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Bifrost Parachain
The Beginner's Guide

Bifrost (BNC) is a project that offers powerful options for the developing DeFi world within the Kusama/Polkadot networks, allowing its users to maximize the utility of their tokens.

1. PROJECT

What is Bifrost Crypto?
Liquid Staking Polkadot Parachain

Bifrost is a Polkadot parachain with the mission to provide liquidity and staking without nominating delays. Bifrost allows users to deposit their staking tokens and mint vTokens (Staking Derivatives Voucher Token) to obtain staking liquidity, as well as receive staking rewards when a token is locked by a smart contract. With Bifrost, you can convert a proof-of-stake (PoS) token into a vToken; for example, DOT can be converted into vDOT.

Bifrost is a web3 derivatives protocol that provides decentralized cross-chain liquidity for staked assets. By leveraging on the cross-consensus message (XCM) it can provide cross-chain liquid staking services for multiple chains.

Bifrost's mission

“provide standardized cross-chain interest-bearing derivatives”

Bifrost’s mission can be summed up as obtaining liquidity for the tokens of other PoS chains that are stacked through smart contracts. To achieve this, the Bifrost protocol encapsulates these tokens from other PoS chains for stacking and issues vTokens that provide liquidity and offer various usage scenarios in DeFi.

Bifrost’s mission is to provide standardized cross-chain interest-bearing derivatives for Polkadot relay chains, parachains, and heterogeneous chains bridged with Polkadot. Furthermore, by aggregating over 80% of PoS consensus chains’ staking liquidity through cross-chain derivatives, Bifrost protocol lowers users’ staking threshold, increases multi-chain staking ratio, and improves the ecosystems application interest base, by creating a three-way positive cycle for the StakeFi ecosystem by empowering users, multi-chains, and ecosystem applications.

Introduction to the Bifrost Parachain

SmartContracts

Bridge

DeFi

Parachain first block: 2022/06/04 15:36:41 (+UTC)

Bifrost has recently gained a slot as a parachain for the Polkadot relay chain. This is important news for the development of the protocol.

They have also recently won a new slot as Kusama’s parachain, without opening a new crowdloan, thus renewing the one they already had.

What is characteristic of these Bifrost updates is that the team has already explained that in the future they will not renew the slot they have in Kusama, securing only a parachain position in Polkadot while Kusama’s previous parachain will become a parathread when the inter-relay bridge is functional.

In this way, they ensure that the Polkadot parachain will be enough to handle Polkadot and Kusmaa transactions thanks to XCMP, a cross-consensus Messaging format.

Liquid Crowdloan Derivative

Bifrost SALP (Slot Auction Liquidity Protocol) aims to release liquidity of contributions in Kusama/Polkadot crownloan through the issuance of derivatives. This will greatly increase asset utilization and attract more prudent investors who do not want to lose opportunity costs to support the parachain slot auction, thereby accumulating more DOT/KSM lock-ups for the Polkadot/Kusama ecosystem.

Liquid Staking Derivative

Bifrost has succeeded in developing a liquidity derivatives protocol for Stake KSM: vKSM, a new derivative that is anchored 1:1 with the KSM stacked that gives KSM stacking revenue.

The objective of vKSM is to help users who use the Kusama Governance Token (KSM), to achieve mobile staking, integrating vKSM and its utility with interesting DeFi scenarios for users to participate more in PoS security. of the network.

In the following link you can find a proposal from the Bifrost team to the Kusama treasury to obtain an initial liquidity subsidy in KSM for the liquidity of its derivatives. It is a very interesting text that defines the objective and the applications of the project.

What is a vToken?

A Voucher Token, or vToken, is a native Kusama (or Polkadot) token that is minted by Bifrost through staking assets. vToken represents the ownership and reward right of the original staking assets.

Thus, the rewards generated by staking are an alternative fungible asset with commercial liquidity, which can unlock the liquidity of the original staking or even become a new staking asset to help users make leveraged transactions.

The vTokens also provide these participants with the liquidity they need to participate in the Bifrost DeFi ecosystem. For example, those with vTokens can use vTokenSwap, an Automated Market Maker (AMM) trading pool, and trade within it. And not only that, vTokens can be used in other protocols within the Kusama network.

2. TOKEN

What are the utilities of the Bifrost Native Token (BNC)?

Bifrost Native Coin (BNC) is the native token of the Bifrost protocol and whose total initial supply is 80,000,000 BNC tokens. The purpose of the BNC distribution is to make the Bifrost network more decentralized, build the size of the vToken derivatives market, and incentivize the staking derivatives liquidity market.

Among the functions of this token:

The token serves for transfer, transaction, staking and other functions within the Bifrost parachain. The BNC used to pay the commission will be sent to the Treasury for further administration and distribution.
Staking guarantee. Participating nodes will have to stake in order to gain voting power within the network, while increasing the cost of slashing. Slash’s guarantee will increase or decrease based on the performance score of the node.
Governance. The BNC can be used for on-chain governance of the protocol, as well as participation within the technical committee, Treasury allocation, node election, and other on-chain governance functions.