Proponent Address: F7fq1jMmNj5j2jAHcBxgM26JzUn2N4duXu1U4UZNdkfZEPV (parachain 2001)
Requested Amount: 50,000 KSM
Product Link: https://bifrost.app/vstaking/vKSM
vKSM mechanism: https://wiki.bifrost.finance/staking-liquidity-protocol-slp/vksm
Bifrost is a substrate based Kusama and Polkadot parachain that provides non custodial decentralized cross-chain liquid tokens for staked assets. By leveraging on Polkadots cross-consensus message format (XCM) it provides standardized cross-chain liquid staking services for various networks notably Polkadot (vDOT), Kusama (vKSM) and the first LST solutions on both Moonbeam (vGLMR), Moonriver (vMOVR) as well as other multiple chains (currently 6+ chains).
This proposal would request the Kusama treasury to lend a total of 50,000 KSM (repaid with interest) as base liquidity for the KSM and vKSM (liquid staking token for KSM) pair.
This proposal is identical to our successful proposal of last year- for reference https://kusama.polkassembly.io/post/1606
The execution timeline of the proposal: https://kusama.subscan.io/treasury/177
The repayment of last years liquidity loan will happen on the 20th of July, 2023 (1 year following the loan receipt in 2022).
In terms of Repayment details, before the 20th of July, Bifrost will post under this proposal comment. The general steps will be the following:
6/20 | Withdraw vKSM/KSM liquidity from Zenlink and Mangata DEX.
6/25 | Initiate Bifrost referendum proposal to redeem borrowed vKSM + one year interest.
7/3 | Start KSM unstaking process on Kusama relay chain.
7/10 | Gather borrowed KSM + interest in Bifrost Kusama sovereign account.
7/11 - 7/20 | Initiate Kusama referendum proposal to repay KSM from Bifrost paraid2001 to Kusama treasury.
> Bifrost had done the repayment of the last liquidity subsidy proposal, at July 11th, 2023. Check our latest comment under the last proposal: https://kusama.polkassembly.io/post/1606#uyr5UGFRsOIFcPN2olpP
This Initial liquidity subsidy is fundamental in keeping the liquidity backing and support for broader utilities and use-cases across various DeFi applications and scenarios within the Kusama and Polkadot ecosystem and driving KSM related economic growth and adoption on both Substrate and EVM parachains.
This liquidity loan will keep driving the benefits achieved from our previous Kusama treasury liquidity proposal of last year for the broad Kusama ecosystem and for the community (below are comparisons between last year's proposal and presents in terms of achievements and present developments):
(Past) Provide liquidity for staked KSM and promote the capital utilization of KSM in various DeFi scenarios and applications. This initial liquidity subsidy provides backing to vKSM being a catalyst in driving the expansion of KSM’s multichain economy.
(Present) Liquidity subsidy helped us to growth KSM-vKSM capitalizations across:
On-going developments and collaborations (check more details in Section #Motivation - application scenarios)
(Past) Bifrost will develop the SLP pallet (vKSM minted pallet) SDK and Stable Asset Pool SDK for cross-chain vKSM mint/redeem calling convenience. The remote SDK call will facilitate cross-chain liquidation for vKSM/KSM.
(Present) The vKSM minted pallet has been developed and it is called the “XCM-Action Pallet” in Bifrost Runtime - XcmAction, it currently works for EVM-compatible chains (Astar and Moonbeam have tested) contract (https://github.com/bifrost-finance/xcm-action-contracts) calling vToken minting/redemption/swap to Bifrost via XCM. It wlll be launched expected at the end of July of 2023.
(Past) Further improve the incentives for users to nominate and pledge tokens;
(Present) Bifrost has incentivized vKSM, vDOT single-token farming for over a year to drive users to use Bifrost and to deploy vKSM on other parachains and protocols.
(Past) Improve the enthusiasm of KSM holders to participate in staking;
(Present) The growth of KSM staked with Bifrost in the past year:
from 70’108.1841 KSM to 347'823.6972 KSM with a growth rate of 396.12%.
(Past) Borrow 50’000 KSM from the Treasury and pay back with interest, increasing treasury funds utilization.
(Present) Bifrost will repay 54,750 KSM with interest on the 20th of July, 2023. In using this liquidity loan, Bifrost has driven KSM liquidity use cases and continues to do so as mentioned in the section “Application scenarios”.
As our original intention stated in our first proposal remains unchanged, Bifrosts long-term goal is underpinned by the following objectives:
KSM, as the governance token of Kusama, about 50% of the total amount of KSM is currently in staking. Bifrost hopes to activate the capital utilization of staked KSM while empowering the security of the Relay-chain consensus, and promote the activity of Kusama Staking. Thus, Bifrost has enhanced liquidity derivative protocol with XCM V3 for Staking KSM: vKSM, a liquid staking token that is anchored 1:1 with staked KSM and comes with KSM staking income. Bifrost hopes to borrow 50,000 KSM from the Kusama Treasury as the base liquidity.
Bifrost's KSM liquidity pledge agreement (staking liquidity protocol-SLP) completes the cross chain nominating of KSM by calling XCM at the runtime level, and SLP pallet completely controls and casts vKSM. In the whole process, the SLP protocol selects the validator with no security risk and reasonable rate of return through the governance on the chain to help users complete the one-stop nominate, and complete the final voting through the “Sequential Phragménd Method“ on the Kusama chain.
vKSM validators (108 validators now): https://bifrost.app/vstaking/vKSM?tab=validators
Bifrost uses a hybrid mechanism of community governance + automatic scoring to select Validators behind vKSM, making the validator election process diversified, more efficient and transparent.
Bifrost divides the seats of entrusted validators into two parts, the Validator White List (VWL) and Validator Boost List (VBL). A set of clear validator rating selection rules will generate the former, while the active application of nodes will render the latter and the Bifrost community votes on their application submission for approval. The SLP protocol will only entrust the assets staked by the user to the validators in these two Lists.
VBL Discussions at Bifrost Forum: https://bifrost.subsquare.io/discussions
In Q3 of 2023, Bifrost will launch a governance voting track dedicated to validator elections: Validator Election Track (VET) in conjunction with OpenGov. The VWL and VBL need to pass the VET voting process before officially taking effect.
Therefore, vKSM can help any user willing to stake, complete the pledge without knowledge threshold, and use governance screening to improve the overall staking quality. Staking with mobility will be integrated with rich DeFi scenes to stimulate more users to participate in the nominated proof of stake.
XCM-action: take KSM staking to Multichain
The function of XCM-Action is to deploy the vToken's mint, redeem, and Swap entry on Multi-chain, making it easier for users from different ecosystems to participate in "Stake KSM with Bifrost" or "Stake DOT with Bifrost".
At the current stage, XCM-Action has completed several stages of development work:
May 2023 | Register xc-vKSM and xc-vDOT on Moonriver and Moonbeam, launch XCM-Action runtime on Moonriver and Moonbeam production.
May 2023 | List vKSM on Pablo DEX on Picasso and create the first vKSM/vDOT pair using Composables’ Centauri IBC bridge (Polkadot ⇔ Kusama).
May-June 2023 | Test the cross-chain settlement function of vKSM and vDOT for XCM-Action using DIA vKSM PoR + Market price feed and Astar lending protocol.
June 2023 | List vKSM on Kintsugi DEX for KSM LST Stablepool and enable vKSM as a new vault type collateral for kBTC.
June 2023 | Launch the Bifrost xc-vKSM Mint & Redeem page on Moonriver ecosystem, guiding Moonriver ecosystem users to stake KSM directly in the EVM environment without manually cross-chain to Bifrost.
June 2023 | List xcvKSM on Solarbeam DEX on Moonriver and launch the xcvKSM-xcKSM pool.
June 2023 | Upon the successful completion of the native Polkadot ⇔ Kusama bridge via Bridge Hub, list vKSM on HydraDX Omnipool.
June-Aug 2023 | Use price feeds such as DIA + Chainlink price feed to promote xcvKSM as a lending and borrowing collateral on protocols such as Orbiter Finance, Moonwell Apollo (TBC).
Aug-Dec 2023 | Enable xcm-action contract and SDK on Ethereum mainnet and L2s (rely on Polkadot ⇔ Ethereum bridge), promote vKSM utilities and Bifrost LSTs Hackathon in Ethereum.
We apply to borrow 50,000 KSM liquidity subsidy from the Kusama Treasury.
For a detailed description, please see the section “Liquidity Loan and Repayment Process” below.
Tracking Borrowing and Repayment Process
Bifrost will complete the borrowing/repayment process of the 50,000 KSM subsidy through a fully open and transparent process on Kusama and Bifrost governance.
About redeem LPs on DEXs:
For non-Substrate DEXs:
Since XCM currently does not support remotely calling Solarbeam's contract from Bifrost to complete the provide/redeem LP operations, Bifrost can only use the multisig solution of Bifrost Council members to operate xcKSM and xcvKSM on Solarbeam.
For Substrate DEXs:
We will execute though governance via HRMP transactions, below are past cases:
Bifrost is a substrate based Kusama and Polkadot parachain that provides non-custodial decentralized cross-chain liquid tokens for staked assets. They are requesting a loan of 50,000 KSM from the Kusama treasury to lend as base liquidity for the KSM and vKSM pair. Bifrost's long-term goal is to facilitate the capital flow of KSM staking and enhance the consensus security of the Kusama network. They have achieved significant growth in the past year, including the development of the vKSM minted pallet SDK and stable asset pool SDK for cross-chain vKSM mint/redeem calling convenience. Bifrost will repay the loan with interest on the 20th of July, 2023. They will use Zenlink DEX, Mangata DEX, and Kintsugi to provide liquidity to this proposal. The repayment process will be transparent and open through Kusama and Bifrost governance.
🧊 Iceberg Nodes 🧊 fully supports this referenda!
Bifrost has long proven to be one of the best parachains in the entire Polkadot and Kusama ecosystem, and having repaid the loan obtained last year (especially during the market phase we are in now) is only the reconfirmation of their growth , of their economic solidity and above all of their seriousness and reliability.
We think their success depends on having understood the true essence of being successful in the Polkadot and Kusama ecosystem, i.e. making partnerships, collaborations and working side by side with other parachains (it is no coincidence that parachain = chain with specific features) and projects, without reinventing the wheel every time, and making use of interoperability and enhancing the XCM use, only in this way can a project get the most out of both its product and the entire ecosystem.
Greetings to all the Bifrost team members and their community
🧊 Iceberg Nodes 🧊 Team