Bifrost Full-Stack Architecture | Bridging the Gap in Cross-chain DeFi


Six months have passed since the Shanghai Upgrade, and the much-talked-about LST Wars show no signs of abating. With a colossal market capitalization, this sector stands as a hotly contested battleground within the DeFi landscape. On one front, established giants like Lido and Rocket Pool engage in ceaseless disputes, while on the other, newcomers like Puffer and Stader enter the fray.

Amidst this heated competition, Bifrost, a seasoned player in the LST (Liquidity Staking Tokens) arena, has strategically navigated its path. Rather than solely pursuing a surge in minting volume or attempting to sway liquidity through subsidies, or resorting to the “decentralization” card to suppress rivals, Bifrost has chosen a different path - one focused on enhancing capital efficiency and elevating the concept of Real Yield.

At the heart of Bifrost’s strategy lies an unshakable belief in “interoperability” as the linchpin of achieving true LSD Real Yield.

Full-Stack Architecture and Interoperability

The core yield of LSD, is intrinsically tied to the staking yield of the underlying blockchain. This staking yield, in most cases, remains a constant, serving as the foundation upon which LSDs operate.

However, to fully harness the potential of LSDs and their integration into the broader DeFi ecosystem, there’s a need to enhance interoperability, which in turn can lead to a compounded yield. Bifrost, a pioneering player in this space, has consistently prioritized the principle of “interoperability” in the design of its Staking Liquidity Protocol (SLP), ensuring that every aspect of its framework serves this overarching purpose.

In a bid to seamlessly integrate vTokens, Bifrost has ingeniously crafted a dividend distribution mechanism from the very outset. When it comes to distributing dividends for interest-bearing assets, there are typically three methods: Claim, Rebase, and Reward-Bearing. These methods were comprehensively explored in our article titled “How LSD Projects Issue Staking Rewards.” Notably, Bifrost distinguished itself early on by adopting the reward-bearing approach, which has now become the prevailing dividend distribution model in the LSD ecosystem.

Bifrost’s strategy involves adopting a “full-stack architecture” to achieve robust cross-chain integration. The pivotal element of this architecture is the utilization of a parachain to host the SLP protocol, while simultaneously deploying remote modules on other chains. This innovative approach allows users and applications on various chains to seamlessly access and leverage the SLP protocol through remote calls. This architectural marvel has empowered Bifrost with a slew of outstanding functionalities:

  • Cross-Chain vToken Minting: Users can now mint vTokens on a variety of chains. For instance, by using DOT, users can mint vDOT on Moonbeam, thereby expanding the accessibility of these assets.
  • Cross-Chain vToken Redemption: Similarly, users possess the capability to redeem vTokens on different chains, thus ensuring liquidity and accessibility wherever they may be.
  • Cross-Chain vToken Swapping: The flexibility to swap vTokens on different chains is a groundbreaking feature made possible by the vToken/Token pool residing on Bifrost’s native chain, providing underlying liquidity.
  • Cross-Chain Liquidity Provision: Users can actively participate in providing liquidity for the vToken/Token pool on the Bifrost Parachain, while simultaneously receiving LP Tokens, further enhancing the utility of their assets.
  • Cross-Chain LP Token Redemption: Lastly, the option to burn LP Tokens on various chains for liquidity redemption ensures that users can efficiently manage their assets across the multi-chain DeFi landscape.

Bifrost’s full-stack architecture is a game-changer in the realm of cross-chain DeFi, offering users a seamless experience akin to utilizing the SLP protocol on a local chain. The beauty of this architecture lies in its ability to abstract away the underlying complexity of cross-chain processes, sparing users from any awareness of fragmentation.

What’s more, this innovation isn’t confined to Bifrost’s own ecosystem. Applications on other chains can effortlessly integrate the SLP protocol using remote calls. This means that applications from diverse chains can integrate all vTokens without the tedious task of integrating each one individually. Thanks to Bifrost’s global status storage for all vTokens, as elaborated in our comprehensive analysis in the article Why Bifrost is more friendly to cross-chain integration than its competitors?

But the benefits of Bifrost’s full-stack architecture don’t end there. It also ushers in the era of “unified liquidity.” In Bifrost’s ecosystem, the liquidity of all vTokens centrally resides on the Bifrost chain. This centralized liquidity hub allows users and applications from other chains to remotely access it, eliminating the need for Bifrost to bootstrap vToken liquidity on various chains. The result? Users and applications can seamlessly conduct vToken/Token exchanges across any chain, enhancing accessibility and liquidity.

In summary, the full-stack architecture of Bifrost enables the SLP protocol to maintain its primary presence on the Bifrost chain while making it universally accessible. This not only elevates the user experience but also delivers unparalleled interoperability. In the flourishing LSD and LSDFi ecosystem, where yield maximizers constantly seek the best opportunities through multi-chain interoperability, Bifrost stands as the ideal solution, ready to meet these needs to the fullest extent.

With Bifrost, the future of cross-chain DeFi is brighter than ever before.