Although the Liquid Staking Tokens (LST) sector has gained attention after the Shapella Upgrade, the product offered within this category is not new. Staking-related services have been offered since the beginning of the Proof of Stake (PoS) consensus mechanism.
Liquid staking is the service that provides the most significant benefit to stakers, lowering the staking threshold, fixed by projects, and enhancing the capital efficiency of users. At the same time, LSTs are important underlying assets in DeFi, creating the possibility of multiple returns, contributing to the birth of a brand new category: LSTFi.
Bifrost started working on this sector back in 2019 and is now providing LST services up to 9 public chains. Among those, Bifrost provides vETH, the ETH Liquid Staking Token.
vETH was launched on its version 1.0 in 2020. After completing the Shapella Upgrade, the vETH contract was upgraded to version 2.0, enabling features such as the withdraw of Staked ETH.
Compared to other types of ETH Liquid Staking Tokens, vETH has three significant advantages:
Let explain those, below:
Most of the existing ETH LST yields are set around 4%.
vETH offers a very competitive yield, hovering around 6.9%!
This happens because Bifrost distributes the MEV revenue of the nodes to vETH holders in addition to the primary staking revenue.
In addition to the base yield, vETH offers a higher overlay yield as vETH holders can provide liquidity to the vETH/WETH pool on Balancer and earn trading fees from all trades made on the vETH/WETH pool. Users can stake vETH/ETH BPT to Aura Finance and earn AURA and BAL incentives.
The yield from the vETH /WETH pool fee is about 1.0%, while the AURA and BAL incentives obtained by staking BPT yields 12.6%. Adding these and the base yield of 6.9% means users could end up with a combined yield of over 9%!
In addition to Aura Finance, Bifrost is also working to include vETH or BPT-vETH/WETH in more LSTFi protocols to give users more flexible interest-bearing options.
vETH adopts an entirely decentralized and non-custodial solution. Every single ETH users entrust Bifrost is delegated to nodes through on-chain contracts and pledged to the Ethereum Network. They are controlled by the contract code and third parties are not able to modify the entrusted node.
As with the PoS consensus, staked ETH may be slashed due to the misbehavior of the validators. We spread the ETH as much as possible to hedge the risk of staked ETH being slashed.
Bifrost also score the credit of the validators and select those with high credit to enter the validator White List (VWL). Currently, there are 130 validators commissioned by vETH. In addition, Bifrost has a complete and proper buffer, stop-loss, and even a compensation mechanism in case of slash events.
Bifrost is a parachain in the Polkadot ecosystem, and vETH has both the ERC20 and Substrate formats. With the cross-chain bridge, Bifrost allows vETH to travel freely between the Polkadot and the Ethereum ecosystems and be available for the potential growth opportunities they bring. At the same time, thanks to the XCM, vETH can circulate easily on all Substrate-based chains and thoroughly combine with the protocols on each parachain, providing almost endless opportunities.
Currently, Bifrost is one of the most successful LST protocols in the Polkadot ecosystem, hence why we are confident vETH has the opportunity to become the most widely circulating ETH LST in the Polkadot eco.
The dream would be to even surpass the circulation of ETH token itself, within the Polkadot ecosystem, becoming the “improved ETH” available inside the network and carrying its interest-bearing properties.
This is a unique advantage of Bifrost in the actual LST Scenario.
With vETH as a medium, Bifrost will stimulate the development of LSTFi in the Polkadot ecosystem. EVM and Substrate ecosystem developers, on the other hand, can integrate vETH as a base asset into their products.
Bifrost has been build and secured by Polkadot for a very long time and the initial hope of going beyond single-chain LST and becoming an omni-chain LST protocol thanks to the XCM integration, is finally a possibility.
Bifrost brings an asset such as vETH to the Polkadot ecosystem and LSTFi applications that can fully stimulate the Polkadot ecosystem. We expects vETH being valued more than just an integrated token on Ethereum. Our vision demands vETH to be the underlying asset in the omni-chain DeFi.
We encourage developers to develop full-chain LSTFi applications based on vToken and provide incentives by inviting everyone to build together.
The 2023 Polkadot Eco Summer Hackathon is in full swing and on top of those hackathons already announced, Bifrost is working to launch new LST challenges and hackathons over the rest of the year.
Join us on X, Discord, and Telegram. Do not miss a single news or update!
