Date : October 20, 2023
Proposal: Grant ASTR from Astar Treasury to Bifrost vDOT as part of the incentive for liquidity program on Arthswap for vDOT/ASTR pool ahead of the DOT Unlock.
Substrate : dmTEFZ77m7WtJmd7PY6pMh111uTtW9jpwfwasTGsWKUGp5M
EVM : 0x3754Fd5eC997c07Ca528bb0bdCB0b4F5b93605dF
Requested Amount: 625,000 ASTR (~$25,000 at time of writing)
Given the upcoming DOT unlock and Bifrost recent deployment of its SLPx light client contract on Astar, as well as the Omni LS DApp, Astar users and the broader community finally have access to Bifrost liquid staking token (LST) for staked DOT, vDOT on Astar network. Currently, the Astar ecosystem and community does not have access to a native DOT LST like vDOT. As a result, we hope to have the support from the Astar team and community to help develop the Astar network by growing vDOT’s native presence which will benefit the Astar ecosystem in terms of TVL, its growth, as well as use-cases for DeFi activity presenting more options and opportunities for holders.
The objective of this proposal is to request the allocation of ASTR from the Astar treasury to Bifrost as part of a 3 months liquidity incentive program on Astar’s largest native Dex, Arthswap for the first vDOT pool paired with ASTR during the upcoming and imminent Polkadot Unlock.
We would like to request 625,000 ASTR from the Astar treasury as a liquidity incentive for the first 3 months after the launch of Bifrost’s liquid staking token for staked DOT, vDOT on Astar network. In fact, vDOT/ASTR will be created on Arthswap. In addition, the pool will be incentivised in part with Bifrost’s native asset BNC and Arthswap’s ARSW.
Pools detailed are provided below, such that the community can clearly understand the request and how the incentives will be used during the 90 days - 3 months period.
Bifrost is a modular, scalable, non-custodial omni-chain liquid staking parachain, built on Substrate and powered by Polkadot and Kusama networks. It provides standardized, high-yield, secure, and reliable underlying interest-bearing liquid staking tokens (LST) through XCM, and is realising the omni-chain vision of using any LST on any chain. For more details on our vision check our recent polkadot forum post here.
As a DeFi protocol, Bifrost is aiming to solve the following issues in PoS ecosystems:
- The paradox between Staking rewards and DeFi yields
- The balance between Token Staking/Circulating and security of PoS chains
- Staking rewards in cross-chain scenarios
Our main objective is to integrate Bifrost’s SLP with Polkadot XCM to create a product with XCM features. Based on the feature of cross-chain invocation, developers can remotely interact with Bifrost SLP pallet in parachains that support any environment, truly achieving the multi-chain expansion of DeFi protocols. Furthermore, the key properties of vTokens are homogeneity, standardisation, unified liquidity and yield bearing, in order to achieve interoperability and cross-chain DeFi interactions, we have recently launched the SLPx. The SLPx is an extension pallet to Bifrost SLP that will allow users to invoke SLP’s functionality on a remote chain without crossing assets into the Bifrost chain, allowing users to mint, redeem, swap vTokens remotely on the target chain. For users, the minting, redemption, and swapping of vTokens have been simplified, as they can now be directly performed on EVM chains such as Ethereum and parachains such as Moonbeam, Moonriver and Astar without cumbersome cross-chain operations all through one single interface, the recently launched Omni LS DApp powered by SLPx. For more information on SLPx technical integration.
### How does vDOT work?
vDOT is a reward bearing liquid staking token issued by the Bifrost SLP pallet. vDOT represents staked DOT on the Polkadot Relay and returns from staking. As staking rewards are received, vDOT increases in value, without any change to the quantity of tokens. Additionally, vDOT is also a fungible and tradable asset. with unique features such as Fast-Unstake, Stable Swap, Automatic validator selection, cross-chain voting. For more details about the underlying technological logic of vDOT, please refer to this link.
vDOT DApp screenshot below and to access press here
The overall liquid staking market has grown significantly post-Shapella upgrade as the largest sector within DeFi. Furthermore, we have observed on Ethereum that yield bearing assets like LSTs are becoming a primary collateral asset within DeFi on lending and stablecoin protocols, a trend which we think will only grow as the sector matures. Additionally, we believe that the adoption and growth of this sector will only proliferate to other ecosystems such will the need for scalability and interoperability of these LSTs, to which we firmly believe Bifrost is well positioned to serve.
We have observed a growth of around 900% in vDOT volume in the past year, recently exceeding 1,500,000 DOT. Our objective is to continue driving this growth by building use cases for vDOT across the Polkadot ecosystem. For the Astar network, our goal is to build native liquidity for vDOT on Astar’s largest native DEX, Arthswap such that vDOT lending and borrowing markets can then be activated and vDOT can be enabled as being the first yield bearing collateral asset on Astar and protocols such as AstridDAO and SiO2 Finance. We believe vDOT can be an important catalyst for growth on Astar network.
Developments and features
Use cases for vDOT in cross-chain scenarios: Bifrost has completed the asset registration of all vTokens on Astar. Users can interact with vDOT and transfer assets between Bifrost and Astar. More importantly, with the recent launch of the Omni LS DApp powered by the SLPx, users can invoke SLP functionalities such as mint, redeem and exchange Bifrost vTokens from a single interface with one click from any chain like Astar without crossing assets to Bifrost.
vToken voting functions on the original chain: This feature allows users to participate in governance on the original chain with their vToken. This feature is currently supported on Kusama’s OpenGov governance (vDOT will be the next) on Bifrost parachain. It is currently in the final testing phase and is expected to be launched on the Bifrost Dapp next month. For more details, please refer to this tweet.
vToken Stable Swap: A dedicated LST Stable Pool which achieves low slippage swaps between LST and its original token. All vTokens on Bifrost Kusama and Polkadot have been adapted for the Stable Swap. For more information regarding the mechanism please check here and on the DApp.
Recent vASTR Launch: Bifrost is doubling down on the Astar network by recently launching vASTR thus bringing its expertise to the network and the ecosystem and taking part in Astar future path with zkEVM.
Ecosystem collaborations, case studies
vDOT Vault on Interlay: Interlay has proposed vDOT as collateral for Vault creation, allowing anyone to choose vDOT as collateral when establishing an IBTC Vault on Interlay. The staking reward feature of vDOT will enhance the collateral income for Vault creators, enriching the revenue attributes of Interlay Vault collateral.
vDOT on Interlay lending markets: Bifrost is currently proposing vDOT as a collateral asset for Interlay lending markets to the community. The objective being to increase the base income for lenders who deposit IBTC, DOT, or any other asset as collateral in the lending market and increasing their yield through leveraged staking by rotating borrowed DOT stake to vDOT and depositing it as collateral.
vDOT minted by HydraDX Treasury, via XCM: HydraDX used the treasury address to cross-chain invoke Bifrost SLPx and minted 81,800 vDOT, which was automatically transferred back to HydraDX to enrich the treasury revenue. By leveraging off SLPx, this transaction was completed in one step, more details here
All of Bifrost’s code is open source: Bifrost · GitHub
We have our formal documentation describing the mechanism and logic of our protocol, pallets and of the liquid staking tokens, vTokens, that are issued by the protocol.
Bifrost and its features have been audited by various high quality third party blockchain smart contract security auditors (Slowmist, Certik, Common Prefix, Beosin).
Bifrost has an open bug bounty on Immunify.
Call for Community Feedback and Support
We would like to call the Astar, Arthswap, Bifrost, and broader Polkadot communities to share their thoughts and provide feedback on this grant proposal.
Liquid staking is a fundamental pillar within DeF and the demand for yield bearing assets as a de facto collateral will only grow, as such, we believe that Bifrost is naturally well positioned to drive liquidity and users to Astar and Arthswap is the natural liquidity hub for the Astar network.