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In the Bifrost Tokenomics 2.0 proposal, Bifrost plans to use 100% of protocol profits for BNC buybacks, with 90% allocated to bbBNC holders and the remaining 10% to be burned. The release of this proposal has sparked considerable interest among community members, who have raised numerous questions. In response, we have organized a FAQ document to comprehensively address these inquiries from the community.
Note: Bifrost Tokenomics 2.0 is currently still in the proposal discussion, and all contents do not represent the final official version that will be launched.
bbBNC is an escrow token. Users can obtain bbBNC by liquid staking BNC to acquire vBNC and then locking this vBNC to receive bbBNC. The amount of bbBNC a user gets depends on the quantity of vBNC locked and the duration of the locking period.
The shortcomings of airdrop mechanisms stem largely from their lack of requirements for significant participant contributions or long-term commitments, leading to mere token distributions. This often results in participation driven by personal gain, with individuals quick to sell their rewards, highlighting the fundamental flaws of airdrops.
The bbBNC mechanism includes multiple layers to specifically reward users who are actively engaged. By introducing a lock-up period dimension, it incentivizes users to hold their investments over the long term, enhancing their returns through a leveraged rewards system and fostering the sustainable growth of the entire ecosystem.
Community members primarily express two concerns:
The escrow mechanism and locked token reward strategy may not effectively reduce selling pressure. While locking vBNC postpones immediate sell-offs, it could lead to a psychological shift among users, potentially triggering even more intense selling if users fear others might sell first.
Are only bbBNC holders eligible for profit sharing, or could a variety of choices be offered? If rewards were diversified, users might be more amenable to long-term commitments.
bbBNC, similar to other escrow tokens, integrates enhanced rights and benefits. Simply locking tokens does not address the issue of selling pressure; instead, genuine confidence in the protocol by users is the critical pillar of tokenomics development. Thus, sharing protocol revenues with bbBNC holders through Bifrost's liquidity staking is the essential foundation for building market value.
bbBNC = Governance + Staking Yields + Protocol Profit Sharing + Burning Mechanism
This design philosophy is intended to fulfill the community’s diverse needs more comprehensively, considering user psychology and market dynamics. Establishing a lock-up period aims to bolster the token's value by leveraging rewards for long-term holders, thereby fostering deeper and more enduring engagement with the protocol rather than short-term trading.
bbBNC holders can get vBNC as rewards.
We are planning to launch a "Protocol Profits" page on Bifrost dApp, allowing users to monitor protocol profits
Additionally, the data can be tracked through the on-chain address of the Bifrost Treasury.
The formula for calculating the early unlock of bbBNC is available in the proposal: https://bifrost.subsquare.io/posts/77
Redemption Fee = {(Remaining locked blocks + 2,628,000) / 10,512,000 (4-year block height)}^2
The vBNC that users can get by unlocking in advance = Locked vBNC * (1 - Redemption Fee)
bbBNC is purposefully designed as a Pallet on the Bifrost blockchain, serving primarily to keep records of locked BNC addresses, which inherently restricts its transferability.
However, in special cases such as switching wallets or if an account is compromised (e.g., by a hacking incident), there arises a necessity to move tokens. We are actively exploring potential solutions to accommodate such needs.
bbBNC holders periodically receive rewards from the vePallet module. These rewards come from various sources in the Bifrost ecosystem, such as transaction fees, SST revenue, swap fees, and commissions from vToken transactions.
The rewards are issued monthly. The division of these rewards is based on the proportion of bbBNC shares that each user holds at the time of reward distribution, enabling them to claim a corresponding share of the total rewards pool.
As of now, only the vBNC-vDOT liquidity pool supports bbBNC boosting. We are considering extending this support to additional LP pools in the future.
Yes, fees collected from early redemptions are distributed to bbBNC holders.
We are preparing to launch a "Protocol Profits" page on our dapp, which will enable users to monitor the income generated by the protocol.
In addition, this information can be tracked through the on-chain address of the Bifrost Treasury.
Following the opening of the Polkadot-Kusama bridge to other tokens, vBNC will be integrated into the omnipool.
The rollout of bbBNC is not anticipated to drastically alter the market liquidity of BNC, as many BNC are already locked in staking (either as Collators or vBNC). It remains to be seen whether these stakers will opt to convert their vBNC into bbBNC.
The total quantity of BNC is fixed and does not undergo inflation. The greater the protocol's earnings, the more BNC will be destroyed. The burning mechanism aims to create a deflationary effect by steadily decreasing the total token supply, which could enhance the value of the remaining tokens.
We are exploring the possibility of converting BTA into Raindrop points through a whitelist approach. Alternatively, we might delay the BTA conversion until next year to align with emerging trends in the NFT market.
bbBNC is indirectly connected to Collators since it is created using vBNC, which involves staking BNC with Collators. This relationship ensures that the interests of Collators are considered in the bbBNC ecosystem.
