Bifrost omnichain liquid staking: SLP pallet and headquarters plus branch model
Thread502 words
Explains why native-chain LSDs like Lido's fragment liquidity and how Bifrost mints all vTokens on one chain via the SLP pallet, serving nine chains through lightweight remote modules and Polkadot XCM.
Key claims
SLP issues LSD assets across nine chains
SLP pallet is deployed only on the Bifrost chain
0/ @BifrostFinance is the leading Ominchain LSD protocol out there and it's time for you to understand how it works and why it changes the game! 🌈
a 🧵 on how @Bifrost enables the Omnichain LSD future! 🚀
So what is @BifrostFinance exactly? 🤔
In a nutshell, @BifrostFinance is a protocol set out to unlock cross-chain liquidity for staked assets across PoS chains, using @Polkadot's cross-consensus messaging (XCM).
Ok but why do we need that? 🤔
Most liquid staking protocols are built on the original chain. @LidoFinance’s $ETH liquidity staking protocol for example is an Ethereum contract implemented in Solidity.
Lido’s $SOL LSD protocol is a Solana contract implemented in Rust.
Hence, the native chain for @LidoFinance's $ETH staking derivative, ($stETH) is Ethereum and the derivative is an ERC-20 token.
Lido’s $SOL staking derivative on the other hand is Solana, while the derivative itself is implemented as a SPL token (which fragments liquidity).
Contrarily, @BifrostFinance's vTokens adopt a cross-chain minting scheme, where all derivatives are minted on the #Bifrost chain and hence are native assets of the #Dotsama ecosystem.
Issuing all vTokens on one chain allows for a uniform format for all types of vTokens and a uniform related interface, making it easier to integrate them across chains.
The pallet @BifrostFinance uses to support vToken minting and redemption is called SLP (Staking Liquidity Protocol), which facilitates the issuance of #LSD assets across (currently) nine different chains.
However, the SLP pallet does not need to be deployed on each chain.
The SLP pallet is exclusively deployed on the #Bifrost chain, while minting & redemption of vTokens on other chains is accomplished through cross-chain interactions, invoking the SLP pallet on @BifrostFinance.
This is enabled through auxiliary modules deployed on the supported networks, essentially resulting in a “headquarters + branch” model.
The main program logic of the application lives on one chain, acting as the headquarter.
Lightweight programs on other chains facilitate the interaction with end-users (receiving user input & providing desired output).
They basically act as branches that transmit user inputs across the chain to the headquarter for processing.
The results are subsequently sent back to the branch for output to the user.
This omni-chain architecture, offers several benefits, including:
🔸 Easy Integration: apps only need to interact with the headquarters instead of individually interacting with all the branches
🔸 Unified Liquidity: all vTokens’ official liquidity pools are deployed on the Bifrost chain, enabling cross-chain accessibility
🔸 Scalability: supported chains only require a lightweight remote invocation program
This omni-chain architecture, is why @BifrostFinance has chosen to build as a parachain on Polkadot, as @Polkodot's XCM provides the perfect basis for Bifrost’s cross-chain interoperability needs.
(Aside bridges like #Snowfork to communicate with other heterogenous PoS chains.)
IMO, @BifrostFinance will play a pivotal role in building towards the cohesive and seamless user experience we need to reach mass adoption! 🌈 🔮
I hope you've found this thread helpful! 🫡
Follow me @zerokn0wledge_ and @BifrostFinance for more 👀
Like/Repost of the quoted post is greatly appreciated 🙏
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What came next · since 29 Sep 2023
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This explainer walks through how things work without making a call on the token, so price moves since publication are shown as market context.
Since then
Zero has written 3 more pieces on Bifrost Finance since this one.
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