Bifrost vToken Voting: governing Polkadot with liquid staked vDOT
Thread545 words
Explains how vDOT holders can vote in Polkadot OpenGov while earning staking yield, via derived addresses from Bifrost's sovereign account, XCM calls, conviction multipliers and governance locks.
Key claims
vDOT retains the same governance rights as DOT
Bifrost votes via XCM calls to derived addresses with three per conviction multiplier
Locked vTokens still accrue exchange rate yield
Liquid staking your tokens while retaining governance rights? ✨
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/1 vToken Voting enables Bifrost LST holders to participate in on-chain governance.
Taking Polkadot as an example, users holding vDOT can use DOT to participate in Polkadot's governance voting.
/2 As a governance token for Polkadot, DOT holders can participate in Proposal voting while also participating in DOT staking.
And vDOT, as a DOT Liquid Staking Token, retains the same rights as DOT.
/3 Using the Bifrost dApp, users can automatically capture DOT staking rewards while also participating in Polkadot OpenGov by locking vDOT for voting participation.
/4 vToken Voting covers the following features:
🔹 View ongoing Proposals
🔹 Vote Aye/Nay/Abstain
🔹 Choose conviction
🔹 Lock vTokens & vote
🔹 Unlock vTokens after lock period
/5 Conviction voting grants greater power to token holders who lock their tokens for longer periods, indicating a stronger conviction.
It can empower a determined minority over an apathetic majority.
/6 Let's have a closer look at vToken Voting on Bifrost:
1️⃣ Users who stake DOT on Polkadot can participate in governance voting.
2️⃣ vDOT staking is done through derived addresses from Bifrost's sovereign address. These addresses also have voting rights.
/7 3️⃣ Bifrost's sovereign address is the parachain address on Polkadot. Derived addresses for staking and voting are calculated from this keyless address.
4️⃣ Bifrost conducts governance voting on Polkadot by making XCM calls to the derived addresses.
/8 ⌛️ vToken Governance Lock
When a user uses vToken for on-chain governance, the corresponding vToken will be locked based on the parameters chosen by the user.
Locked vTokens cannot be transferred or redeemed, but it does not affect the yield from exchange rate increases.
/9 An increase in the exchange rate of vToken does not automatically increase the supply.
When the governance lock ends, the corresponding vToken will be unlocked.
/10 🔒 Governance Lock Amount
Since a user's vToken can participate in multiple different governance referendums simultaneously, the lock duration varies.
Therefore, the governance lock amount is calculated based on the data of all vTokens currently held by the user.
/11 As a result, vDOT can participate in multiple Referenda votes simultaneously.
Now, based on the above conditions, let's understand the operating principle of vToken Voting:
/12 🗳 vToken Voting Framework
1️⃣ To vote in favor of Referenda 1 with a 3x Conviction, a Bifrost user locks 10 vDOT.
/13 1️⃣ The SLP module calculates the vDOT equivalent to 12 DOT (assuming a vDOT-DOT exchange rate of 1:1.2).
2️⃣ It then makes an XCM call to the corresponding derivative address under the Bifrost Sovereign address, based on the user's vote and Conviction multiplier.
/14 3️⃣ Each derivative address holds staked DOT, representing its maximum voting power.
There are three derivative addresses for each Conviction multiplier, representing aye/nay/abstain voting intentions.
/15 4️⃣ Once Referenda 1 ends and the Conviction Lock is lifted, Bifrost users can unlock 10 vDOT by calling the Unlock function.
At the same time, Conviction unlocking will be executed on Bifrost derivative address 1 on the relay chain.
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