Replay PortalReplay Portal). In a speech titled "How Bifrost SALP Empowers the Polkadot Ecosystem", Bifrost Product Manager Tyrone Pan introduced that Bifrost's Card Slot Bidding Liquidity Protocol (SALP) aims to help crowdlending participants release pledges by issuing derivative assets The liquidity of assets makes the crowd lending process more flexible and attracts more lock-ups.
As the underlying DeFi protocol of the Polkadot ecosystem, Bifrost has made full preparations for the slot auction of the Kusama parachain network. In order to facilitate everyone’s further understanding of Bifrost’s auction characteristics and the ideal model for the development of the project, Odaily compiled Tyrone’s speech You are welcome to read and understand the entire content below.
Hello everyone, I am Tyrone, the product manager of Bifrost, and today I will share with you how SALP works. The official bidding phase of the Bifrost Kusama slot has just started. I believe many people have minted coins. I just glanced at it, and more than 1,000 KSMs have participated in the minting in about 20 minutes.
Just now Lurpis also said that participating in coin minting can not only get BNC token incentives, but also get two derivatives at the same time, one is called vsKSM and the other is called vsBond. Next, I will introduce how these two derivatives are used. of.
First of all, Bifrost's positioning is very clear. We are a DeFi technology protocol that releases liquidity for pledged assets, as shown in the figure above, so we will not only help those POS chains on the left of the picture other than Polkadot to release liquidity, but also Release liquidity for other parachains connected to Polkadot. In addition, Bifrost can also empower other DeFi applications. All DeFi applications connected to the Polkadot ecosystem can be associated with our derivatives.
Before introducing SALP, I would like to briefly introduce the special incentive mechanism of parachain auctions - Crowdloan. You need to understand how the crowdloan mechanism works and how it empowers the Polkadot ecosystem.
From a market point of view, the primary significance of crowdlending is to allow projects to gain support from the community and absorb more DOT and KSM to become a parallel chain. From another perspective, this also gives DOT and KSM another major role besides Staking. Brand new usage scenario.
The picture above shows the role of crowdlending in promoting the ecology. It can be seen that its design is very interesting and can play the role of an "invisible hand" in the entire ecology. The project wants to access the parachain, so it needs the help of the community. In order to maintain competitiveness, the project party will work hard to create and accumulate its own value, so crowd lending seems to be a small mechanism, but it can promote the entire ecology development of.
The parachain auction is not once and for all, and the project party needs multiple auctions to continue the business operation. For users, there will be some entanglement between participating or not participating in the parachain auction. Generally speaking, there are two reasons for users to participate in the pledge. One is to hope to get a higher potential than the pledge. Rewards will give users more rewards. Second, they are very optimistic about the long-term value of a project. There are two reasons for not participating in staking. One is that staking needs to wait, Kusama is 48 weeks, and Polkadot is 2 years. During this waiting period Internal users must passively bear the risk of market volatility, and assets may shrink. Second, they are worried that the actual development progress of the project party may not meet expectations, which will also cause revenue damage.
So we can think about it, if the liquidity of pledged assets can be liberated, what kind of result will it be? For all parties in the ecology, there is actually a common interest in releasing the liquidity of parachain pledged assets:
For users who participate in crowdlending, releasing the liquidity of pledged assets allows users to respond to market fluctuation risks in a timely manner, and at the same time have the opportunity to obtain crowdlending rewards from project parties that have missed it;
For the project party, releasing the liquidity of the pledged assets will not only make the project party more competitive in the auction, but also create some innovative gameplay related to derivatives;
For the entire Polkadot ecosystem, releasing the liquidity of pledged assets can bring more usage scenarios to DOT/KSM, and it can also stimulate competition among projects and accumulate more value for the Polkadot ecosystem.
Back to the topic of today's speech, what is SALP? SALP is a liquidity release protocol for issuing derivatives for pledged assets in the parachain auction scenario.
We will divide derivative assets into two types, one is vsToken and the other is vsBond. Many people ask us, why should we separate the two derivatives? The reason is actually not difficult to understand.
Non-homogeneity factors such as uneven slot rental periods, different redemption periods, and inconsistent reward strategies for parachains make derivatives unable to achieve complete homogeneity, and non-homogeneity is an obstacle to liquidity. In contrast, homogeneous derivatives will pool liquidity from crowdlending of different parachains, forming a huge liquidity advantage. Therefore, Bifrost started from the Token attribute of participating in crowdlending, separated and decoupled its asset attribute and equity attribute, and designed two derivatives for users: vsToken (Voucher Slot Token) and vsBond (Voucher Slot Bond).
vsToken is a homogeneous token, which represents the proof that users pledge to parachain crowdlending. vsToken can be traded at any time or redeemed 1:1 with vsBond after the lease period of the parachain ends.
vsBond is a special homogeneous token. The vsBond issued for different parachains is different. Its attributes represent the slot lease period and participation rewards for users supporting different parachains. vsBond can place pending orders through Bifrost's built-in vsBond trading market without considering liquidity issues.
The SALP agreement and the derivatives market can be said to be Bifrost's unique advantages over other bidding projects. This is also a DeFi usage scenario that can be implemented immediately when the parachain goes online.
Briefly introduce the operation principle of SALP. Bifrost will create a proxy voting account for all bidding projects that want to use the SALP protocol. It will collect the KSM and DOT voted by all users. All tokens will be concentrated in this account and given to All KSM and DOT in the account will be automatically pledged to the auction module. When the lease period of the parachain ends, all KSM and DOT will be unlocked, returned to the agent account, and then returned to the user.
Next, I will share with you the product interface of our SALP module (as shown below), which is also the first time we have announced the specific appearance of the module in the live broadcast.
This is a basic page. Like other third-party websites, this page will display all parachain auction information. You can see information such as the amount of tokens raised and rewards of different projects. How are we different from other third-party sites? The most important thing is that through this interface, users can pledge their KSM and DOT to get corresponding derivatives. The derivatives will not affect your incentives for other projects.
How to redeem your KSM with vsKSM and vsBond? After the parachain lease expires, users can use vsKSM + vsBond 1:1 to redeem the original assets. There are two curves in the above figure, representing different liquidity pools, users can exchange derivatives during the pledge period through these two pools, but it has a certain discount rate.
The third interface is the usage scenario of vsBond. As a semi-homogeneous token, it can be traded. Users can sell the incentives for participating in a crowdlending to others, and can also buy incentives for other projects, which is equivalent to establishing A vsBond pending order market.
Finally, I would like to share with you the discount principle of vsKSM. SALP adds another usage scenario to KSM and DOT. There are two reasons why derivatives will be discounted. One is that it depends on the crowd loan incentives given by the project party. It will give users a psychological expectation that the derivatives during the pledge period will be affected by the fluctuation of the specific incentive value. Unlocking time, for example, if the unlocking period is one year, its discount cost may be relatively high, and the closer to the redemption period, the discount cost will be smaller and smaller.
Therefore, for this derivatives market, there are two opposing user roles. One type of user is optimistic about the long-term value of the Polkadot ecology, and they will buy discounted vsKSM and vsDOT, because he is optimistic about the long-term value of the Polkadot ecology for a long time, so They are willing to buy a discounted but untradable KSM in advance; other users are in urgent need of cash flow, so they will choose to sell vsKSM or vsDOT in exchange for discounted funds.
There is a high correlation between crowd lending and SALP, and the overall design and product model of SALP are very suitable for Polkadot ecology and other parachain projects. In the previous roundtable session, friends from Lurpis, Zenlink and other project parties also mentioned that SALP will be connected to other projects in the future, and this is what we are doing now, and you will soon see that we cooperate with each other The results of the cooperation between, by voting for other projects, you can also get derivative rewards, as I have shown before.
This concludes my speech, thank you all.
