- Referenda/
- Big Spender/
- #1538/
Bifrost DOT liquidity loan for vDOT liquidity for one year; repay in full with approximately 6% interest.
- 0.0%
- 0.0%
- 0.0%
Threshold
Bifrost has a strong track record of reliably repaying loans, and this has brought significant benefits to the ecosystem!
Aye for sure!
We’ve been working with the Bifrost team since the early days of Velocity, and we see both the team and their products as key to unlocking growth for DeFi on Polkadot. Even before Velocity, we’ve been beating the drum about the opportunity to increase LST penetration in our ecosystem—which currently sits at around ~2% of staked capital.
Treasury support for this initiative has proven not only successful in driving adoption of vDOT, but also financially beneficial for the Treasury itself, thanks to the accrued interest on the loan. We hope to see more proposals like this brought forward—ones that leverage the Treasury in safe, efficient, and creative ways.
Velocity Labs
Thanks to your questions
- The ~6% APY is derived from 60% of the vDOT proportion under a ~10.68% staking APY. As vDOT is a yield-bearing asset that accrues varying staking rewards throughout the year, the final repayment APY will reflect these actual changes. If the staking APY decreases, the repayment interest will decrease accordingly.
- Both Bifrost and Hydration are providing long-term incentives for vDOT-DOT liquidity, with approximately $3M on Bifrost and $9M on Hydration. This allows arbitrageurs to maintain balanced liquidity between the platforms.
- https://github.com/bifrost-io is our current site after changing from bifrost.finance to bifrost.io (due to another project also named Bifrost).
Dear Proposer,
Thank you for your proposal. Our first vote on this proposal is AYE.
The Big Spender track requires 60% quorum according to our voting policy v0.2, and any referendum in which the majority of members vote abstain receives an abstain vote. This proposal has received seven aye and zero nay votes from nine available members. Below is a summary of our members' comments:
The voters overwhelmingly supported the proposal, citing Bifrost's admirable efforts to provide transparency and structure through loans. They praised its proven reliability and strong track record of repaying loans with interest, emphasizing its importance to the DeFi ecosystem and the Polkadot network. Many expressed that Bifrost should set a precedent for interest-based lending, reinforcing the belief that it was the right project to lead such initiatives. Overall, the sentiment reflected confidence in Bifrost's ability to effectively manage and return liquidity.
The full discussion can be found in our internal voting.
Please feel free to contact us through the links below for further discussion.
Kind regards,
Permanence DAO
Decentralized Voices Cohort IV Delegate
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PolkaWorld vote AYE on this proposal.
Bifrost is one of the very few teams in the Polkadot ecosystem with a proven track record of borrowing from the treasury and successfully repaying both principal and interest. In 2022 and 2023, Bifrost repaid two loans of 50,000 KSM each, contributing over 8,000 KSM in interest to the Kusama treasury. In 2024, it also repaid a 500,000 DOT loan on time, delivering over 40,000 DOT in staking yield. This consistent performance demonstrates a high level of reliability and makes Bifrost a trusted partner for the treasury’s capital utilization.
The primary purpose of this loan—to support the vDOT-DOT liquidity pool—is strategically important for the entire Polkadot DeFi ecosystem. vDOT is already being used as a key asset in several major applications, including Interlay’s iBTC Vault, Hydration’s money market, Bifrost’s LoopStake, and cross-chain scenarios on Moonbeam and Astar. With the continued development of SLPx and Hyperbridge, vDOT is becoming the first truly multichain LSD (Liquid Staking Derivative) base asset on Polkadot, which makes deep liquidity all the more essential.
From a governance and risk perspective, the proposal is clearly designed, transparent, and trust-minimized. The loan issuance, minting, liquidity provision, and repayment will all be executed on-chain via XCM, using a stablecoin pool mechanism to avoid impermanent loss. This ensures the full return of DOT assets with an estimated 6% yield (based on a 10.68% annual staking rate, approximately 60,000 DOT). For the Polkadot treasury, this represents a low-risk, interest-bearing deployment of capital.
Finally, from an ecosystem growth perspective, Bifrost has integrated over 13 partners through its RSP (Revenue Sharing Program), including Astar, Subscan, and The Kusamarian. It has deployed vDOT liquidity pools on platforms such as Omnipool, Interlay, Base, Arbitrum, and BNB Chain, actively expanding the cross-chain utility and influence of DOT, and pushing DOT toward becoming a true multichain native asset.
In summary, this proposal addresses capital safety, ecosystem growth, and long-term value creation—and stands out as a highly beneficial initiative for both the Polkadot treasury and the broader ecosystem.
Good day there!
Thank you for your proposal.
I guess that the loan mechanism is the way to support the Protocols that seek users and liquidity in the Polkadot Ecosystem.
- Can you please provide information regarding all loans and liquidity rewards that Polkadot Treasury provided to Bifrost in the last 18 months?
- What is the actual strategy to attract more users from outside the ecosystem?
- How many BNC rewards will be allocated from your side?
- Is this loan claimable at any time or will it be repaid after 1 year only?
Not biaised at all (joking).
The ref is about to make Treasury DOT from idle assets to working assets for the ecosystem basically.
It's a loan so in the long run, the Treasury is preserved.
Full AYE ah ah. :)
Edited