Established in 2019, Bitfrost’s primary focus has been on creating a liquidity-stacking para chain. The Product Manager at Bifrost, Tyrone Peng talked about liquidity release solutions during an interview with Cryptooshala. He believes that these solutions are very vital for safe and efficient staking.
What is liquidity staking and what prompted you to move in that direction?
Proof-of-Concept (PoC) agreement is presently looming in the blockchain sphere. A lot of public Proof-of-Stake (PoS) chains need full nodes or validators on the network to stake a fraction of their token while ensuring the safety of the blockchain operation.
Staking rewards data shows that the average rate for DeFi protocols is more than 30% while for PoS blockchains is more than 55%. Hence, it’s critical to find solutions to the liquidity crisis during staking periods as this will help improve the utilization rate across the whole network. In 2019, the company Anc Bifrost was launched to help solve this problem. But another problem has arisen recently, as reports say that cryptocurrency mining in Texas takes a lot more electricity by the coming years.
What’s Bitfrost’s mission?
Bitfrost aspires to release liquidity for the allocation of derivative assets and also open interconnected links between several heterogeneous chains. Bitfroat believes this will help provide adequate liquidity for the Web 3.0 multi-chain interoperability concept.
Tell us about our liquidity issuance solutions and why they matter.
Bifrost proposes two different approaches to free up liquidity:
1. Liquidity Staking Protocol (LSP)
Bitfrost is a completely decentralized betting derivatives network. The network has standardized capital retention, settlement, and interest generation on betting assets, offering liquidity for all kinds of betting assets.
However, as a result of the network’s decentralized nature, the collateral provided must come with certain features. That’s not all, the consideration paid, the proven capital, and the assets issued on the network must be made available.
2. Slot Auction Liquidity Protocol (SALP)
Bifrost, through Slot Auction Liquidity Protocol (SALP), intends to free up liquidity of deposits in the crown loan of Polkadot (DOT) and Kusama (KSM). This will be done via the insurance of derivatives and will considerably improve asset utilization while attracting more sensitive investors. These investors will further support the para chain slot auction, hence, more DOT/KSM locks are accumulated for the Polkadot / Kusama ecosystem.
What is slot auction liquidity protocol and how does it work?
SALP is a liquidity release protocol developed precisely for para chain auctions on the Polkadot ecosystem.
The para chain auction is a program distinct from Polkadot. It is basically a multi-chain architecture that delivers the entire security of parachains via a slicing mechanism. This effortlessly enables them to verify blocks of every parachains.
However, the relay chain is limited to a specific number of para chain it can access. To this end, Polkadot / Kusama is aiming to make use of an auction for every Parachain project to contend for slot rentals. This will help distribute the limited Parachain slots to more profitable parachains.
The competition for slot rentals is done by seating DOT / KSM in the relay chain. Therefore, the more bets placed, the higher the possibility of getting a slot. This entire process is called Slot Auction.
SALP helps to provide derivatives for every member of Crowdloan who makes a DOT / KSM deposit via Bifrost. They will get to earn vsBond and vsDOT as a derivative to be utilized to teeter the opportunity cost
What have been your most important accomplishments in the past 12 months?
Bordering from 2020 to 2021, Bitfrost was able to achieve 80% of its goals and objectives for the four quarters of 2021. Bitfrost primarily pursued five main pillars; Online Core Business, Testnet Launch, SALP Business, Bridging, and vETH Business. These have greatly enriched and benefited Bitfrost’s product line while developing tight environmental partnerships.
Ever since Bitfrost was established on Kusama Parachain, it has produced and validated more than one million blocks. That’s not all, it has also conducted more than 200,000 transfers and 250,000 intrachain transactions. Bitfost also ranks second for the number of BNC addresses in the chain in Kusam with about 78,000
What’s next for Bifrost?
Bitfrost is looking to launch another batch of para chain auctions for Polkadot. Also, since Bifrost makes use of just one network, Bifrost-Kusama will gradually evolve to Bifrost-Polkadot shortly.
Bitfost will still proceed to mint derivatives from Kusama and Polkadot parachain auction releasing liquidity while encoding the Bifrost SLP (Staking Liquidity Protocol). Just on derivatives, the platform will also continue to develop the Ethereum decentralized cross-chain bridge program from Snowfork.