How did Bifrost win the “unlocking liquidity” race?

As Kusama Parallel Chain bidding enters the countdown, how does Bifrost’s SALP, a well-known eco-project of Boca, “zoom in” on the “liquidity release” track? What does becoming a parallel chain bring to Bifrost and the polka ecosystem? What kind of participation can users easily gain?

Moderator: There are quite a lot of new friends today, can you first briefly introduce your blockchain industry experience and Bifrost, as well as what kind of initial intention did you have to create a project like Bifrost?


Lurpis: I previously worked in Sina Weibo doing R&D, which also belongs to the full-stack direction. 2017, I entered the blockchain industry to start a business and created Coin Hunt Technology Company, and after several years of development, we did a lot of exploration in the field of DeFi. So in July 2019, we made the Bifrost project, and here is a brief introduction of our project.


Bifrost (Rainbow Bridge) is a DeFi base protocol of Polka Ecology, which is committed to be an infrastructure to provide liquidity for pledged assets, and currently launched vToken, a derivative for Staking and Slot Auction of Polka Parallel Chain. millions of dollars have been obtained from NGC, SNZ, DFG, CMS, etc. It is also a member of Substrate Builders Program and Web3 Bootcamp.


In fact, what Bifrost wants to do is very simple, take the derivatives of staking as an example, ethereum launched beacon chain on December 1 last year, users can deposit coins into it to earn staking revenue, but the deposited ETH may need to wait for ETH 2.0 to come online before it can be taken out, the lock time is about 1-2 years, which creates a high opportunity cost Bifrost is to issue you a derivative called vETH when you are staking. As long as you hold vETH, you can get the staking revenue of ETH 2.0, and you can also cash out the vETH for trading, without waiting for the two-year lock-up period.


As high market cap PoS projects like ETH2.0 and Polkadot come online, the problems caused by lock-in will become more and more serious. Because pledged assets are required to participate in DeFi, if a DeFi application is built on top of a PoS, users will be faced with a revenue decision: whether the revenue of Staking is higher or DeFi is higher. Bifrost, a derivative of Staking, was created to solve this paradoxical problem, and the solution is to allow you to get the benefits of Staking and participate in DeFi, essentially solving the paradox between the benefits of DeFi and the underlying chain. The solution is that you can participate in DeFi as well as Staking.


We have completed 80%+ of the development progress, currently doing code audit and mainly preparing for Kusama and Polkadot card slot bidding. In fact, before launching the parallel chain, we have already launched a liquid derivative product of pledged assets for Ether 2.0 – vETH, which is actually still an ERC20 asset at present. With the launch of Bifrost parallel chain, vETH will be the first asset to cross into the Polkadot ecology.


As of now, the accumulated minting volume of vETH has exceeded 18,000 ETH, and the total locked market value is about $40,000,000, which means that the first batch of ETH to enter the polka ecology after Bifrost goes live on the parallel chain in the future is about this size. So we also hope that after Bifrost is launched, it will bring a lot of external assets to the polka ecology and make the whole ecology prosperous.


Moderator: It is understood that Acala also has the function of “liquidity release”, so what is the advantage of Bifrost in the track of “liquidity release”?


Lurpis: This question can be answered in two ways. First, Bifrost’s vToken release and Acala’s liquidity derivative, L-Dot, are not in conflict with each other; Bifrost is actually more vertical in the Staking derivatives track. In addition to KSM and DOT, we will also bridge some external assets, such as ETH2.0, Cosmos, EOS, which are the items we need to go to provide liquidity for it. Therefore, Bifrost will become a transit bridge for external assets to enter the polka ecology, and users of external heterogeneous chains will naturally enter the polka ecology to hold assets in order to get liquidity and staking revenue.


Secondly, Acala is more vertical to do DeFi stablecoin protocol, Bifrost and Acala have also exchanged a lot of views on why they need to do liquidity derivatives protocol, since Acala wants to do over-collateralized lending stablecoin, it needs to solve the problem of interest generation of PoS class assets. Before the launch of Bifrost, Acala needed to solve these problems by itself, so it had two types of assets, L-KSM and L-DOT. As the minting volume and liquidity of vToken gradually increase, it will also consider using vToken as a pledged asset in Acala’s lending side.


Moderator: As we saw in the “Rococo Update” of Poca Weekly, the Poca XCM protocol was refactored last week, and the Parity team is currently compiling the entire codebase, so what is the impact of this “refactoring” on many parallel chain teams? What is the impact of this “refactoring” on many parallel chain teams? Will the parallel chain slot auction be postponed as a result? How long is it expected to be delayed?


Lurpis: There is no official announcement for the parallel chain auction, the public media is only giving speculation. It can be said that although Poca has kusama test network, as the canary network for Poca to have economic environment to test first, but you can see that parity is very strict in doing things. Two days ago Gavin announced the plan of Kusama card slot auction, before the completion of XCM, Shell chain, Statemint (public welfare parallel chain) will not easily start bidding, this is also because incomplete code will have a fatal impact on the initial start of the ecology.


We have been following up on the protocol refactoring of XCM, and the code changes are quite a lot. The problem it solves is to ensure both speed and stability in the whole cross-chain protocol. Bifrost has already used XCM to interact with other parallel chains in Rococo, and the whole process and experience is good, so we predict that this refactoring will not take long.


In fact, last year before Boka officially went on the main network, Gavin also released a to do list to confirm what needs to be done before Boka goes online. We can compare last year, the time interval between the release of the to do list and the launch of Boka main network is about one month, so we follow this schedule to project the time of Kusama auction should be late May.


Moderator: In the past month or so, we have seen Rococo parallel chain test network being restarted frequently, the latest restart happened last week, so, is each restart of Rococo closely related to the parallel chain project side, and what cooperation work does the parallel chain need to do?


Lurpis: Each reboot of Rococo is equivalent to upgrading a new version, which is a good thing, and Parallel Chain has been continuously updating the new features after the reboot. Each reboot is one step closer to the official bidding.


Moderator: Can the project Bifrost be implemented through smart contracts? What is the necessity of choosing to link to a relay chain through a slot? Why not implement it through Cosmos’ IBC protocol?


Lurpis: One of the key reasons Bifrost chose the polka ecology is that it does not need to maintain a set of consensus by itself, which is a direct advantage after connecting to the relay chain through bidding for parallel chain slots and enjoying the shared security of parallel chain provided by polka. Maintaining a set of consensus security requires a lot of capital and human cost investment; for a DeFi product, it is easier to invest the cost into business logic and product development to quickly iterate on a killer application. At the same time, Bifrost can use smart contracts to deploy business in heterogeneous PoS chains outside of Boca. For example, our vETH will become a dual asset protocol for ERC-20 and Substrate Base when the Bifrost parallel chain goes live, and will be seamlessly delivered and used across multiple chains.


Moderator: It is understood that Bifrost will “enlarge” the entire polka ecology after it becomes a polka parallel chain, that is, the KSM participating in the auction will also be able to enter the market circulation, is this a unique feature of Bifrost? Is this a unique feature of Bifrost? Is it a sure win in the auction with this tool?


Lurpis: Yes, we have completed the development of a solution that allows users to release liquidity during the bidding pledge period: the Card Slot Auction Liquidity Protocol, which we call SALP, and the product page is expected to be available to you soon.


SALP is indeed a Bifrost original. Our original intention in studying the card slot auction derivatives was to help users unlock the liquidity of 6-48 week auction pledges, and considering that factors such as uneven auction redemption periods may have an impact on the liquidity of derivatives, we created the derivatives vsToken and vsBond, which separate the asset and equity attributes, and decouple them through separation. The separation and decoupling ensures that users can buy and sell vsToken at any time to enjoy liquidity, while holding vsBond to receive bidding rewards issued by the parallel chain. This is something that other related card slot liquidity projects cannot do, and as a financial product, a derivative without uniform liquidity will have a great impact on the user experience.


Here is an example to understand more specifically what SALP protocol is. For example, if a user participates in the parallel chain slot auction through SALP protocol, your Token will not have any financial security risk, the form of participation is still decentralized, after the user participates in the Kusama parallel chain auction through Bifrost, he will get two assets, vsKSM and vsBond. vsKSM represents the KSM tokens pledged in the parallel chain slot, with vsKSM you can trade at any time, and in the future you can trade in DEX and CEX; vsBond represents the rights and interests attached to your participation in the parallel chain auction, for example, if you participate in Bifrost’s parallel chain auction, you can get an asset like vsBond-BNC, as long as you hold this asset and By holding this asset and Staking, you will receive a BNC incentive towards the parallel chain auction.


How is the vsKSM price guaranteed? Each vsBond we issue to a parallel chain has a redemption period, after expiration, as long as you hold vsKSM and vsBond, you can redeem your KSM on a one-for-one basis, which means that as long as you buy vsKSM at a lower price in the market, when your vsBond expires, you can get KSM on a one-for-one basis, and the difference in price is your So our SALP protocol is a risk hedging tool for investors who participate in the slots on one hand, and on the other hand, it can actually enhance the number of KSM and DOT locks in the parallel chain slots during the flat auction process, giving the whole boca ecology more ways to play.
Our SALP protocol will be launched simultaneously in the Kusama slot auction, so it can also be understood that Bifrost is the first parallel chain to use SALP protocol.


Moderator: It is reported that OKEx will soon launch a product that supports users to participate in Kusama parallel chain slot auction with one click. What percentage does the team plan to give to incentivize users to support Bifrost’s participation in slot auctions?
Lurpis: Yes, there are two points to clarify here, the first is that Bifrost will participate in the Kusama and Polkadot slot auctions, but Bifrost does not have a first network, so it will take the main network token to participate in the Kusama and Polkadot auctions. The exact auction plan is still in the secrecy stage and has not been announced yet. But what is certain is that we will take at least 15% of the total BNC tokens to participate in the Kusama and Polkadot auctions, and we will announce the reward details in the near future, which is very competitive compared to other projects.


We will strongly support OKEx’s support of the Kusama slot auction. We think that, on the one hand, the exchange can lower the threshold for users to participate in Kusama slot auctions, and on the other hand, it can allow more users who don’t know much about the rules of parallel chain slot auctions to understand and participate directly. Therefore, we will also give a portion of the reward to users who participate in the Bifrost slot auction through Oi OKEx. At the same time, Bifrost will be among the first to participate in the Kusama parallel chain auction.


Therefore, there are three advantages of participating in the Bifrost parallel chain auction: first, Bifrost does not have a prior network and directly uses the main network Token to participate in the Kusama slot auction; second, Bifrost will apply the SALP protocol in the Kusama auction, and the user’s KSM can get a derivative, which disguisedly unlocks the function of not needing to lock the position in the auction. function; thirdly, we will cooperate with OEE OKEx, and users can participate in Bifrost card slot bidding directly through OEE OKEx. With the above three advantages, we are very confident to get the first batch of slots.


Moderator: Very excited! And what is the release mechanism of Bifrost tokens?


Lurpis: The release mechanism of BNC is actually a very crucial point, because our Kusama-oriented slot auction currently does not require a locked position, so you can get 100% tradable Token after supporting Bifrost in the slot auction. Bifrost public website. In the future, when Kusama opens its slot auction, you can participate directly through OKEx or through Bifrost’s slot auction topic page.
It is reported that OKEx will soon launch products that support users to participate in Kusama parallel chain slot auctions with one click, and several high-quality projects will cooperate with the platform in an effort to let users easily participate in slot auctions while enjoying revenue and returns. Please keep an eye on the official announcement of the platform. Before that, you can also deposit your KSM and DOT into the OKEx Earn product in the staking to manage your money, and you can enjoy a high annualized return of 13.5% on demand. 

How did Bifrost win the "unlocking liquidity" race?

As for why we didn’t do the first network, because we think the strategy of each parallel chain auction slot is different, for Bifrost, we are required to go to provide liquidity to derivatives, in this case, the liquidity will be better only if the number of your derivatives is more concentrated and homogeneous, so we want to keep as few as possible without destroying the overall business types of derivatives. We will do this by upgrading to be compatible with the Kusama and Polkadot networks.

@Clover: What are the advantages of Bifrost compared to Acala?

Lurpis: We and Acala are both early developers of parallel chains under the Substrate framework, and each has its own characteristics in terms of advantages. bifrost actually focuses more on the release of derivatives from pledged assets, and will bridge more PoS networks in addition to Polkadot and ETH2.0, and is a bridge for users to cross-chain assets into the polka ecology. bridge. This is also the reason why Bifrost is called “Rainbow Bridge” in Chinese. The second difference is that in addition to Staking assets, Bifrost also has a derivative agreement – SALP – for Kuasama and Polkadot slot auction assets, and will cooperate with some project parties for slot auction liquidity release in the future.

According to OKEx quotes, as of press time, KSM quotes 310.63 USDDT, up 26.86% during the day.

I believe that in the near future, both Bifrost and KSM will give us a good answer.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/how-did-bifrost-win-the-unlocking-liquidity-race/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-05-24 05:20
Next 2021-05-24 07:12

Related articles