 protocols, blockchain researchers, professional infrastructure and node operators, community and opinion leaders, ecosystem contributors, and partners. These individuals will form various sub-fellowships, each divided according to their specific expertise, experience, and skill set. Each sub-fellowship will have its own mandate, role, and responsibilities, and will consist of expert members. What is Bifrost Sub-fellowship Each sub-fellowship will be responsible for its specific field and will be tasked to initiate proposals, manage its sub-fellowship, onboard members, and initiate discussions of proposals related to its expert field. For each sub-fellowship, a leader will be nominated who will represent the sub-fellowship to lead reviews and discussions. The Sub-fellowships will be detailed in the following context. Treasury Fellowship This is primarily composed of the Bifrost Foundation, with a clear focus on treasury-related proposals and strategic management of treasury funds. Criteria of Applicants The following are the basic requirements to apply for membership in the Treasury Fellowship. An understanding of the DeFi market sector, broader DeFi primitives, and their respective business models. Knowledge of Bifrost’s economics and business model. Track record in participation in treasury-related proposals and functions. A product-oriented mindset skilled in various Web3 products, capable of independently evaluating product quality and Product-Market Fit (PMF). Exisiting Members Find them in the Bifrost Discord channel: Treasury Fellowship Tech Fellowship It is mainly composed of developers and members with technical backgrounds. The Tech fellowship is focused on releasing updates related to Substrate and runtime, discussing the latest technological developments related to Polkadot, managing the fellowship and onboarding of members, and participating in the discussion of topics such as hackathons and proposals for product delivery and integration. Criteria of Applicants The following are the basic requirements to apply for membership in the Tech Fellowship (any 2 of the following are sufficient). Track-record in Rust development Familiarity with Bifrost Pallets and Polkadot tech. Familiarity with Bifrost and the ability to construct transaction-encoded data for various XCM, pallets, and method calls. The RP has been submitted to Bifrost multiple times and has been successfully merged. Existing Members Find them in the Bifrost Discord channel: Tech Fellowship Strategy Fellowship They mainly comprise business partners, product managers, advisers, protocol founders, and ecosystem contributors. Its objective is to develop and implement initiatives to drive growth and expansion across the ecosystem and beyond. The fellowship’s main tasks are topics and proposals related to product roadmaps, the development and growth of the Bifrost protocol and its business expansion across ecosystems, and the Strategy fellowship’s management and onboarding of its members. Criteria of Applicants The following are the basic requirements to apply for membership in the Strategy Fellowship (any 2 of the following are sufficient). Previous leadership roles and experience or similar responsibilities with DeFi protocols and Polkadot. Onchain track record demonstrating active participation in the governance of DeFi protocols. This includes discussions on functional product upgrades, growth, and business go-to-market initiatives and strategies. A deep understanding of the DeFi sector, market structure, and trends within the ecosystem and beyond. Familiarity with the operational logic of Bifrost Staking Liquidity Protocol (SLP), its vTokens, and a broader understanding of the various LST landscapes and ecosystems. Existing Members Find them in the Bifrost Discord channel: Strategy Fellowship Community Fellowship This group mainly comprises members involved in marketing operations, community leaders, and head ambassadors. It focuses on discussing community proposals, structuring events, and collaborating with other communities. Criteria of Applicants The following are the basic requirements to apply for membership in the Community Fellowship (any two of the following are sufficient). Track record in Bifrost, Polkadot, and broader Web3 Communities Experience in organizing community initiatives, such as online/offline events Ability to initiate discussions and build constructive proposals on other chains/dapps to broaden the use of vTokens and spread the Bifrost brand (reaching DAOs for Treasury diversification and more) Having solid educational or infographic/designer/video skills that could help to produce a series of content to explain DeFi narratives and the specificities of the Bifrost protocol. Existing Members Find them in the Discord channel: Community Fellowship Infra Fellowship They predominantly include infrastructure providers, node & validator operators, Validator Boost List (VBL) members, and technical operations and maintenance members. Members are primarily focused on discussing VBL application proposals and initiatives around optimizing existing Bifrost infra and validator/collators programs, managing the fellowship, and onboarding members in the Infra Fellowship. Criteria of Applicants The following are the basic requirements to apply for membership in the Infra Fellowship (any 2 of the following are sufficient). Familiar with Bifrost VET and VBL. Experience in server operation and maintenance. Existing Bifrost collator runner. Existing Members Find them in the Discord channel: Infra Fellowship Application for Fellowship Membership Anyone (including individuals or entities) interested in participating as a candidate in the Bifrost Fellowship program is encouraged to inform the community of their plans to run on the discussion forum by following the steps below: Phase 1: Self-introduction - At any time Background of your motivation for Fellowship membership application. Clarify which sub-fellowship you are applying to join. As a member of a particular sub-fellowship, state how you will add value, help Bifrost grow, and identify the aspects Bifrost needs to improve. What is your individual/entity background and experience, and why should the community and fellowship members vote for you? (Provide your governance experience with on-chain or off-chain proof.) Phase 2: Discussion and evaluation by community & Fellowship During this phase, the corresponding sub-fellowship leader will comment and lead the evaluation and engagement process. This phase normally takes 7-14 days and includes time for the Fellowship to discuss internally and conclude. Following this, the Candidate can decide whether or not to post the formal proposal on-chain in the next phase. Phase 3: Initiate on-chain proposal-dynamic voting time After considering the Fellowship’s suggestion in the previous phase, candidates can ask the Fellowship or can self-post their proposal on-chain, and initiate an on-chain referendum. Fellowship Referenda The fellowship’s governance model has multiple tracks, each with its own approval and support parameters, where votes are weighted according to their ranks. Members of the Fellowship can vote on any given proposal, and the aggregated vote of all members (weighted by their rank) constitutes the Fellowship’s collective vote. Most Bifrost Fellowship Referenda Origin are Runtime function extrinsic. Hence, most referenda are initiated by Strategy Fellowship and Tech Fellowship, and other fellowship members are led to vote on them. The list of current and historic fellowship referenda can be viewed on Subsquare. Rank Updates Fellowship members can request an update on their ranks at any time, and each year, they can be updated by one rank. Any fellowship member up to rank 4 can be promoted to the next rank through a fellowship referendum that can be voted by the members who are ranked two or higher. For instance, the fellowship referenda 64, which promotes a member from rank 1 to rank 2, can only be voted by members whose ranks are greater than or equal to 3. Promotion of the Polkadot Fellowship members from rank 5 needs to be done through an OpenGov referendum. For more information, check the rank updates section on the fellowship dashboard. Whitelisting Polkadot OpenGov allows the Technical Fellowship to authorize an origin known as “Whitelisted-Caller” to execute with Root-level privileges for calls approved by the Fellowship (currently, only level-three fellows and above can vote for whitelist calls). Note that the fellowship cannot unanimously change the network parameters, conduct rescues, or move assets. The whitelisted proposals still have to go through the whole life cycle of an OpenGov referendum and can only be enacted when the referendum passes successfully. The whitelisting process starts as a fellowship referendum with an embedded XCM call from the collectives system chain to the Polkadot relay chain. For instance, the Bifrost Fellowship referenda #14 was used to whitelist the Bifrost OpenGov referenda #14. Sub-Fellowship Salary The Salary structure will be announced in Q4 2024.
Products
2024 / 06 / 29 10:00
Fundamental
vDOT - Benefits and Use Cases of Bifrost’s Flagship Liquid Staking Asset
vDOT - Benefits and Use Cases of Bifrost’s Flagship Liquid Staking Asset
With the recent expiry of the first Polkadot parachain lease periods and the unlocking of a large amount of DOT, over 3.3 Million DOT have been minted into Bifrost’s liquid staking solution for staked DOT - vDOT, with a total value reaching 18 million USD. The Polkadot Unlock Harvest campaign incentivizes users to mint vDOT with their DOT. Users receive points, Raindrops, for each vDOT minted. More specifically, users receive primary DOT staking rewards and a share of the bonus pool of 500,000 BNC - worth over $150,000. The percentage of rewards a user gets depends on the number of raindrops they have accumulated. The campaign started on October 24th and will run until November 22nd. For detailed rules, please refer to the article: “Polkadot Unlock Harvest - Rules and Rewards of the upcoming Bifrost Event”. Bifrost offers users a competitive earning APY for staked DOT through dynamic validator selection and also offers users more ways to maximize their capital efficiently with compelling use-cases throughout the Polkadot ecosystem. The sum of the basic yield of staking (Base), combined with the expected yield from the Polkadot Unlock Harvest event’s prize pool (Raindrop) and the vDOT/DOT Farming pool, results in a comprehensive annualized yield of vDOT currently exceeding 44%! Why Choose vDOT? As a liquid staking token (LST) for staked DOT, vDOT has the following advantages: The first LST to retain governance rights of the original chain: vDOT supports Polkadot OpenGov and reserves the voting rights of the staked DOT. vDOT users can have their say in the governance of Polkadot as they would with DOT and obtain underlying staking yield, straight through the Bifrost interface. Instant Withdrawal: While users can redeem vDOT for DOT at any time through the Swap pool without waiting for the 28 days unlock period, the Fast Redeem feature allows users redeem their vDOT for DOT in less than 28 days via the matching queue mechanism. Yield bearing Asset: Staking rewards increase the value of vDOT relative to DOT, reflecting in the continuous growth of the redemption rate of vDOT to DOT. Users do not need to claim Staking rewards manually. Security and Decentralization: Bifrost is a decentralized, non-custodial protocol. Bifrost maintains the diversity of validator delegation through its automated and dynamic algorithm, avoiding centralization risks. Slash Protection: Bifrost protects users from slash losses through the BNC Insurance Fund. When a slash loss occurs, funds from the insurance fund are used to compensate first without affecting user earnings. Multiple Use Cases: vDOT is used in various DeFi applications, such as liquidity farming on DEXs, restaking and as a collateral asset on lending and borrowing protocols. vDOT Use-Cases Providing liquidity on the DOT-vDOT pair on native DEXs on the Astar network with Arthswap, and on Moonbeam network with Beamswap, and Stellaswap. Users provide liquidity and earn liquidity rewards. vDOT can be collateralized and lent out on the Interlay lending market, allowing users to implement a yield-farming strategy to achieve a higher compounded yield. However, this strategy requires risk management, as increasing the number of cycles may lead to higher liquidation risk. Alternatively, users can lend out vDOT to earn interest without engaging in additional borrowing. vDOT can be used as collateral for iBTC vaults, enabling vault operators to access staking rewards whilst securing the trustless iBTC bridge. vDOT can be used for participating in Polkadot governance. For users who stake DOT to mint vDOT, governance rights remain in their hands. This also reflects the Bifrost protocol’s neutrality in governance. Conclusion Since its development, the liquid staking sector has evolved from a competition based solely on yield rates to a dual of yield rates and ecosystem application scenarios. Due to Bifrost’s unique cross-chain architecture, vDOT holders have a flexible and secure solution providing optimal staking yield and benefit from interoperable and composable use cases across ecosystems. Finally, vDOT is the only LST allowing holders to participate in Polkadot governance while earning their staking yield. It is a compelling solution for users who face the dilemma of whether to stake, participate in DeFi, and govern. If you are holding DOT, are you still sure you don’t wanna try vDOT?
Education
2023 / 11 / 15 11:00
SLPx Pallet - A Further Step Into The Omnichain Liquid Staking
SLPx Pallet - A Further Step Into The Omnichain Liquid Staking
What is SLPx? SLP is the module used for processing vToken minting and redemption on the Bifrost chain. To mint and redeem vToken through SLP, users must first transfer their assets to the Bifrost chain, creating user experience issues. SLPx is a recently developed extension pallet to SLP by Bifrost that will allow users to call SLP’s functionality on a remote chain without crossing assets into the Bifrost chain. Specifically, SLPx will allow users to: Mint vTokens on a remote chain Redeem vToken on the remote chain Swap vToken/Token on a remote chain using liquidity from the Bifrost chain behind the scenes. You can use DOT directly to mint vDOT on Moonbeam, Moonriver and Astar, and both the original and target assets are on these chains. The whole process appears to be done respectively on the Moonbeam, Moonriver, or Astar local chain, and users are not bothered by the cross-chain interaction processes behind it. Likewise, you can redeem vDOT for DOT directly on the target chains. Remote minting and redemption provide convenience for user operations on remote chains. In addition to providing convenience, the token swaps enabled on remote chains offer a new meaning to “unified liquidity”. You can exchange vDOT/DOT on Moonbeam, Moonriver or Astar using the vDOT/DOT liquidity pool on the Bifrost chain. In this way, Bifrost does not need to divide the liquidity of vDOT/DOT into different chains. All chains’ vDOT/DOT exchanges share the same pool depth, leading to a more negligible price impact and a better trading experience. At the same time, if a lending protocol on any supported remote chains uses vDOT as collateral, it can directly call on the unified liquidity pool on Bifrost to complete a liquidation when it occurs. If a liquidity pool is built on a remote chain to perform liquidation, the liquidation process will likely have a higher discount rate due to insufficient depth. The Importance of SLPx For users, the minting, redemption, and swapping of vTokens have been simplified, as they can now be directly performed on Moonbeam, Moonriver and Astar without cumbersome cross-chain operations. The unified liquidity feature will also provide users with a better swapping experience. For applications on these parachains, integrating SLPx can bring additional features to their users. For example, lending protocols can remotely convert users’ collateralized DOT into vDOT, allowing users to earn staking rewards without additional steps. Furthermore, the unified liquidity will lower liquidation discounts for lending protocols. Lastly, by integrating SLPx, applications can remotely mint, redeem, and swap all types of vTokens without the need for individual adaptations for different vToken types. For the ecosystem development of Moonbeam and Astar, SLPx introduces LSD assets from different chains. The remote service capability allows users to enjoy full-chain services from other chains without leaving the native chain. For Bifrost, the remote-call feature implemented by SLPx is a significant milestone toward achieving Omni-LSD Vision. Technical Implementations SLPx is divided into two parts: the Local pallet on the Bifrost chain and the Remote pallet deployed on the remote chain (if the remote chain is an EVM chain like Moonbeam, it should be called a remote contract). For example, when a user on Moonbeam utilizes SLPx to mint DOT into vDOT, the DOT is sent to Bifrost first, minted into vDOT, and then returned to Moonbeam. During this process, the user must interact with the remote contract and remotely call the local pallet to complete related operations. The whole procedure consists of three steps: Send DOT to Bifrost Mint DOT into vDOT Send vDOT back to Moonbeam However, these three steps only require the user to initiate an interaction (pay once). After starting an interaction, all other processes are completed automatically. The same is true for the logic of remote redemption and remote swap. This process is possible because SLPx uses XCM V3 as the cross-chain instruction format. XCM V3 specifies the instruction format that XCM V2 does not have, with one of the essential types of instructions being multi-hop executions. The source chain can send an XCM V2 message to the target chain and define how the target chain executes it. No instructions in XCM V2 allow the target chain to execute the message by initiating a new XCM message. However, with the addition of this type of instruction in XCM V3, the source chain can send an XCM-001 message to the target chain, have the target chain do a series of executions, and then initiate a new XCM-002 message to any third chain (which is equivalent to an acknowledgment message if the third chain is the source chain itself). In short, XCM V3 allows an XCM message to command another chain to initiate a second XCM message. After the XCM-002 message reaches the third chain, according to the message instruction, it can continue to initiate a new XCM-003 message. This is the multi-hop transmission, and this multi-hop chain can theoretically be infinite. As long as the user on the source chain pays enough fees, the message can complete multi-hop execution until its logic terminates. In the remote minting use case of SLPx, after the user destroys the DOT on Moonbeam/Moonriver/Astar, calls the remote contract and an XCM message is sent containing the following instructions to the local pallet: Mint DOT in Bifrost (Burn-Mint logic transfer asset) Mint DOT to vDOT on the Bifrost chain Lock vDOT on the Bifrost chain Send an XCM command to the remote contract to mint vDOT (Lock-Mint logic transfer asset) on Moonbeam, Moonriver and Astar SLPx Implementation Progress We have deployed the SLPx remote pallet/contract on Moonbeam, Moonriver, Astar, and Ethereum. We will continue to deploy it on Manta, Astar zkEVM, Filecoin, and many more in the future. The remote pallet/contract has completed code auditing. The Audit Report can be found HERE. In addition, we have developed the front-end application for Omni LS dApp. Users can experience a range of functionalities such as remote minting, remote redemption, and remote swapping through the Omni LS dApp on these chains. Conclusion SLPx serves as Bifrost’s technical solution to achieve its Omni-LSD vision. Chains that deploy the SLPx remote module will be able to interact with the SLP module on Bifrost, enabling remote minting and redemption of vTokens. This ground-breaking interaction method brings convenience to users and provides a simple cross-chain integration path for developers on remote chains.
Products
2023 / 10 / 12 10:00
Chain Abstraction - The Path to a New Omnichain Web3 Architecture
Chain Abstraction - The Path to a New Omnichain Web3 Architecture
Web3 has evolved into a multi-chain ecosystem, comprising hundreds of L1 blockchains, along with various Layer2 solutions, subnets, parallel chains, and application-specific chains. While this proliferation has spurred innovation and blockchain adoption, it has also led to fragmentation, with applications, assets, liquidity, and users spread across different chains. Although cross-chain bridges offer a way to migrate assets between these chains, they fall short of creating a seamless whole. The solution lies in the concept of a full-chain architecture, which holds the promise of uniting the fractured landscape of Web3. The vision for a full-chain architecture gaining industry consensus and widespread adoption is an exciting prospect. The potential benefits are substantial, with the following outcomes on the horizon: User Convenience and Capital Efficiency: In a full-chain architecture, users would no longer need to concern themselves with where an application is deployed, where their assets reside, or where liquidity is sourced. Instead, they would interact with the entire blockchain ecosystem seamlessly, accessing all applications, assets, and liquidity effortlessly. This newfound convenience would elevate capital efficiency and enhance the overall user experience. Developer Freedom and Interoperability: Developers would be liberated from the constraints of choosing a specific blockchain or deploying instances on multiple chains to retain users. Instead, they could focus on deploying their programs and liquidity in the most suitable locations, enabling users from different chains to access them. This approach would eliminate the restrictions on interoperability between applications, facilitating free integration across different blockchains. This transformative state can be aptly described as “Chain Abstraction”. Chain Abstraction In software terminology, “abstraction” involves concealing intricate details from users to present a simplified interface, reducing complexity. Just as “account abstraction” hides elements like private keys and mnemonic phrases to ensure a seamless user experience, “chain abstraction” conceals the underlying blockchain infrastructure, enabling users to interact without the need for awareness or concern. It’s akin to using applications like WeChat or Taobao without needing to know the exact location of Tencent or Alibaba’s servers. However, achieving chain abstraction as the industry standard will require concerted efforts from the entire blockchain community. This endeavor encompasses not only applications built on a full-stack architecture but also secure, high-performance cross-chain bridge protocols and gas-less account abstraction solutions. It is, in essence, a comprehensive engineering challenge. As pioneers in the Omni-LSD (Liquidity, Security, and Developer Experience) field, Bifrost’s role is pivotal. Bifrost aims to serve as a model and reference for the full-chain integration of DeFi protocols, guiding the industry toward the realization of a unified Web3 ecosystem. Conclusion In conclusion, the journey toward a full-chain architecture within Web3 represents a crucial step forward in streamlining the blockchain experience for users and developers alike. As we continue to advance in this direction, the potential for a more accessible, interconnected, and efficient blockchain ecosystem becomes increasingly tangible. The collaboration of all stakeholders in the blockchain space is essential to make this vision a reality, and with dedication and innovation, we can reshape the future of Web3.
Education
2023 / 09 / 18 10:00
Feature
Polkadot Unlock Harvest 2.0: 2.1M DOT Liquid Staked in 30 Days
Polkadot Unlock Harvest 2.0: 2.1M DOT Liquid Staked in 30 Days
The 2nd Round of the Polkadot Unlock Harvest campaign has come to an end and we are glad to share with you the incredible results achieved. After a first round with over 1,800,000 vDOT minted on Bifrost, this time we have surpassed the previous milestone hitting an astonishing result of over 2,100,000 DOT liquid staked into vDOT on Bifrost! By the time we are writing this content, Bifrost has become the Liquid Staking protocol providing fully decentralized LST, with the highest amount of DOT staked, becoming the leader protocol of the Polkadot LST ecosystem. Outreach The event has attracted the participation of thousands users: 66,382 DOT participated in vDOT farming, ultimately converting to a minting volume of 52,187 vDOT. 1,315 addresses were invited, collectively staking 709,287 DOT and minting 557,616 vDOT. 2,954 addresses participated in minting, collectively staking 2,095,325 DOT and minting 1,647,271 vDOT. Rewards In this second round of the event, Bifrost team set up multiple reward pools and incentives to support the minting of vDOT, including: vDOT Farming Pool: vsDOT holders can stake vsDOT in advance and automatically receive vDOT after the release of the second round of crowd lending, without the need for manual operation. Participating in vsDOT Farming allows users to share the rewards from this pool. Invitation Incentive Pool: Users can invite others to mint vDOT, and the pool is divided based on the number of invites and the amount staked by each invitee. Raindrops Pool: Users minting vDOT can earn Raindrops points, and they can also earn bonus points by completing specific tasks. The pool is divided based on the points earned by each participant. As announced via Bifrost official social media pages, the addresses who joined the event and contributed to reach such an incredible goal will be rewarded with an airdrop of 124,000 BNC Tokens! These rewards will be distributed proportionally to stakers who collected Raindrop points minting vDOT, inviting friends and being part of the farming pools. The distribution will proceed linearly - on a weekly basis - following a vesting period. Results Overall, during the last two rounds of Polkadot Unlock Harvest, almost 4,000,000 DOT were staked into Bifrost, leading to an increase of vDOT minting volume and a growth percentage of 185% in less than 6 months. During the event, we have received massive support and recognition from the community of vDOT holders and users. This support and recognition stem from some extra features of vDOT, announced over the last few months: Governance Voting Retention Power: vDOT holders can participate in governance voting in OpenGov, just like they do with DOT. Airdrop Eligibility: Airdrops within the Polkadot ecosystem for DOT holders will be fully distributed to vDOT holders. Currently, vDOT holders have received eligible $PINK and $DED as airdrops. Ecosystem Interoperability and Composability: vDOT holders can not only trade it at any time but are also able to create higher compounded yields and more utility in the Polkadot DeFi ecosystem. What’s Next? The 3rd round of the Polkadot Unlock Harvest will be probably announced in April, consequent to the unlocking of the DOT contributed to the third Polkadot round of Parachains Auction, among which the contribution made by users to Bifrost itself stands out. Thanks for being part of the Liquid Staking Revolution!
Events
2024 / 02 / 27 11:00
Polkadot Crowdloan Unlock 1.0 - Data Recap
Polkadot Crowdloan Unlock 1.0 - Data Recap
With the conclusion of the first round of the Polkadot slot lease for parachains, an amount of 100,000,000 DOT was unlocked. On October 12th, Bifrost launched the Polkadot Unlock Harvest Event, which started a week earlier than the actual date of the unlock and finished on November 22nd, spanning 40 days. The event’s goal was to encourage participants to liquid-stake their DOT, which have been unlocked in the process, by minting vDOT on Bifrost. Participants could earn Raindrops points by minting vDOT and inviting others to join the event. A reward of 500,000 BNC have been put in place for this event and it is going to be shared, based on the Raindrops acquired by users. As of the event’s conclusion: 1701 addresses had minted vDOT over 2,310,000 DOT have been Minted into 1,888,416 vDOT Total Minting Volume (TVS) of 12 million USD On average, each participating address minted approximately 1,110 vDOT and received a share of 450 BNC rewards. The rewards for participants in this event will be released linearly, once a week, over the coming months. The Polkadot Unlock Harvest event significantly increased the daily minting volume of vDOT, with a growth of around 113%. More users are benefiting from compounded returns through liquidity staking with vDOT. As a liquidity staking asset, vDOT offers the flexibility of being instantly redeemed for DOT through a quick redemption feature (lightning mode) or traded at any time through liquidity pools. vDOT also provides multiple advantages for holders, including participation in yield farming, lending, and much more! It’s worth noting that performing a DOT to vDOT conversion, users do not give up their governance rights. Stakers can directly use vDOT when voting in OpenGov through the governance interface provided by Bifrost. Among DOT Liquid Staking Tokens, this feature is unique to vDOT! With the continuous growth of vDOT minted, Bifrost will continue to work on vDOT integration across different chains and explore additional use cases and applications. We will continue to build until the realization of Bifrost’s omni-chain vision. Join us today. Visit bifrost.app
Events
2023 / 12 / 05 11:00
Bifrost Presents Omni LS DApp - The Easy And Secure Way To Access Liquid Staking From Any Chain
Bifrost Presents Omni LS DApp - The Easy And Secure Way To Access Liquid Staking From Any Chain
What is Omni LS? Omni LS DApp is a front-end application developed by Bifrost that supports remote minting and redemption of Bifrost liquid staking tokens (LST) “vTokens”, as well as Remote Exchange and Swap of vTokens. This front-end application is powered by the SLPx Module deployed on the chain, which consists of the local pallet/smart contract of the Bifrost chain and the remote pallet/smart contract on the remote chain. Currently, Omni LS DApp supports remote minting, redemption, and exchange on the EVM Parachains such as Astar, Moonbeam, Moonriver and Polkadot relay chain, as well as on Ethereum. What problem does the Omni LS DApp solve? Bifrost’s vToken is an LST asset created by the Staking Liquidity Protocol (SLP). Currently, Bifrost supports vDOT, vKSM, vGLMR, vMOVR, vBNC, vFIL, and vETH. Except for vETH and vFIL, the other vTokens require users to transfer their corresponding assets to the Bifrost chain before these can be minted into their respective LSTs. This process poses challenges for user experience and broader adoption! Suppose there is a lending and borrowing protocol on Moonbeam that supports vDOT as collateral. This feature is beneficial for users as they can earn additional staking rewards compared to collateralizing DOT. However, with the current process, if a user only has DOT on Moonbeam, they would need to follow these following steps: Transfer DOT from Moonbeam to Bifrost through cross-chain transfer Stake DOT on the Bifrost chain to obtain vDOT Transfer vDOT back to Moonbeam through cross-chain transfer Collateralize vDOT on Moonbeam and borrow the desired asset An Easy Solution The Omni LS DApp aims to simplify this process and provide a seamless experience for users to natively mint and utilize vTokens across different chains. Instead of the user needing to operate in four steps and sign transactions four times, with the Omni LS DApp, steps can be shortened to just two: In the Omni LS DApp, directly convert DOT on Moonbeam into vDOT. Lend vDOT on the native Moonbeam lending protocol and borrow the desired assets. In addition to remote minting, the Omni LS DApp also supports remote redemption and exchange: Remote redemption: Users can directly redeem vTokens for their original tokens on other chains without the need to transfer them to the Bifrost chain. Remote exchange: Users can exchange vTokens for their original tokens, or vice versa, on other chains without the need to transfer assets to the Bifrost chain. However, the liquidity used behind the scenes is from the Bifrost chain. In summary, the Omni LS Dapp allows users to directly mint, redeem, and exchange vTokens on remote chains in just a click, without the need to switch between multiple Dapps and chains to complete these operations. Is the Omni LS DApp Secure? The backend of Omni LS DApp utilizes the SLPx Module developed by Bifrost, which has undergone an audit by Common Prefix. The Audit Report can be found HERE. Currently, Omni LS DApp only supports remote operations on Polkadot parachains. The security of cross-chain message transmission behind these remote operations is ensured by the Polkadot relay chain. As a multi-chain system that shares security, communication between Polkadot parachains has a high level of security. In the future, if Omni LS DApp needs to support remote operations on heterogeneous chains, it will require support from a cross-chain bridge infrastructure. The security of heterogeneous cross-chain bridges is still an unresolved issue, and we will exercise great caution in this regard. Omni LS DApp Operation Guide Click to visit the Omni LS DApp homepage: omni.ls To connect your wallet, click on the “Connect Wallet” button located in the top right corner. Remote Minting Click on the “Stake” tab Select the asset you want to remotely mint into its respective LST “vToken” Go to the minting page Enter the desired quantity Click on “mint” The vToken will be minted on the original chain where the asset is located. Remote Redemption Click on the “Unstake” tab Select the asset you want to redeem Go to the redemption page Enter the quantity of the asset Click on “redeem” The original token will be redeemed to the chain where the vToken is located. Remote Exchange To perform a swap, navigate to the Swap tab, select the type of asset you want to exchange, enter the desired amount, and click on the “Swap” button. Future Developments of Omni LS DApp The architecture of Polkadot naturally enables the possibility of Omni-chain applications. However, this potential has not yet been fully explored, and many applications still choose to deploy on a single parachain. Even with multi-chain deployment, it essentially replicates a single-chain Dapp on different chains. From the user’s perspective, an Omni-chain Dapp is an application that can be accessed on any chain. Users shouldn’t have to worry about which chain they are on and should be able to use it like a local native Dapp on any chain. Whilst multi-chain deployment can achieve to some extent similar effects, contracts deployed on different chains cannot communicate with each other. This leads to issues such as inconsistent asset formats and fragmented liquidity. We believe that the Omni LS DApp’s remote access feature is the solution for Omni-chain Dapps. We hope that applications integrated with vTokens can incorporate the functionality of Omni LS DApp through a series of strategic integrations. When a user on Moonbeam uses a lending Dapp to collateralize DOT, the system automatically converts DOT to vDOT, combining four steps into one. We are also about to launch corresponding incentive programs to encourage developers and DeFi applications to explore more complex and useful integrations. Conclusion We have introduced the best front-end interface ever developed by Bifrost - the new Omni LS DApp! This enables users to remotely mint, redeem, and exchange vTokens. Compared to the original process, Omni LS DApp simplifies the user experience by allowing users to utilize the services provided by the Bifrost chain on remote chains, such as local DApps. In terms of security, currently, the Omni LS DApp only supports remote access to Polkadot parachains. However, in the future, we plan to gradually support heterogeneous chains. Omni LS DApp serves as an example application developed by Bifrost. We hope to see more third-party applications adopting a similar approach to deeply integrate Bifrost vTokens and make LSTs a key primitive within DeFi.
Announcements
2023 / 10 / 19 10:00
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