[Proposal: 2] Register Bifrost Liquid Staking Tokens (LSTs) xcvDOT, xcvGLMR, xcFIL and xcvFIL on Moonbeam

Governance Democracy Proposals
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Register Bifrost Liquid Staking Tokens (LSTs) xcvDOT, xcvGLMR, xcFIL and xcvFIL on Moonbeam

Authors: Tyrone, Thibault

Summary

This proposal aims to add Bifrost vDOT (liquid staking DOT) on Moonbeam, prepare for two use cases:

  1. Pushing the integration of xcvDOT& xcvGLMR XCM stake/unstake SDK (Bifrost XCM-action SDK) on Moonbeam, it is convenient for users to mint Substrate Native LSTs directly in Moonbeam EVM applications.
  2. Bifrost will deploy the Omni LSD Dapp on Moonbeam for easy user interaction.
  3. Deploy xcvDOT, xcvGLMR and xcvFIL liquidity on Moonbeam DEXs.

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Test on Moonbase

xcvDOT cross-in Moonbase:

xcvDOT cross-out Moonbase:

xcvGLMR cross-in Moonbase:

xcvGLMR cross-out Moonbase:

xcFIL cross-in Moonbase:

xcFIL cross-out Moonbase: Subscan | Aggregate Substrate ecological network high-precision Web3 explorer

xcvFIL cross-in Moonbase:

xcvFIL cross-out Moonbase: Subscan | Aggregate Substrate ecological network high-precision Web3 explorer

Protocol Description

Bifrost (https://bifrost.finance) is a substrate based Kusama and Polkadot parachain that provides non custodial decentralised cross-chain liquid tokens for staked assets. By leveraging on Polkadots cross-consensus message format (XCM) it provides standardised cross-chain liquid staking services for various networks notably Polkadot (vDOT), Kusama (vKSM) and the first LST solutions on both Moonbeam (vGLMR), Moonriver (vMOVR) as well as other multiple chains (currently 6+ chains).

Bifrost is currently one of the largest liquid staking protocols on Polkadot with a current total TVL of $38M. vDOT, Bifrost liquid LST for staked DOT was launched in late May of 2022, and there is already around $4M TVL of DOT staked with Bifrost. vGLMR, the first parachain-liquid staking derivative in Polkadot ecosystem launched in late Nov of 2022, which has accumulated over 5M GLMR staked with Bifrost.

Learn more details about the mechanism behind vDOT, vFIL and vGLMR.

Recently, Bifrost had implemented XCM V3, improved the underlying logic of vTokens (SLP Pallet). Learn more details here.

Bifrost App: https://bifrost.app/

Check Bifrost LST statistics at here.

Motivation

Benefits for Moonbeam ecosystem

  • Protocol Owned Liquidity (POL) : Provide more liquidity for staked DOT, FIL and GLMR, promote the capital utilization of DOT, FIL and GLMR in various DeFi scenarios and applications leveraging Polkadots’ XCM.
  • Drive the enthusiasm and interest of more DOT, FIL and GLMR holders to participate in staking and benefit from the capital efficiency and liquidity benefits of holding these LSTs vs. native staking.
  • Support the growth of the protocols building natively in Moonbeam and Polkadot by integrating xcvDOT, xcvFIL and xcvGLMR and driving utility and usecases within their ecosystems.

What are the differences between Bifrost LSTs “vTokens” and Lido?

The Bifrost parachain pallet natively executes Substrate runtime logics to stake and mint LSTs, thus Bifrost vTokens are easily crossed to other parachains via XCM, these Substrate LSTs’ are supported by Polkadot parachain consensus thus ensuring security.

As vTokens can be crossed chain via XCM, Bifrost is finalising a vToken XCM mintable Pallet which is called the “XCM-action Pallet”. It services other parachains to call this pallet via XCM and mint vTokens, this Pallet then will automatically send vTokens back via XCM to the destination chain’s caller address (the caller address is LST user). Therefore, Bifrost will deploy an XCM-action contract and UI on Moonbeam, to be directly interacted by any Moonbeam applications to support vToken mint & redeem on Moonbeam.

In addition, we are trying to test if this pallet could facilitate cross-chain liquidation for vDOT/DOT and vDOTs use cases in various DeFi protocols (i.e. Lending/Borrowing) on Substrate and EVM parachains.

Read detailed logic about how XCM-action works (we are currently co-testing with Astar): Notion – The all-in-one workspace for your notes, tasks, wikis, and databases.

vToken Fast-Redeem

While Moonbeam’s original chain Staking has a fixed 28 rounds (about 168 hours) revoking period, Bifrost SLP helps users to realize the possibility of early vGLMR redemption by matching the real-time GLMR staked order unstaked order, and form a fast-redeem queue.

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In the capture above, the green line shows there are no other unstaked orders above me, which means if there is any new GLMR stake with Bifrost, my unstaking order will be fulfilled in the first place.

Links & References

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hey, Tyrone and Thibault, first of all, Thank You for your well-written proposals and the outstanding work you have put into them!

I find your proposals to be an outstanding initiative, and I am highly supportive of the active efforts being made by the teams to expand and offer more diverse use cases. particularly, I appreciate the focus on DOT & KSM tokens, especially since LIDO has decided to sunset support for Polkadot. I have already shared your proposals with the community, and I’m hopeful that they will actively engage in the discussion and pose any necessary questions.

on a personal note, I would highly appreciate additional clarification regarding the potential risks associated with these proposals. It would be incredibly helpful to obtain a more comprehensive understanding of the security measures you have implemented to effectively mitigate any potential threats of exploits. Thank You in advance!

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Thanks @tyrone1868 for the proposal.

As @turrizt did, I’ll also post some comments in this one also they also apply to the Moonriver proposal.

It would be great for the community to understand the risks associated with Bifrost LSTs. For Lido, the risk was mostly associated with Smart Contract logic, but they codebase has proved to be robust in that sense. Consequently, it would be great if you can provide some of the risks associated to using Bifrost as a technology.

For example, it is important to understand that vDOT, vKSM, vGLMR and vMOVR are not Polkadot, Kusama, Moonbeam and Moonriver assets. They are Bifrost assets that Bifrost generates in their own chain. Consequently, it is important that users understand these risks, as it is not the same owning vGLMR and moving it as xcvGLMR than owning GLMR itself.

Regards

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Hey @turrizt and @AlbertoV19,

appreciated to your suggestions, we totally agree with you to declare the risks of vTokens in multiple aspects. Staking Liquidity Pallet (SLP) is the core module to execute all transactions for underlying staking via the XCM and generate liquid staking Token (vToken) to users. Thus, a SLP vToken security instruction might help to understand the vToken reserve risk and protocol security. Please check all the details at: Staking Liquidity Protocol (SLP) vtoken security.pdf - Google Drive

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Note that the new XCM-action contract has been audited of course and the results will be shared by the time it’s going live.

@AlbertoV19 I would also say the Bifrost pallet codebase has shown to be robust over time :grin:

@turrizt Always Remember that the best security measure is to use XCM and benefit from the Polkadot security.

If users intented to trust a centralized protocol like Lido with all the logic embedded in smart contracts, the conception itself of SLP is more secured (using XCM calls) and fully decentralized.

The Notion link to SLPx pallet (new name for XCM Action pallet) describes the mechanisms in details and the PDF shared by Tyrone shows additional features like the ability to pause the feature.

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Live OpenGov ref is:
https://apps.moonbeam.network/moonbeam/referendum/2

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Link to the on-chain proposal:

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@tyrone1868 - could you please update the title in polkassembly and in the text, reference this post?

thanks

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I told Tyrone to do so

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Full support from us regarding this proposal!

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