Discover Bifrost’s omni-chain liquid staking solution which is unlocking liquidity and increasing asset utilization for users across diverse chains.
Liquid staking offers stakers in Proof-of-Stake blockchains the ability to amplify the utility of their assets. Let's unravel what liquid staking is.
Traditionally, staking in Proof-of-Stake blockchains involves locking up assets to secure the network. While stakers receive tokens as rewards, the drawback lies in the inability to utilize these assets for other yield-earning opportunities. Add the mandatory unstaking periods to the mix, and users must wait for durations, such as 28 days on Polkadot and 7 days on Kusama before they can access and utilize their tokens.
Enter liquid staking, a solution that provides the benefits of traditional staking and offers a pathway to unlock previously inaccessible liquidity. Liquid staking service providers solve this liquidity problem by minting a derivative token (LST)— receipts and a claim on the underlying staked asset— which can then be traded or deposited in DeFi protocols.
Often, these liquid staking derivatives are yield-bearing tokens, compounding staking rewards and increasing the derivative's value relative to the base asset.
In essence, liquid staking provides stakers instant liquidity access, allowing them to maximize their assets while still earning staking rewards.
Liquid staking has become a prominent trend in Proof of Stake blockchains, a major feature of chains such as Ethereum, Polkadot, Kusama, Cosmos, Moonbeam, and more. Liquid staking protocols offer users the convenience of instant liquidity when needed. Looking at current statistics, Ethereum, for instance, has over 28.6 million ETH staked, reflecting a 23.85% staking rate. Notably, 12.07 million ETH (equivalent to $27.841 billion) is staked on liquid staking protocols like Lido, Rocketpool, and more within the Ethereum ecosystem.
This surge has spurred the development of a new decentralized financial product category known as liquid staking token finance (LSTFi). LSTFi involves leveraging liquid staking token (LST) in DeFi across diverse yield-earning opportunities on different protocols. Notably, this ecosystem has witnessed rapid growth, with protocols like Pendle and Aura on Ethereum creating a flywheel effect, allowing users to utilize their liquid staking token of ETH continuously.
In the context of Polkadot, the current staking rate is notably higher at 54.04%, with a substantial 708.19 million DOT tokens staked. However, only 1.49% of staked DOT is in liquid staking platforms like Acala, Bifrost, Parallel, and Stellaswap. This highlights a significant pathway for further growth and utilization of liquid staking protocols within the Polkadot ecosystem.
Bifrost is a dedicated liquid staking middle layer integrated into the Polkadot and Kusama networks. Bifrost stands at the forefront of the LSTFi race on Polkadot and Kusama, offering liquid stakers diverse applications and yield-earning opportunities across various blockchains. Users liquid staking on Bifrost receive the receipt tokens, vTokens, which are interoperable with different blockchains, and this is facilitated by Polkadot's cross-chain messaging (XCM) capabilities.
Despite its transformative potential, liquid staking faces challenges that demand attention. A primary concern is staking centralization, where protocols stake users' assets on specific validators. Downtimes on these validators can result in slashes to users' staked assets. Another looming issue is network centralization, with a single liquid staking protocol holding a significant share of staked tokens, as seen with Lido accounting for 32.3% of the total share of staked ETH. These are some common problems with regards to liquid staking services provided by liquid staking protocols.
Bifrost is a dedicated liquid staking middle layer, extending its services to over 9+ chains, including Polkadot, Kusama, Moonbeam, Astar, Filecoin, Moonriver, and Ethereum. Through its vTokens, Bifrost issues receipts of staked assets, serving as reward-bearing tokens that accrue and compound staking rewards over time. These vTokens, including vETH, vDOT, vKSM, vGMLR, vMOVR, vBNC, and vFIL, share a unified format on the Bifrost chain, enhancing interoperability between chains through Polkadot's XCM.
Bifrost's innovative approach allows users to leverage vTokens across various chains, opening avenues for yield-earning opportunities. Currently, vDOT, the receipt token for liquid staked DOT, finds utility in diverse DeFi opportunities on Moonbeam, Astar, and Interlay, including utility in iBTC vaults. This suite of opportunities has seen Bifrost garner a TVL of over $110 Million. A significant advantage of Bifrost’s vTokens is the ease of access to staking rewards. Users can easily purchase vTokens, hold them, and automatically accrue staking rewards without any other steps required.
At the heart of Bifrost is the burning desire to innovate and bring forth products and solutions to make utilizing our liquid staking services easier. With that thought in mind, we have these products:
SLPx is an extension pallet to SLP that allows users to invoke SLP's functionality on a remote chain without crossing assets into the Bifrost chain. With SLPx, users can Mint and redeem vToken on a remote chain and swap vToken on a remote chain using liquidity from the Bifrost chain behind the scenes. The OmniLS is the first app built using SLPx and allows users to access vTokens from any blockchain in one transaction.
Reserving governance rights on base chains: Bifrost is the first liquid staking protocol on Polkadot and Kusama to enable derivatives (vTokens) to participate in the governance of the base chain on OpenGov. As such, vTokens reserve the governance rights of their base staked assets. Users can utilize these tabs for Polkadot and Kusama to have their say in the governance of these networks.
These innovations put Bifrost’s liquid staking solution above others.
Bifrost's vTokens presents users with unique advantages such as:
Governance Rights Reserved: Unlike other liquid staking tokens, vTokens on Polkadot and Kusama retain governance rights, allowing users to actively participate in the governance of their parent chains through OpenGov.
Ease of Access: Bifrost's novel applications, such as OmniLS powered by SLPx, streamline the minting and redemption of vTokens from any chain, ensuring convenient access for users. Users can access Bifrost’s liquid staking services and liquid stake their assets from any chain.
Node Screening for Optimal Yields: Bifrost employs node screening mechanisms to optimize yields for users liquid staking with us, enhancing the overall liquid staking experience.
Reward Bearing with Automatic Compounding: Staking rewards on vTokens automatically compound, eliminating the need for manual claims and ensuring seamless accrual of rewards for users liquid staking on Bifrost.
Instant Withdrawals: Users liquid satking on Bifrost enjoy the flexibility of withdrawing liquidity instantly by swapping their vTokens for other assets, providing liquidity on demand.
Security and Decentralization: Bifrost adopts a decentralized non-custodial protocol, maintaining diversity in validator sets through an automated and dynamic algorithm. This approach mitigates the risks of centralization, ensuring the security of users' assets.
Slash Protection: Bifrost safeguards users liquid staking on the platform from slash losses through the BNC Insurance Fund. In a slash loss, the insurance fund compensates liquid staking users without affecting their earnings.
Versatile Use Cases: Interoperable vTokens can be utilized across different chains, offering liquid staking users a spectrum of yield-earning opportunities in the evolving DeFi landscape. As such, users liquid staking on Bifrost can access more applications and further utilize their assets through vTokens.
Bifrost is a beacon of innovation and user-centric solutions. We look forward to unlocking a world of possibilities for users, providing liquidity and a gateway to diverse yield-earning opportunities through our liquid staking services. The journey doesn't end here; it evolves as Bifrost continues across blockchains with our Omni-chain approach to liquid staking. Join us in this exciting exploration, where your assets gain fluidity, and opportunities become boundless.
