What is Bifrost?

Bifrost is a cross-chain project that lets users participate in decentralized finance (DeFi) applications while earning staking rewards on their cryptocurrency. Being a parachain (parallel chain), it operates on Kusama, a pre-production environment, and the Polkadot network, developed by Substrate, with its native coin, BNC.

The auction for the first batch of Kusama parachain slots was concluded on the 20th of July, 2021, with Bifrost successfully bidding for the 5th position in the first batch of Kusama parachain with 142,430.9241 KSMs. This value was more than the number of KSMs bid for the first two spaces. The remaining 5,614.7220 KSMs will be added into Bifrost SALP’s integrated Bancor liquidity pool as core funding for vsKSM, giving token users derivative liquidity for vsKSM in the early days of staking.

The Kusama slot auction’s success represents a pivotal point for Bifrost. Bifrost earned the chance to be the first to join the Polkadot community and fully realize the ability of different derivatives to combine through this auction. Furthermore, the bidding procedure proves the benefits of the SALP business and completes the first stage in the implementation of the SALP business. Bifrost will leverage its first-mover advantage as a parachain in the future to encourage derivative application and ecological growth.

The project’s website and whitepaper do not specify the team members, but since it is an open-source project (built on other open-source portals, but mainly as a parachain slot candidate on Polkadot), its Github account lists three people (Lupris, Edwin, and Jianping Deng) to be involved in development. Also, there is an unclear token classification status, a lack of apparent KYC, and a lack of privacy policy.

Ecosystem, Technology, and Utility

The Bifrost project aims to provide its users the possibility of earning staking rewards, and at the same time providing liquidity to their tokens. It will act as an intermediary protocol between layers of application and will support these applications with Proof of Stake (PoS) services and liquidity staking. It seeks to offer three services: a hedge for staking assets, double rewards, and leverage to expand staking principal.

Staking in cryptocurrency refers to a situation wherein users lock their tokens in smart contracts for some time to earn rewards, more like interest on tokens staked. But the flaw therein is that tokens staked cannot be accessed or used for other Defi activities, until the time for the staking smart contract is up. But Bifrost seeks to solve this problem with its vTokens. Bifrost aims to proffer a solution, through liquid staking.

Liquid staking allows users to stake any cryptocurrency on the Bifrost platform, and receive an equivalent vToken in exchange. This is to say that if you stake 1 ATOM token via Bifrost, you’ll receive an equivalent 1 vATOM token in exchange. These vTokens can thereafter be used to access and fund Defi applications on Kusama.

Although Ethereum supports smart contracts and has more popularity, Bifrost still chooses Polkadot because even with Ethereum’s popularity, it would be very hard to provide the required liquidity that staking systems need. By joining the Polkadot ecosystem, Bifrost Finance hopes it will provide the liquidity required. Polkadot is designed for cross-chain interoperability and as a potential competitor to Ethereum, and this enables others to build integrations that allow staking on other PoS networks (including Ethereum). Bifrost uses Polkadot’s GRANDPA consensus algorithm to enable staking, planning to leverage on:

• The growth of Defi and;
• The blockchain industry’s perceived drift towards PoS variants

All PoS tokens will be represented by vTokens and will have the ability to connect with tokens on the Polkadot network, due to Polkadot’s cross-chain operability.

The Bifrost network built on Polkadot’s ecosystem includes:

• Cross-chain users who own vTokens, and can also be BNC miners

Voters who own BNC and can vote for the governance, proxies of staking nodes, assets Bifrost supports, as well as sync nodes. They’ll receive rewards for their service.

• Node validators who vote on valid transactions. Validators also receive 10% of the total rewards that are summed to users.

• Stake proxy nodes are nodes that are nominated to support the PoS chain of Bifrost partners. They will receive and confirm the amount of stake proxy which to be moved to other chains. They can also connect with mining pools, liquidity pools, DApps, and wallets. This will make things easier for the staking node to interact with other DApps on other DeFi protocols.

• vToken DEX which is the exchange that provides liquidity for vToken. Users will also be able to stake or unstake their tokens on this exchange.

• Community Developers who build applications like wallets or DApps or make new features for Bifrost.

BNC Utility

The BNC token is essential for the upkeep and operation of the Bifrost network and can be used for:

• Trading fees:

Users that engage in Bifrost network transfers, transactions, staking, and other behaviors are required to pay transaction fees. Bifrost has a Flexible Fee module that supports multiple asset payment fees such as BNC, DOT, vDOT, KSM, vKSM, and others. These fees are gathered and converted into BNC before they are stored in the treasury to promote network growth and maintenance.

• Collateral:

To guarantee good conduct, participating nodes are required to stake BNC. And based on node performance, collateral may be increased or lowered.

• Administration:

To build network community governance, BNC holders would be able to recommend and/or vote on network enhancements, with each vote corresponding to the amount of BNC token they own.

The entire quantity of BNC, like many other cryptocurrencies, is restricted to 80 million BNC tokens. And around 2% of this value will be distributed to individuals who participate in the Kusama parachain auction.

Benefits of Bifrost

Bifrost provides similar to other Defi platforms but may have an edge with its improved benefits:

• Liquidity Staking:

This is a different option than locking up a user’s stake. It enables Bifrost users to link their tokens, which must be supported by Bifrost, and stake any quantity of their token. It also enables them to effectively unstake their tokens without the need for transactions to be authorized. Following that, they will receive vTokens and staking rewards. These vTokens may be found on the DEXs of Bifrost.

• Provision of Liquidity for Parachain Auction:

Tokens of participating users will be locked during the parachain auction and even after the sale if the project they backed won the auction. The project will provide prizes to compensate its supporters for their losses. However, if the valuation of the locked tokens rises, it poses an issue for supporters. Furthermore, Bifrost enables you to participate in the auction, support your project, and if it wins, Bifrost will reward you with vTokens equivalent to the tokens you locked for your project.

• Voting Market:

There are various validators on PoS systems lately, which confuses consumers who wish to stake for one. Validators are an important component of the PoS consensus system. They are effectively the staking system’s moderators and are in charge of creating new blocks on the chain. With its bidding procedure, Bifrost eliminates this confusion, allowing users to stake on genuinely good validators.

• Decentralized Exchange:

At first, Bifrost will support vTokens on its DEX but will connect with other exchanges in the future to integrate more pairs.

Bifrost Network Design

The Bifrost parachain is intended to serve as an extra layer between Kusama’s Relay Chain and the Kusama network’s application layer.

Users can receive staking rewards by sending their proof of stake (PoS) cryptocurrencies (such as ETH, KSM, or ADA) to the Bifrost protocol and converting them to a matching vToken (vETH, vKSM, or vADA).

These users get the liquidity they need to engage in the Bifrost DeFi ecosystem thanks to vTokens. Those who hold vTokens, for example, can utilize vTokenSwap, an automated market maker (AMM) trading pool that lets users trade between 64 pairings in an 8-currency pool.

It is also worth noting that vToken users can use them to access other DeFi apps on parachains created on the Kusama network.

Project Metrics

Token Distribution

The network’s utility token is the Bifrost Native Coin and here’s a highlight of how it will be distributed:

Ecosystem: 50%

Founders and Team: 20%

Seed Round I: 6%

Seed Round II: 4%

Strategic Round: 2%

Private Round: 3%

Marketing and Community Build: 3%

Mint Drop: 2%

Treasury (Foundation): 10%

BNC Price and Market Data

Bifrost’s price was 4.65 US dollars as of November 2, 2021. BNC has a 24-hour trading volume of around 1,375,677 USD. The price of the token had risen by approximately 18.5% in the last 24 hours. It’s also worth mentioning that Bifrost Native Coin has a current circulating quantity of 0 BNC coins and a potential lifetime supply of approximately 80 million. The currency’s value has increased by 13.9% in a week; 5.2% in an hour. Gate.io is the most active exchange right now if you want to buy or sell Bifrost Native Coin.

Bifrost is dedicated to developing a liquidity infrastructure for pledged assets. It has released a vToken for Staking and a Polkadot Parachain Slot Auction (SALP). It has raised $2.15 million in funding from NGC, SNZ, DFG, CMS, and other organizations, as well as a Web3 Foundation Grant. It is also a participant in the Substrate Builders Program and the Web3 Bootcamp.

Strategic Investors

Bifrost project backers include Altonomy, CMS Holdings, Consensus Lab, Digital, Finance Group, Digital Renaissance, Illusionist Group, Incuba Alpha, Liebi, Longhash Ventures, NGC Ventures, One Max Capital, PAKA, SevenX Ventures, SNZ Holding, WEB3, Youbi Capital, Zonff Partners.

References

Bifrost. (n.d.). Retrieved November 3, 2021, from Cypherhunter:

https://www.cypherhunter.com/en/p/bifrost-codes/

Bifrost BNC ICO (Token Sale) Review And BNC Token Analysis. (n.d.). Retrieved November 3, 2021, from Cryptorank:

https://cryptorank.io/ico/bifrost-finance

Bifrost Finance. (n.d.). Retrieved November 3, 2021, from Bifrost Finance:

https://bifrost.finance/

Bifrost Finance. (2021, July 24). A review of the Bifrost slot auction highlights – Bifrost — DeFi for PoS. Staking and liquidity. Bifrost — DeFi for PoS. Staking and Liquidity. Retrieved from Medium:

https://medium.com/bifrost-finance/a-review-of-the-bifrost-slot-auction-highlights-fd00ed74a193

Bifrost Native Coin price, BNC chart, market cap, and info. (n.d.). Retrieved November 2, 2021, from Coingecko:

https://www.coingecko.com/en/coins/bifrost-native-coin

DigitalCoinPrice. (n.d.). Bifrost (BNC) (BNC) Price, Chart & Market Cap. Retrieved November 3, 2021, from Digitalcoinprice:

https://digitalcoinprice.com/coins/bifrost-bnc

Lurpis, B. (2021). Bifrost Finance Whitepaper. Retrieved from Github:

https://github.com/bifrost-finance/bifrost-wiki

What is Bifrost? (BNC). (n.d.). Retrieved November 3, 2021, from Kraken:

https://www.kraken.com/learn/what-is-bifrost-bnc