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Bifrost launches LoopStake - Supercharge Staking Rewards through Leverage Staking
Liquid staking tokens (LSTs) have been present since the inception of the Proof of Stake (PoS) consensus mechanism. Since the Shanghai upgrade on Ethereum, LSTs have gained significant prominence, now representing the largest category within DeFi, with assets under management surpassing $60 billion.
Across various DeFi protocols, ETH LSTs are rapidly replacing ETH as a more versatile collateral option. This shift is attributed to Ethereum LSTs offering the market a yield-bearing asset. Consequently, many composability plays have emerged with LSTs as the foundational component for strategies and products - Leverage Staking serving as a prime example.
What is Leverage Staking
Leverage staking is a strategy that allows users to utilize LSTs on lending protocols to amplify the staking yield earned from these tokens. Users stake their assets to obtain an LST, use the LST as collateral on a lending protocol to borrow the staked assets, and obtain the LST again with the borrowed asset.
For instance, by collateralizing ETH to borrow stETH in AAVE, the over-collateralisation rate stands at approximately 107%. This means that for every 1 ETH collateralized, users can borrow up to about 0.93 ETH worth of stETH. In contrast, if users were to collateralize ETH to borrow USDT, the over-collateralisation rate could be as high as 130%. In this scenario, for every 1 ETH collateralized, users may only be able to borrow up to approximately 0.77 ETH worth of USDT.
This is because ETH/ETH-LST exhibits a strong price correlation. ETH-LST accumulates staking rewards, showing a one-way upward trend in ETH-based prices.
Leverage Staking is typically achieved through a manual looping process.
For example, if you are a user with 1 ETH:
You can mint 1 ETH LST (assuming a minting rate of 1:1)
Then, on a lending protocol, you collateralize 1 ETH-LST to borrow 0.93 ETH
Next, you can mint the 0.93 ETH back into 0.93 ETH-LST
You can repeat this loop many times, boosting your yield. This, however, becomes unprofitable when the borrowing rate exceeds the staking yield.
As described above, the efficiency of manually conducting iterative staking operations is very low, and multiple transactions consume a lot of gas. Therefore, specialized leveraged staking management tools have emerged in the DeFi space, allowing users to complete leveraged staking within one single click.
Bifrost introduces LoopStake
The one-click leverage staking service tailored for the Polkadot ecosystem.
As a leading LST protocol in the Polkadot ecosystem, Bifrost’s LoopStake offers users a streamlined one-click leverage staking service designed explicitly for assets within the Polkadot ecosystem.
Manual leverage staking is possible, but it requires users to perform frequent manual operations and to transfer assets between parachains especially if the lending pool and LST protocol are not on the same parachain.
Users can access the LoopStake interface through bifrost.app and enjoy the seamless leverage staking experience with just one click. The initial phase of the product launch will support leverage staking for assets such as DOT and KSM, and we will gradually expand to include more parachain assets.
Explore LoopStake directly on Bifrost dApp!
LoopStake will allow users to set and manage leveraged ratios according to their risk preferences and leverage stake their assets with just one click. Behind the scenes, Bifrost directly creates leverage for users through flash loans, eliminating the need for iterative borrowing and reducing the number of transactions, resulting in lower gas costs.
Loop Stake features include a Leverage Up to 4x: LoopStake supports setting a maximum leverage ratio of 4x. With this feature, users can earn staking rewards on 4 times their initial deposits.
Basic users can simply liquid stake their DOT - obtaining vDOT - with an exchange rate of 0.73! According to the current incentive parameters of the Polkadot network, the annualized yield is approximately 22%, allowing you to earn +0.2 DOT a year per each single DOT staked.
If you are not satisfied with this yield, you can use leveraged staking!
Assuming you use 4x leverage, 1 DOT can be amplified to 4 DOT.
LoopStake allows this by borrowing 3 DOT through a flash loan and then staking the 4 DOT to mint 2.92 vDOT. After minting, vDOT will be placed in the collateral pool. You will earn staking rewards from the 2.92 vDOT while paying interest on the borrowed 3 DOT.
The final net yield is the actual yield you can receive!
Assuming a constant borrowing interest rate of 10%, the interest for borrowing 3 DOT over a year is 0.3 DOT. Initially, 2.92 vDOT can be redeemed for 4 DOT, and at the end of the year, it can be redeemed for 4.72 DOT (an increase due to accumulated staking rewards), resulting in a profit of 0.72 DOT. Comparatively, leveraging amplifies earnings by providing a significant increase compared to the 0.20 DOT earned without leveraging.
Aggregate Cross-chain Liquidity
Leverage staking requires access to the liquidity of lending pools.
Bifrost strives to aggregate cross-chain liquidity in the Polkadot ecosystem to provide leverage-staking users with the best borrowing rates. Leveraging Polkadot’s XCM messages and Bifrost’s Omni module, Bifrost’s LoopStake in the future will be able to access liquidity from lending pools on any other parachain.
However, considering that the increase in leverage staking volume is a process, in the initial stage of launching Loop Stake, we have opted to create a lending pool on Bifrost to provide lending liquidity, with plans to expand gradually.
Risks of Leverage Staking
Leverage staking involves amplifying risks to amplify returns. Thus, users should be cautious when opting into the product. Users will be exposed to more risks if they set a high leverage ratio.
Although the vToken/Token price ratio is quite stable and shows a one-way upward trend, in certain extreme circumstances, this price anchor may be impacted:
Oracle Issues: Oracle price feeds may contain errors or be maliciously manipulated.
Slash Risk: Malicious behavior by nodes or network failures may lead to slashing, resulting in decreased staking assets and a drop in vToken prices.
Market Manipulation: Price fluctuations of vToken/Token may occur through large-scale buying and selling activities aimed at market manipulation.
Code Risk: There may be code vulnerabilities in the leverage staking or SLP module.
To protect its users from these risks, Bifrost has implemented a series of measures to mitigate the issues highlighted above:
Diversified Oracle Sources: Bifrost obtains price feeds from 4 different Oracle service providers, and any outliers from individual oracles are excluded.
Slash Protection: Bifrost has implemented a systematic slash protection strategy, as detailed in the article “How Bifrost provides an insurance mechanism for vToken holders against the Slash risk.”
Stable Market-making System: The liquidity pool for vToken/Token utilizes a Stable Curve automated market-maker curve specifically designed for vToken, adjusting with the exchange rate of vToken/Token. Compared to traditional AMM market maker curves, its advantages lie in extremely low trading slippage costs and relatively stable exchange rate maintenance. Additionally, in the event of large transactions, MEV Bots will swiftly intervene to mitigate their impact on prices. Bifrost will operate a group of MEV bots, and any third party can also run arbitrage bots. For more details, please refer to Bifrost LST Stable Swap.
Stringent Auditing Procedures: Loop Stake code has undergone an audit by a reputable auditing firm, Oak Security, and the audit report can be found HERE.
Nevertheless, we recommends that users fully understand the potential risks and set leverage ratios according to risk tolerance and profiles.
Conclusion
In DeFi, the emerging trend called Farming as a Service is becoming popular.
DeFi protocols will provide a single source of income and offer users a range of combined yield strategies, allowing users to access multiple sources of income with a single click.
This model will simplify user operations, provide users with higher capital efficiency, and offer more flexible choices. Staking is just the beginning, and in the future, Bifrost will introduce more combined yield strategies to expand the choices available to vToken holders further.
Just as LoopStake allows for remote access to multi-chain lending pools, our combined yield strategies will not be limited to single-chain strategies but can fully leverage the entire DeFi ecosystem to create cross-chain combined strategies.
Bifrost’s research and exploration in chain abstraction and full-chain architecture have already provided sufficient support for us to achieve this.
Products
2024 / 03 / 13 11:00
The 2nd DOT Crowdloan Unlock is coming… as is the Polkadot Unlock Harvest 2.0
Last October, Bifrost launched the Polkadot Unlock Harvest.
The event, coinciding with the first phase of Polkadot crowdloans expiring, lasted for +40 days, and collected a total of 1,700 addresses who staked over 1.8 Million DOT, sharing a Reward Pool of 500,000 BNC.
On January 16th, the 2nd batch of Polkadot’s crowdloans will end!
With over 26 million DOT set to unlock, the Polkadot Unlock Harvest is returning in a new version, promising a Reward Pool of +150,000 BNC for those users who will Liquid Stake DOT - Mint vDOT - on Bifrost!
The event, spanning over a month, will be divided into two distinct phases geared towards providing users with different opportunities to earn tokens and rewards.
vsToken Farming
Starting Date: January 3rd, 8AM UTC
Ending Date: January 15th, 8AM UTC
Reward: 7,358 BNC
Participants who supported the first crowdloans for Efinity, Composable, Centrifuge, Interlay, Nodle, and HydraDX through Bifrost’s SALP had the chance to farm their vsDOT and vsBond, to earn rewards.
Upon pool maturity, the staked vsDOT and vsBond will automatically be converted into vDOT and participate in the Polkadot Unlock Harvest 2.0 event, without even requiring user intervention.
For more details on the vsToken farms and their specific yield, visit HERE.
Polkadot Unlock Harvest 2.0
As the second round of Polkadot crowdloans expire, the Polkadot Unlock Harvest 2.0 campaign will go LIVE.
Users can Liquid Stake their unlocked DOT for vDOT and participate in liquidity mining, earning Raindrop Points, and sharing BNC incentives.
Additionally, users can invite and refer friends to participate in liquidity mining, and both parties will receive additional BNC rewards.
Starting Date: January 16th, 7AM (UTC)
Ending Date: February 20th, 10AM (UTC)
Campaign: Here
Reward: 150,000 BNC
Participants can earn from:
Raindrops Pool Rewards
Participants who liquid stake their DOT on Bifrost - minting vDOT - will receive corresponding Raindrop Points, in addition to the basic DOT staking rewards and also enjoy additional rewards from the Raindrops pool.
The more Raindrop points users accumulate in the lesser amount of time, the higher their rewards from the Raindrops pool will be. Rewards from the Raindrops pool can be viewed on the Staking Page of the Bifrost dApp, with a pool size being approximately 120,000 BNC.
Friend Invitation Rewards
During the event, users who invite friends to Liquid Stake DOT, can share a special Reward Pool of 6,000 BNC Extra.
The more friends are invited, the greater the share of the reward for the inviter will be.
Friend Staking Rewards
Participants who successfully invite friends - who successfully mint vDOT - can share a friend-staking reward pool of 24,000 BNC Extra.
The more vDOT tokens are minted by the invited friends, the greater the reward for the inviter. Friend staking rewards will be distributed proportionally, based on the ranking of the total vDOT minted by friends.
Note:
Users’ Staking Rewards will be valid, only if the invited mints vDOT.
The minimum amount an invited user should mint is 0.5 DOT.
Each address can only be invited once.
The friend invitation rewards will be distributed based on the ranking of the number of friends successfully invited by the inviter. Proportions of this rewards will be based on the number of friends invited.
How to Get Raindrops
DOT Liquid Staking: For every 1 vDOT Minted, a minimum of 300 Raindrops can be obtained. During the DOT staking boost period, a maximum Raindrop boost bonus of 55% can be applied.
Friend Invitation: When staking DOT, if the inviter’s address is provided (each address can only be successfully invited once), the invited person can receive 1000 Raindrops as a one-time reward.
How to use Boost to Get more Raindrops?
After successfully inviting a friend, users can receive a 10% Raindrops Boost bonus when Staking DOT.
By joining the Bifrost Discord Server and binding your address using the bot command, users can receive an additional 10% Raindrops Boost bonus when staking.
If users have participated in the first round of Polkadot crowdloans for Efinity, Composable, Centrifuge, Interlay, Nodle, and HydraDX, they can receive a Raindrops Boost bonus, varying from 5% to 25%, based on the amount of DOT locked.
If you have participated in the vsToken Farming Event, you can receive an additional 10% Raindrops Boost bonus when staking.
Reward Settlement
The rewards for vsToken Farming & Polkadot Unlock Harvest will be displayed on the campaign page.
Rewards will be settled uniformly after the end of the campaign and distributed linearly over three months (with weekly distributions).
Please set your reminders and stay tuned to the Bifrost community updates at all times.
Don’t miss the first event of the Year!
Events
2024 / 01 / 15 11:00
Exploring Liquid Staking with Bifrost: Unlocking Asset Potentials
Discover Bifrost’s omni-chain liquid staking solution which is unlocking liquidity and increasing asset utilization for users across diverse chains.
What is liquid staking?
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.
What are the Advantages of Liquid Staking?
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.
Current State of Liquid Staking
Applications of liquid staking
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’s Unique Position
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.
Challenges of Liquid Staking
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’s Contribution to Liquid Staking
Why Choose Bifrost?
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.
Advantages of vTokens: Unleashing Possibilities
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.
Conclusion
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.
Research
2024 / 01 / 12 10:00
Polkadot Crowdloan - Bifrost Parachain’s Slot Renewal
Bifrost is a dedicated Liquid Staking middle layer built on Substrate, powered by Polkadot, providing non-custodial decentralized cross-chain liquid tokens for staked assets.
Presently, Bifrost holds a combined Total Value Locked (TVL) of $90 Million across multiple chains and introduces innovative solutions such as:
SLPx: Enables cross-chain automated minting, redemption, and utilization of liquidity, primarily focused on the Bifrost chain.
vTokens Support for Governance: The first liquid staking assets within the Polkadot and Kusama ecosystems, enabling governance functionalities on their parent chains.
In May 2022, Bifrost secured its Polkadot slot auction and successfully onboarded as a Polkadot parachain, operating seamlessly for over a year and a half.
With just six months left in the current parachain lease period, we have launched a new round of crowdloans to secure Parachain Auction #61.
New Parachain Auction Details
Contribute 1 DOT ~> Get 8 $BNC
This auction round extends an open invitation to all Bifrost and Polkadot supporters: For every 1 DOT contributed to the crowdloan, participants will receive 8 BNC, UNTIL SOFT-CAP (30K DOT) IS REACHED!
How to join
Log on to Bifrost’s vCrowdloan page and scroll down to find the Bifrost Crowdloan Section.
Click on “Contribute”.
Choose the amount of DOT to allocate.
Hit the Confirmation button.
Caps
The Soft Cap is 30,000 DOT.
This means that only the first 30,000 DOT contributed will be eligible for BNC rewards in this crowdloan. Upon surpassing this threshold, any additional DOT contributed won’t qualify for BNC rewards.
The Hard Cap is 300,000 DOT.
Once the allocated DOT hit the Hard Cap, the crowdloan will end.
How to contribute
Users can contribute to the Bifrost Crowdloan through different means. These include:
Bifrost vCrowdloan is the first option is the recommended one, as it helps to preserve liquidity for the duration of the crowdloan. After contributing DOT, users receive the vsTokens, which can be traded on the secondary market or used for liquidity mining to earn profits.
Polkadot JS will directly lock users’ DOT on-chain for 98 weeks.
Desktop wallets such as Talisman and Subwallet allow users to contribute directly to the crowdloan.
Mobile wallets such as Nova Wallet also allow access to the crowdloan tab, from the Nova Wallet App.
Rewards Distribution
The BNC rewards for participating in the crowdloan will be unlocked linearly over a year.
Users can access the vested BNC by clicking “unlock vesting” on the Dapp.
About Polkadot Crowdloans
Crowdloan is a block space leasing mechanism introduced by Polkadot.
Parachain projects lease block space on Polkadot, represented as slots, by locking up DOT. These DOT can be crowdloaned from the community through crowdloans with rewards for users guaranteed by the project.
Gavin Wood has proposed a more flexible block space trading method called Polkadot 2.0. Until its implementation, Polkadot will continue to use the slot auction system.
Announcements
2023 / 11 / 29 11:00Fundamental
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
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
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 10:00Feature
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
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
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 10:00Get the latest blog posts
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