vETH/ETH Liquidity Farming is Live: Details, Incentives & User Guide

Published in

Bifrost — One Stake, Endless Opportunities.

4 min readApr 11, 2023

After completing the Goerli testnet check and code audit, we upgraded the vETH2.0 contract on the Ethereum mainnet on April 6th.
What has changed:

The swap rate of vETH/ETH officially increased to reflect the benefits of staking.
Users can convert vETH1.0 with vETH2.0 at a ratio of 1:1 through the conversion entrance.
The convert entrance is open for a long time.

Currently, Bifrost users have replaced +11,000 vETH 1.0 with vETH2.0!

Note: We invite you to complete the conversion steps soon as there will be substantial rewards for participating in the vETH/ETH liquidity mining!

vETH/ETH Pairs Created in Balancer

Since the constant product type automatic market-making algorithm created numerous improved versions. Among them, the Curve protocol created the StableSwap algorithm for trading characteristics between stablecoins, which makes trading between Pegged Tokens (where the swap rate is always close to 1:1, or a known specific ratio) capital efficient, smoothing the price curve in a precise interval and reducing the arbitrageur’s scope for arbitrage.

However, the vETH/ETH pair, which comprises an interest-bearing wrapped asset and the original asset, doesn’t fit the characteristics of a Pegged Token precisely. vETH’s price remains highly correlated with ETH, yet it does not remain constant around a fixed exchange rate, as vETH keeps generating pledged returns, and its price relative to ETH increases unilaterally. Balancer refers to these pairs as Correlated Tokens.

Balancer has developed the Composable Stable Pools algorithm, which is ideal for vETH/ETH trading pairs. Assuming that the exchange rate of vETH/ETH is 1:R, this algorithm ensures that the trading price remains constant around 1:R and changes as R changes.

Therefore, Balancer’s Composable Stable Pools are ideal for vETH2.0/ETH trading pairs. We have created the vETH2.0/ETH pair on Balancer on April 10.

vETH/ETH Liquidity Farming

Besides trading fee earnings, LPs can also receive additional Farming incentives by staking LP Token. xcBNC, the ERC-20 version of BNC, will be available to Liquidity Providers who stake LP Tokens through the Farming interface on bifrost.app, starting at 10.00 am (UTC) on April 11th.

Users have two other options:

Balancer offers a Liquidity Farming incentive to attract more liquidity, and LPs can stake their LP Tokens to the Balancer protocol to receive BAL rewards. The opening time, closing time, and reward level will be specified.
Aura Finance is a “governing party” of Balancer, equivalent to the relationship between Convex and Curve. The Liquidity Provider stakes the LP Token to Aura, the BAL reward goes to the Aura Finance agreement, and Aura Finance provides the Liquidity Provider with a replacement reward: Aura.

Following Bifrost’s launch of vETH/ETH farming, vETH holders can expect Balancer, Auro Finance to incentivize the Farming pool, and we will announce the launch date via Twitter as soon as it is confirmed.

vETH/ETH Farming Pool Tutorial

ETH Liquid Staking on Bifrost Dapp

2. Enter the ETH amount

3. Click Stake to complete the signature on chain and confirm

vETH/ETH LP Minting

Scroll down to LP vETH/ETH Pool and select Deposit

2. Click Get LP to jump to Balancer to add vETH/ETH liquidity

3. Enter the amount of Tokens you want to stake and select Preview. You can add ETH directly to the liquidity pool and pay a small token swap fee, and some of the ETH will be automatically converted to vETH; or both Tokens can be added at the same time, facilitating the liquidity pool to dynamically readjust its underlying asset prices and ratios.