Since the upgrade of Ethereum Shanghai, the LSD track has become a narrative trend. While veteran players vie for minting volume and liquidity, new players continue to enter the market, eager to get a share in this potentially hundred-billion-dollar market. However, most LSD protocols are actually quite similar at the product level, with no fundamental innovation, and competition is mainly based on subsidies and airdrops.

In this context, community members have been constantly asking us: What makes Bifrost different from other LSD protocols? What advantages does it have? What ecological niche will Bifrost occupy, and what competitive strategies will it adopt?

To this, our answer is: Bifrost is the first full-chain LSD application, which is fundamentally different from single-chain LSD applications at the architectural level. This architecture gives Bifrost better integration and higher liquidity utilization.

What is Full-Chain?

All along, "full-chain" has always been a mysterious term, seemingly different from "multi-chain" and "cross-chain," but few have clearly explained what the differences are.

First of all, "full-chain" does not mean "running on all chains" literally. Currently, there is no application running on all chains, and there is no cross-chain bridge infrastructure that is compatible with all chains. Full-chain refers more to an application architecture paradigm: When developers build applications, they take full-chain interoperability as a prerequisite and design the different parts of the application on different chains as a whole, instead of simply replicating the single-chain application to run on multiple chains.

Why is Bifrost a Full-Chain LSD Protocol?

 The module used by Bifrost to support vToken minting and redemption is called the SLP (Staking Liquidity Protocol). Through SLP, Bifrost has already supported LSD asset issuance on 9 chains, but Bifrost does not achieve this by deploying SLP modules on 9 chains.

SLP module is only deployed on the Bifrost chain. The minting and redemption of vTokens on other chains are all completed through cross-chain remote calls to the SLP module on the Bifrost chain. Of course, to achieve this, other chains need to deploy an auxiliary module that supports initiating remote calls.

Full-chain applications can be built in a "headquarters + branch" model. The main application logic is placed on one chain, like a "headquarters", and then a lightweight program is provided on other chains to interact with end users (get user inputs, output desired results), like individual "branches". After the "branch" or user inputs, the input is cross-chain transferred to the "headquarters", which processes and outputs the results, and then the results are cross-chain transferred back to the "branch" for user output.

For the Bifrost SLP protocol, the portion deployed on the Bifrost chain is equivalent to the "headquarters", while the portion deployed on other remote chains is equivalent to the "branches".

Advantages of Full-Chain LSD

The full-chain architecture has many benefits, including:

• Other applications that need to integrate with Bifrost only need to interact with the "headquarters" without having to interact with each "branch" separately, reducing the complexity of cross-chain integration.

• If the logic of the "headquarters" involves the use of asset liquidity, the liquidity can be uniformly deployed on the chain where the "headquarters" is located to avoid liquidity fragmentation.

Lido, Rocket Pool, Frax Finance, and other LSD protocols also support minting LSD on multiple chains, but they use a multi-chain deployment approach, so they cannot be called fully cross-chain applications. The essence of multi-chain deployment is to replicate the same functionality on different chains, without cross-chain interoperability.

Ease of Integration

We discussed this in the article "Why is Bifrost more friendly to cross-chain integration compared to Lido?". In the case of multi-chain deployment, each chain has a different format and standard for LSD. If applications on other chains need to be integrated, they need to be individually integrated one by one. However, as a fully cross-chain LSD protocol, all vTokens in Bifrost are in the native format of Bifrost chain, so applications on other chains can be integrated all at once. Intuitively, if you want to integrate n LSD assets through Lido, you need to make n efforts (connecting with n chains), but with Bifrost, you only need to make 1 effort (connecting with Bifrost chain).

Unified Liquidity

Cross-chain application integration involves not only token integration but also liquidity integration. In the case of multi-chain deployment, the primary liquidity for each LSD is typically established on its native chain, and the liquidity of different LSDs is fragmented on different chains. Moreover, this liquidity cannot be called across chains. In Bifrost, all official liquidity pools for vTokens are deployed on the Bifrost chain, supporting cross-chain invocation. Users can exchange vToken/Token on other chains, but the liquidity behind it is from the Bifrost chain.

If a lending protocol on a certain chain integrates vToken as one of the collateral assets, when liquidation is required, it can also remotely use the liquidity on the Bifrost chain without needing to create a liquidity pool on its local chain.

Liquidity aggregation in the same place can maximize liquidity depth.

Scalability

Due to the full-chain architecture, the main parts of the application are only deployed on one chain, and other chains only require a lightweight remote invocation program. Therefore, the overall code is simpler compared to multi-chain deployment. Simple code means lower probability of contract vulnerabilities and higher security; In addition, adding support for a new chain only requires deploying a simple module on the new chain, without the need for multi-chain adaptation of the protocol main body, hence stronger scalability.

Empowering with XCM

Bifrost chose to build as a parachain on Polkadot because XCM can provide maximum empowerment for Bifrost's full-chain interoperability.

XCM is a set of cross-chain interaction instruction specifications and language standards, which are applicable not only to the Polkadot ecosystem but also to cross-chain message transmission between heterogeneous chains. In the full-chain architecture of Bifrost, modules on different chains need to communicate, and all communication adopts the XCM message format.

It should be noted that using the XCM message format is an option, and applications on different chains can use any agreed-upon format standard for communication. However, XCM will be a more universal and widespread choice. If applications default to using XCM as the language for cross-chain communication, it will save a lot of business integration costs and unlock deeper cross-chain interoperability.

Summary

We believe that the competition among LSD protocols is not just about the basic yield level but also about composability. The LSD assets integrated by more protocols will provide holders with more options for use cases and higher compounded yields. In the future of the multi-chain era, composability includes both intra-chain composability and cross-chain composability, and the full-chain architecture undoubtedly brings superior cross-chain composability.

For LSD protocols, and even all DeFi protocols, full-chainization is the inevitable development direction. As the pioneer of full-chain LSD protocols, Bifrost is undoubtedly at the forefront of paradigm iteration.

What is Bifrost?

Bifrost is a modular, scalable, non-custodial parallel chain LSD platform built on Polkadot. It provides standardized, high-yield, and secure underlying interest-bearing assets for Web3 through XCM, and is currently realizing the vision of any chain using any LSD (Omnichain LSD).