What is Bifrost (BNC)?

Bifrost (BNC) is a project that offers powerful options for the developing DeFi world within the Kusama / Polkadot networks, allowing its users to maximize the utility of their tokens. 

Bifrost is a blockchain project built on Kusama (KSM) focused on offering services staking y decentralized finance to its users. The goal of Bifrost is to provide an intermediate layer between Staking and an application layer, offering rewards for staking or for DeFi operations that use the protocol.

In this way, Bifrost seeks to generate a smart contract structure that offers rewards for their participation in said protocol. This is possible because Bifrost is capable of incorporating tokens such as DOT o ETH, block them in staking and instead offers you vDOT or vETH tokens, which can be used within other platforms that accept these tokens for their operations.

Bifrost is currently being built on top of Kusama, but the idea of ​​the project is to also have a space on top of Polkadot. In fact, now Bifrost is waiting for its "auction" to start to be able to participate for a Polkadot slot, and to be able to deploy on a parachain in this network.

How does the Bifrost token work?

Bifrost is a protocol that uses Substrate technology applied in Kusama, and is implemented in such a way that it works as an additional layer between the transmission chain and the application layer within the Kusama network (or Polkadot depending on the protocol implementation network).

Participants can upload their Bet Proof (PoS) cryptocurrencies (such as ETH, KSM or ADA) to the Bifrost protocol and convert them into a corresponding vToken (vETH, vKSM or vADA) to earn rewards for staking and be able to use their vTokens for other operations.

What is a vToken?

A Voucher Token or vToken, is a native Kusama (or Polkadot) token that is minted by Bifrost through staking assets. vToken represents the ownership and right to reward the original staking assets.

Thus, the rewards generated by staking are a fungible alternative asset with trading liquidity, which can unlock the liquidity of the original staking or even become a new staking asset to help users carry out leveraged transactions.

The vTokens also provide these participants with the liquidity they need to participate in the Bifrost DeFi ecosystem. For example, those with vTokens can use vTokenSwap, an Automated Market Maker (AMM) trading group, and perform trades within it. And not only that, vTokens can be used in other protocols within the Kusama network.

Actors within the protocol

Bifrost has a series of actors with very specific tasks within the protocol, namely:

1. Cross-chain user. These are the users who have vTokens or other PoS cross-chain assets and receive rewards for staking. These users can participate in the staking system and generation of tokens within the parachain.
2. Voting User. These are the BNC token holders, Bifrost's native token. These users can participate in the governance decisions and various control operations of the Bifrost network.
3. Validators. The validation nodes are in charge of reviewing the information of the transactions and voting for their acceptance within a block of the parachain. The Bifrost protocol uses a minimum of 30 nodes to validate the information before joining the network. As an incentive for their work, validators receive 10% of the voting income allocated to users.
4. proxy. The proxy nodes are those that allow the interconnection between the different networks that are supported by the protocol. Thanks to them, Bifrost is able to allow the interaction between the dApps of these connected chains.
5. necklace. This actor is in charge of collecting the data of the users' calls and transmitting the information of the inquiries. The collator will generate the blocks and send them to the validator for final verification.
6. bidder. The bidders with the right to vote are chosen through a referendum on the proposal. The account approved by the election becomes Bidder, which can link the address of the node that needs to be voted on, and has the right to bid for votes in the Bifrost voting set, such as the Slash level or the number of times that the role is produced, the Bidder permissions will be canceled if they do not respect the protocol rules.
7. Asker. Exchange or holder of vToken, who is the auctioneer of the entrusted voting rights agreement.
8. Council. The council must primarily perform three governance tasks: proposing a referendum, canceling an uncontroversial, dangerous or malicious referendum, and electing a technical committee.
9. vToken DEX. This is a DEX capable of providing liquidity for vToken exchanges within Bifrost.
10. Development community. They are made up of all those users who develop applications and dApps that use the Bifrost protocol structure.
11. Sudo. This actor is the super administrator, whose role is centered in the initial stage of the launch of the system. This actor has the right to set and adjust most of the parameters of the system to maintain the development of the same, but after the stable operation of the main Bifrost network, the Sudo permissions will be removed by a referendum at the proposal of the community.

BNC token, the Bifrost token

Bifrost Native Coin (BNC) is the native token of the Bifrost protocol and whose initial total supply is 80.000.000 BNC tokens. The objective of the BNC distribution is to make the Bifrost network more decentralized, build the size of the vToken derivatives market, and incentivize the liquidity market for staking derivatives.

Among the functions of this token:

1. The token serves for transfer, transaction, staking and other functions within the Bifrost parachain. The BNC used to pay the commission will be sent to the Treasury for subsequent administration and distribution.
2. Guarantee on staking. The participating nodes will have to perform staking in order to gain voting power within the network, while increasing the cost of Slash. The Slash guarantee will increase or decrease based on the node's performance score.
3. Governance The BNC can be used for on-chain governance of the protocol, as well as participation within the technical committee, Treasury allocation, node election, and other on-chain governance functions.

Token distribution

To ensure the development of the function, the launch and the development of the Bifrost ecosystem, the different parts of the BNC allocation have different lock ratios in time. The allocation for the BNC team is scheduled to unblock linearly for 180 days (half a year) after Day Zero (issue day), and continue the process for two years.

Conclusions

Bifrost is an excellent option if you are looking to maximize the utility of your tokens in both the Polkadot and Kusama ecosystems. This thanks to its ability to integrate with other protocols within these networks. For example, you can use Bifrost and interact with the Karura protocol or, also, interact with ZenLink and take advantage of the potential of these dApps to maximize the rewards of your holdings or the exchange capacity.

In any case, Bifrost is a project that still has a lot of potential for improvement, especially if it manages to get hold of the parachains slots within the Polkadot and Kusama auctions.

Links of interest