2. Okay, we know how this sounds.
However, the main point of this short
explainer is to sort it all out about Bifrost
and its SALP Liquidity Protocol for people
who are non-tech, non-crypto natives,
and who are simply confused about our
project.
3. As you may already know (if you have been reading some
Medium articles about Bifrost, or simply checking out the
official website), Bifrost Finance was created with a very
honorable goal - to create a “win-win” situation in which
investors can use both “staking” and “liquidity pool”, plus
many other great features.
4. It is written in the whitepaper
that “the Bifrost project was created to solve the
above-mentioned staking problem”, which means
the problem when staking does not provide the
ability to earn more rewards. Bifrost’s solution to
this exact issue is called Staking Liquidity Protocol,
thus you get liquid versions of your staked assets.
But there also exists another Liquidity Protocol in
Bifrost ecosystem, which is called SALP.
5. For sure, it would be fair if we explain more about “What is
the Parachain Slot Auction?”. When it comes to the word
“parachain” you can think of Polkadot and Kusama, and that’s
right! In both Polkadot and Kusama that are multi-chain
ecosystems, there is a sharding mechanism in which the relay
chain can give a shared security to some parachains.
6. The sharding on Polkadot is not a single logical dataset, each shard
(parachain) there can have its own logic and database, and the relay chain
gives full security to all connected parachains. Thus, all connected
parachains can enjoy the shared security of the relay chain. To determine
the best players of this game, there was created a Slot Auction (competition
between parachains with the help of staking DOT/KSM to the relay chain). If
your head didn’t explode yet - let’s continue!
8. SALP (Slot Auction Liquidity Protocol) generates special
derivatives, which will help participants to release their
parachain bonding in the crowdloan (well, we hope you know
that the crowdloan is needful to support the project and to
build it generally). If you need to get to know more about this -
here is an example. You provide your DOT or KSM to the Bifrost
Slot Auction Protocol, then it will be contributed to the Relay
Chain Crowdloan Account. After participating in a Crowdloan,
your DOT or KSM is typically locked for the Duration of the
Lease Period. But not in this case, you receive vsDOT or vsKSM
which you can transfer and use for your purposes. Sounds too
good to be true? Well, this is the aim of Bifrost - to make it easy
and comfortable for both sides.
9. According to the bonding derivatives, there are two
types of them: vsToken and vsBond. Why not only
one? Well, they have different purposes. The first one
- vsToken - builds an aggregative derivative market
for all parachain bondings with high liquidity. Second
- vsBond - builds up a pending order market for
parachain rewards, without liquidity. 1 contributed
Token magically becomes 2 vsTokens
(vsToken/vsBond) that have many more possibilities
than the usual token you have had before.
10. little bit of
crypto-magic
To make it even more simple, it looks like you
give us a slice of bread, and we create a
wonderful sandwich with turkey (or, tuna, if you
like it more) and give it back to you! What do we
have here? Our project gets more support and
has a possibility to implement ideas and get them
onto another level. “Win-win” situation for sure.
11. Wink if you want to read more
articles from the “dummies” series ;)
Thank you for your attention!
