Bifrost plans to use the DOT loan, worth more than $3.7 million to boost liquid staking adoption across the several network it supports.
Bifrost, a liquid staking middleware, has announced a treasury loan of 500,000 DOT from the Polkadot network. As of this writing the loan is worth more than $3.7 million.
According to a press release, the Bifrost Foundation aims to apply the loan to several use cases in the Polkadot ecosystem focused on vDOT, Bifrost’s liquid staked version of DOT. The plan is to use the funds to facilitate vDOT adoption and increase its use cases on decentralized finance (DeFi) platforms in Polkadot, including blockchain development framework Substrate, and EVM parachains.
Bifrost to Repay Loan with 5% Interest
The loan was approved after a completed Treasury proposal by the Bifrost Foundation was submitted to Polkadot. The lending period will last for a year, at the end of which Bifrost has to repay all the DOT in full, along with the yield generated from staking. The interest will be about 5%, roughly 54,000 DOT. A vote on the loan ended with nearly 99% (69.2 million DOT) of voters for, and only 1.1% (748.1k DOT) against.
A liquidity loan proposal summary from January highlights Bifrost’s history of successful repayments of previous loans. It notes that Bifost successfully repaid a 2022 Treasury liquidity loan of 50,000KSM (more than $2.5 million), along with more than 4,750KSM (over $100K) in interest, to the Kusama Treasury in July last year. Bifrost then renewed the loan for maturity this year.
Built on Substrate and powered by Polkadot and Kusami, Bifrost provides cross-chain liquid staking services across several chains. In addition to Polkadot (vDOT) and Kusama (vKSM), other chains include Ethereum (ETH), Moonriver (vMOVR), Moonbeam (vGLMR), Astar (vASTR), and Filecoin (vFIL). The main objective of the Bifrost platform is to integrate its Staking Liquidity Protocol (SLP) with Polkadot’s Cross-Consensus Message Format (XCM) to develop a product compatible with XCM. However, Bifrost aims to solve a few other proof-of-stake (PoS) issues, including concerns around keeping governance rights while holding a liquid staking token, and rewards applicable when staking across multiple chains.
Loan Beneficial to Polkadot and Kusama
The new Bifrost loan reflects positively on Polkadot, as well as OpenGov, Polkadot’s decentralized governance service. It is also beneficial to Kusama, Polkadot’s canary network. Through the Bifrost loan, Polkadot has indicated its readiness to support the adoption of DeFi solutions that support multiple use cases. The entire process is decentralized, ensuring that Polkadot remains community-driven and that members of the community can contribute to decisions made on the network.
Earlier this month, Bifrost announced BTCFi, a new staking service for Bitcoin holders. The new feature aims to offer users decentralized Bitcoin staking and support cross-chain interoperability. BTCFi will enable users to send and receive liquidity backed by Bitcoin across blockchain networks.
Bifrost will power BTCFi using BtcUSD, a Bitcoin-backed overcollateralized stablecoin. This will strengthen the new service as over-collateralized assets lower the risk of bad debts and an asset losing its peg.
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