Interview Recap | OneBlock dives into protocol’s roots, current developments and future plans

LSD (Liquid Staking Derivatives) enables users to stake their crypto assets, earn interest, and maintain liquidity to optimize capital efficiency. With the successful completion of the Shanghai upgrades this year, the LSD track has garnered renewed interest in the crypto space. Bifrost, the pioneering crowdloan LSD project in Polkadot, has spent over two years developing a groundbreaking staking product known as the “killer app” to explore the full potential of LSD development.

Bifrost is a scalable, non-custodial, decentralized full-chain liquidity staking dedicated parachain based on Polkadot Layer-1. It offers standardized liquidity staking derivatives (Omnichain LSD) for multiple blockchain networks. Since its launch on the Kusama parachain on October 21, 2021, Bifrost has minted over $137 million worth of derivatives, provided $11.04 million of liquidity, attracted 84,297 addresses, completing +334,000 signature transactions.

Bifrost’s mission is to aggregate Staking liquidity from over 80% of PoS consensus chains through cross-chain derivatives. It aims to provide standardized cross-chain interest-bearing derivatives for PoS relay chains, parachains, and heterogeneous public chains bridging with PoS. The platform seeks to lower the threshold for users’ Staking, increase the ratio of multi-chain stakings, and expand the revenue base of eco-applications. The ultimate goal is to create a tripartite StakeFi ecosystem that empowers and fosters positive growth for users, multi-chains, and eco-applications.

OneBlock is honored to collaborate with Bifrost in the “2023 Polkadot Eco Project Support Program.” In this interview, Lurpis, Co-Founder of Bifrost, will share Bifrost’s technological innovation and ecological progress, along with the diverse developer support programs.

Bifrost: A Modular Parachain Pioneering Omnichain LSDs

Bifrost is a modular parachain dedicated to Omnichain Liquid Staking Derivatives (LSDs). Based on Substrate, Bifrost provides standardized, governable, and shareable liquidity Omnichain LSDs through XCM cross-chain interoperability. It addresses the challenges of fragmentation, lack of governance, and dispersed liquidity of LSDs, fulfilling the vision of minting any LSD on any chain.

Rooted in Polkadot, Embracing Decentralization, Multi-chain, and Standardization

From its inception, Bifrost has been devoted to decentralized, multi-chain, and standardized LSD development. The choice of Substrate technology and the Polkadot ecosystem stems from a technical perspective, as there is no other alternative technical implementation solution in the market except Substrate with XCM and Polkadot shared security.

As a pioneer in the full-chain LSD track, Bifrost has encountered numerous challenges during its development journey. However, these experiences have provided a solid technological foundation and opened up new opportunities for growth. Bifrost is actively decentralizing its governance through upgrades, and OpenGov Pallet has been introduced to support governance on the Kusama parachain.

Bifrost’s Rapidly Growing Ecosystem and Anticipated Products

After more than two years of development, Bifrost has established a mature and stable underlying technological framework. Using XCM, Bifrost can easily create LSDs for different parachains. Currently, Bifrost has successfully launched liquidity pledge derivatives (LSDs) for seven blockchains, including vDOT, vETH, vKSM, vGLMR, and others. The minting scale and liquidity continue to grow.

Bifrost has achieved significant milestones in the first half of this year:

• In March 2023, Bifrost launched the Bifrost <> Filecoin cross-chain bridge alongside the Filecoin FEVM launch, introducing the first Filecoin LSD — vFIL. vFIL provides liquidity to miners and has surpassed $350,000 in two weeks.
• In May 2023, Bifrost introduced Flexible Gas Fee, allowing any token to pay for Bifrost’s parachain Gas Fee, thereby reducing barriers to entry for new users to the Polkadot ecosystem.
• In June 2023, Bifrost and Moonbeam / Moonriver & Astar tested the XCM Action SDK and jointly launched the Polkadot LSDFi Hackathon Bounty. This initiative enables developers to use Solidity to develop XCM cross-chain minting LSD functionality in EVM environments, thus lowering the threshold for multi-chain LSDFi applications.
• Bifrost is set to release heavyweight new products and technologies in the second half of the year. Although details are kept confidential due to market secrecy treaties, these releases are expected to promote more “Polkadot” characteristic applications, creating greater anticipation.

Innovative Protocols, SLP and SALP Enabling Diversified Products

Bifrost’s innovative protocols, SLP (Staking Liquid Protocol) and SALP (Slot Auction Liquid Protocol), are at the core of providing diversified products through cross-chain interoperability. SLP and SALP are the earliest protocols to support XCM v3, ensuring full decentralization and interoperability across chains.

SLP allows more flexible and efficient fund scheduling in the SLP pledge pool by deriving parachain sovereign accounts and implementing multiple Delegator identities for staking Validators. SALP enables users to contribute through the Sovereign Account of the parachain and receive messages confirming Crowdloan Contribute success through XCM v3.

This allows the minting of vsDOT & vsBond derivatives.

Leveraging XCM to Unlock LSD Liquidity, Flexibility, and Original Chain Governance

The communication of XCM is fundamental to realizing Bifrost’s cross-chain staking derivatives and is an integral part of the SLP protocol, guaranteeing wider circulation of derivatives created by the SLP/SALP protocol. Consequently, Bifrost has been diligently working on facilitating the opening of HRMP channels between Bifrost parachains and additional parachains. Currently, Bifrost’s SALP protocol, which provides derivatives for Polkadot and Kusama slot auctions, has supported successful auctions for a total of 21 Polkadot parachains and 21 Kusama parachains.

Bifrost utilizes Cross Consensus Messaging (XCM) to offer cross-chain liquidity staking services for multiple chains. All LSDs supported by Bifrost are developed based on XCM. In addition to standardization and shared liquidity, the most significant achievement of Bifrost LSDs is their ability to retain governance rights. This means that Bifrost LSDs can support original chain governance.

For instance, users can actively participate in voting on the OpenGov governance proposal of Polkadot or Moonbeam through vDOT or vGLMR. This exemplifies a typical cross-chain interoperability scenario, where the user’s voting decision on the Bifrost chain is mapped to the governance proposal of the original chain through cross-chain interoperability. Consequently, users can enjoy abundant liquidity and flexibility brought by LSD while retaining full power to participate in governance through Bifrost LSDs.

Bifrost Eco Support Programs for Developers

As the Bifrost community grows, more partners are joining and contributing to its development. Bifrost offers support programs for developers to encourage ecosystem growth:

Bifrost Grant Program

This program funds integrations related to Bifrost Dapps, Wallets, SALPs, SLPs, and protocol-level projects. Funding amounts range from $5,000 to $50,000 per grant application.

If you are interested in this program, you can learn more about it in the official documentation below.

https://wiki.bifrost.finance/builders/bifrost-grant-program

Bifrost Bug Bounty

The Bug Bounty program rewards developers who find and report vulnerabilities in the Bifrost ecosystem. Rewards are distributed based on the impact of the vulnerability. Developers who are interested in this bounty program can check out the official website.

https://immunefi.com/bounty/bifrostfinance/

Conclusions

Bifrost continues to excel in the liquid staking space, but challenges lie ahead, especially in supporting heterogeneous chain LSDs. Bifrost aims to overcome this challenge through cross-chain interoperability bridges. By adhering to core strategies such as LSD standardization and cross-chain solutions, Bifrost will bring forth new supporting facilities for LSD and further contribute to the Web3 field’s pioneering efforts.