DOT/KSM Crowdloan Derivatives
Bifrost, Acala, Parallel, Equilibrium
Main goal of derivatives is to solve the problem of choosing better financial solution: locking your assets into crowdloan for a pretty long period and get a crowdloan rewards or use your assets in DeFi scenarios and earn additional income.
The projects listed below offer the following solution: user locks assets in (any supported) crowdloan through deviratives protocol and get derivatives (vsDOT, lDOT, etc..) in ratio 1DOT : 1 devrivative DOT. This derivative DOTs can be swapped, used for liquidity providing and other.
Thus in total users get crowdloan rewards of the project (or derivative crowdloan rewards) + opportunity to earn some income in DeFi.
Bifrost
Bifrost’s Slot Auction Liquidity Protocol (SALP) generates two derivatives for contributors by dividing the Non-fungibility and Fungibility of the Slot Auction derivatives into two derivatives, vsDOT (Voucher Slot DOT) and vsBond (Voucher Slot Bond). Both are issued 1:1 to the amount of DOT contributions.
vsDOT is a fully fungible pass that may be exchanged or used in DeFi
- Fungibility congregates liquidity from various parachain crowdloans
- Can be exchanged for DOT before the lease on the parachain expires
- The price is not tied to DOT
- Initial exchange rate for DOT is achieved via bootstrapping the liquidity pool on an Automated Market Maker
- Trading price is set by the market
- Can be used to invest in bootstrapping pools, earn LP tokens, and farm in Bifrost LP farming pools
vsBond is a semi-fungible pass-through that is assigned to several projects and generates various derivatives owing to varied lease expiry dates
- Can carry out transactions using Bifrost’s built-in vsBond market without experiencing liquidity issues
- Is not needed to redeem parachain rewards after the lease period
- Can be used in pair with vsDOT in Bifrost’s non LP farming pools (for those who don’t want to deal with impermanent loss)
Both vsDOT and vsBond are required to redeem DOT in a 1:1 ratio at the end of the parachain lease.
Acala
The Acala Crowdloan will now provide two on-chain alternatives for contributing DOT: directly through the crowdloan module with a two-year lock, or indirectly through Acala’s Liquid Crowdloan vault.
Users will use lcDOT to participate in the crowdloan while still having access to their liquidity:
- Contribute DOT to the Acala-managed Liquid Crowdloan Vault
- Receive Acala (ACA) tokens, your network share. The more DOT you lock, the higher rewards you get
- Liquid Crowdloan DOT (lcDOT) is a liquid token that represents your locked DOT
- In DeFi, use lcDOT provides access to the underlying DOT liquidity. Swap, use as collateral to mint a USD, and do other things
- With your lcDOT tokens, redeem the underlying DOT locked in the Acala Crowdloan (after the lease period)
IcDOT features:
- Issued in 1:1 to the amount of DOTs that contributed to crowdloan
- Now applicable in Acala only, but it may be extended to other parachain projects in the future
- The initial exchange rate of lcDOT: DOT is obtained by bootstrapping the liquidity pool on an Automated Market Maker
- In contrast to Bifrost’s SALP, lcDOT alone provides the possibility to redeem DOT at the end of the lease time
Parallel
You can stay liquid by obtaining cDOT when locking your DOTs (issued 1:1). Initially users will receive cDOT-A derivatives by contributing in Project A’s crowdloan via the Parallel app. Compared to Bifrost derivatives, cDOT-A may have the disadvantage of segregated liquidity.
General cDOT features:
- cDOT is a native token on Parallel’s platform that can be redeemed for DOT at the end of the parachain leasing period for the winning project
- The cDOT coins, named after the parachain platform, will be distributed after Parallel’s network is operational
Applying:
- To earn loan interest, deposit cDOT in Parallel’s Money Market
- Deposit cDOT in order to lend DOT or other assets from Parallel’s Money Market
- Use Parallel Finance to trade cDOT
Equilibrium
When you contribute your DOTs to parachain auctions through Equilibrium, you receive a special token called xDOT. Equilibrium will take a snapshot of all contributions and calculate appropriate xDOT allocations for every participant in the Genshiro blockchain once a project you voted for becomes a parachain.
How it will work:
1) Stake DOT through Equilibrium for the parachains of your choosing
2) On Genshiro, get xDOT against each of your DOT
3) Receive your rewards
4) Purchase, pledge, or exchange xDOT
5) Return DOT when the parachain lease expires
You can use xDOTs on the Genshiro money market:
- Supply liquidity and earn an APY of more than 30%;
- Borrow liquidity against xDOT;
- Trade on Equilibrium DEX using xDOT as margin;
- Sell xDOT or supply liquidity by depositing it in the relevant Balancer pool
