RELEASED CROWDLOAN LIQUIDITY FOR PARTICIPANTS WITH BIFROST SALP

Samson Dogo
5 min readApr 22, 2021

The Bifrost Slot Auction Liquidity Protocol (SALP) was created to enable users to generate derivatives to lock in KSM / DOT liquidity at Crowdloan. SALP would greatly improve Crowdloan’s capital use and draw more investors who don’t want to miss out on a chance to help the Parachain slot auction at a low cost. SALP allows users to enter a community loan without having to use a DOT or KSM lock. SALP improves the chances of a competitive tender in parachain ventures. SALP can increase the number of slot auction ties in the Polkadot or Kusama ecosystem, allowing DOT / KSM to perform more innovative functions.

vsDOT / vsKSM and vsBond are two variants of Bifrost SALP. vsDOT/vsKSM is a completely Fungible token, while vsBond isn’t quite right for different parachains. Parachain 1 and 2 generate different vsBond-1 and vsBond-2, for example. vsBond-1 can be substituted, and vsBond-2 can be replaced as well, but vsBond-1 and vsBond-2 are not compatible. In comparison to the various parachains that will be auctioned, vsBond will be special. Different vsBond are created by the bidding actions of the same parachains in different time periods, which will be explained in more detail later.

Derivatives are not entirely tradable and a non-fungible liquidity barrier due to invariable variables such as different parachain lease dates, different redemption times, and contradictory parachain incentive strategies. Fungible derivatives, on the other hand, incorporate the liquidity of several parachute loans to obtain an objective liquidity advantage. As a result, Bifrost begins with the community loan’s token attributes, splits them into utility and equity, and creates two derivatives: vsToken (Coupon Slot Token) and vsBond (Coupon Slot Token).

The first is an exchangeable coin that serves as a voucher for a user’s parachute auction donation. The coupon can be used at any time, or it can be used in conjunction with vsBond to have one-to-one traceability.
The second is a coin that represents the auction reward and rental period of various parachutes, thus resolving the issue of disparate reward strategies among parachutes. Meanwhile, vsBond can process transactions without worrying about liquidity issues using Bifrost’s built-in vsBond market.

Bifrost hopes to be able to distinguish between the utility value and equity of a token in the simplest possible way using vsToken and vsBond. At the same time, vsToken will have strong liquidity as an additive derivative.

Technical solution

Let’s explore the mechanics of VsToken and vsBond:

vsBond: A coin represents the rewards of the parachute auction and the 1: 1 buyback of vsToken.

vsBond represents a specific parachute and successful lease time. Therefore, vsBond’s full name is: vsBond + Parachain Project Name + Retirement Date, for example: vsBond-Bifrost-2022–06–01.

  1. Contribution Reward: vsBond can be transferred to the corresponding parachain through XCMP, and then only the address holding vsBond needs to be identified as a contributor.
  2. Combined with vsToken, vsToken can be redeemed 1:1 after slots retirement. Therefore, vsBond can be regarded as a special product that contains Contribution Reward and 1:1 redemption. As an equity certificate, vsBond does not require high-liquidity transactions and can be sold through a buy-in-price form of pending orders in Bifrost vsBond market, without creating liquidity pools.

vsToken: an exchangeable token that releases additive liquidity

The VsToken functionality allows contributors to sell vsToken for the original token before the slots become obsolete to achieve the goal of freeing up liquidity.

Unlike VsBond, vsToken does not depend on specific parachutes and slots. To do this, Bifrost has designed two exchange groups to achieve vsToken interchangeability: 1-to-1 fixed group and Bancor group (1: x, x <= 1). Specific details on the mechanism can be found at the following address: https://wiki.bifrost.finance/learn/vtoken/salp

Possible cooperation projects

In the future, SALP will be featured in the form produced by Bifrost after the official launch of Parachain. Projects participating in the Parachain slot auction can be set up with SALP to complete the creation of slot liquidity derivatives and users can use Bifrost Dapp. SALP seamlessly joins the parachain crowdfunding of the cooperation project. To participate in the auction, all votes are automatically transferred to the corresponding Parachain group lending address via the Bifrost SALP module. Currently, SALP has also reached potential collaboration on a number of projects that require parachute auctions. In addition to DEX trading and usage in the Bifrost vTokenSwap and Polkadot / Kusama ecosystems, vsToken will also expand the liquidity plan on core exchanges. With the launch of the Bifrost parachute, the reduction scale and liquidity of vsToken will continue to improve and the SALP program will be available for other projects. For more information, contact salp@bifrost.finance.

The Bifrost SALP application plan is an innovative by-product that was developed by the team after an in-depth study of user requirements and a feasibility study and evaluation. In Polkadot, the architecture of the multi-chain system separates canonicality and validity and forms a bridge of mutual trust between differentiated systems of consensus. Bifrost SALP has the same original intention as Polkadot. Qualitative transaction attributes and differentiated capital attributes are divided into two parts, which means that derivatives can obtain sufficient liquidity and at the same time reduce the participation barriers of users. SALP is believed to become a creative product in the DeFi ecosystem when the Polkadot slot auction officially opens. SALP is also being rolled out for the first time in the upcoming Bifrost auction calendar for the Kusama Parachain slots. Stay tuned.

About Bifrost

Bifrost is the core protocol of Polkadot Ecological DeFi. It promises to be a proprietary asset infrastructure to provide liquidity. Bifrost has released variants of vToken for gambling and Polkadot Parachain Slot (Crowdloan). It has raised $ 2.15 million from NGC, SNZ, DFG, CMS, and other organizations, as well as the Web3 Foundation Grant. He is also a member of the Substrate Builders Program and the Web3 Bootcamp.

You can optimize operations in various scenarios such as vToken, DeFi, DApp, DEX, CEX and carry out liens transmission channel such as staking and collective lending through vToken, secure pledged assets, and expand scenarios such as vToken as security. Loans, the share of the issue premium in interest, can be deducted from soft loans.

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