Bifrost is a project built on Kusama that enables users to participate in decentralised finance (DeFi) applications while simultaneously earning staking rewards on their cryptocurrency holdings.
Cryptocurrency staking permits users to secure their tokens in smart contracts to generate staking rewards. However, a significant limitation of traditional staking is that users with locked cryptocurrency cannot access these funds for participation in various DeFi activities.
The Bifrost team addresses this limitation through the introduction of liquid staking, a concept that allows users to stake any cryptocurrency via the Bifrost platform.
What is Bifrost?
Bifrost is a Polkadot-based parachain that transforms the staking landscape by providing decentralised, cross-chain liquidity for staked assets.
Following its launch on Kusama in July 2021 and Polkadot in June 2022 after securing parachain slots with over 400,000 DOT ($14 million at that time), Bifrost utilises Polkadot’s shared security and cross-consensus messaging (XCM) to maximise the potential of proof-of-stake (PoS) tokens.
Its objective is to eliminate the compromise between staking rewards and liquidity, thereby empowering users across multiple blockchains with flexible DeFi opportunities.
Bifrost’s principal feature is its Staking Liquidity Protocol (SLP), which enables users to convert staked PoS tokens, such as DOT, KSM, or ETH, into vTokens (e.g., vDOT, vKSM).
These voucher tokens maintain staking rewards while remaining liquid and tradable on Bifrost’s DEX or other DeFi platforms. In contrast to traditional staking, where assets are locked for 28 days on Polkadot, vTokens provide immediate liquidity without compromising security or yield.
As of March 2025, Bifrost’s total vToken minting value exceeds $60 million, with integrations spanning Polkadot, Kusama, Ethereum, and Layer 2 solutions like Base and Arbitrum through partnerships with Hyperbridge.
The Slot Auction Liquidity Protocol (SALP) further enhances its utility by releasing liquidity for crowdloan-locked DOT/KSM through the issuance of derivatives.
Bifrost’s functionality is strengthened by Polkadot’s ecosystem. XCM facilitates cross-chain staking services, connecting Bifrost to over 80% of PoS chains’ liquidity. Users benefit from features such as no lockup periods, automatic compounding, and governance participation without sacrificing asset mobility.
The platform’s Treasury, enhanced by Polkadot’s OpenGov in 2023, allocates funds for ecosystem growth, offering incentives such as the Rainbow Boost (30-day minting rewards) and vToken Reward Share Program, driving adoption.
Bifrost Network Design
The Bifrost parachain functions as an intermediary layer between Kusama’s Relay Chain and the application layer within the Kusama network.
Users can deposit their proof of stake (PoS) cryptocurrencies (such as ETH, KSM, or ADA) into the Bifrost protocol and receive corresponding vTokens (vETH, vKSM, or vADA) that continue to generate staking rewards.
These vTokens provide users with the necessary liquidity to engage in the Bifrost DeFi ecosystem. For instance, vToken holders can utilise vTokenSwap, an automated market maker (AMM) trading pool that facilitates trading between 64 pairs within a single pool of 8 currencies.
It is worth noting that vToken holders may also employ these tokens to access additional DeFi applications in parachains constructed on the Kusama network.
Operational Framework
- Cross-Chain Compatibility
Unlike many liquid staking projects restricted to a single blockchain, Bifrost generates vTokens that function as cross-chain liquid staking tokens. These vTokens, minted on the Bifrost chain, are usable across various networks, enhancing staking flexibility.
- Centralised Liquidity
Rather than distributing liquidity across multiple chains, Bifrost consolidates liquidity in a single location, facilitating support for DeFi applications on any blockchain.
- Expanded Staking Options
Bifrost enables users to stake diverse token types through its DApp, not limited to assets from a single blockchain.
- vTokens as Gas Fees
In contrast to traditional liquid staking, which often requires native tokens for gas fees, Bifrost permits the use of vTokens for gas fees, streamlining transactions.
- Enhanced Staking Rewards
Bifrost implements intelligent node filtering to ensure users receive competitive Annual Percentage Yield (APY) compared to alternative staking platforms.
- Rationale for Chain Development
While most liquid staking platforms utilise smart contracts deployed on various blockchains (e.g., Lido’s stETH on Ethereum, Lido’s SOL on Solana), Bifrost adopts a different strategy by minting all vTokens directly on its proprietary blockchain, ensuring superior cross-chain functionality and seamless integration with the Polkadot/Kusama ecosystem.
Bifrost Simplifies Staking
Bifrost enhances liquid staking across multiple blockchains through its cross-chain architecture and SLPx module. This configuration enables users to mint, utilise, and exchange vTokens (such as vGLMR) efficiently without navigating complex cross-chain transactions.
In conventional liquid staking, transferring assets between chains can be intricate. For instance, if one wishes to stake GLMR (Moonbeam’s token) to generate vGLMR, the process would typically require:
- Transferring GLMR from Moonbeam to Bifrost-Polkadot.
- Minting vGLMR on Bifrost.
- Transferring vGLMR back to Moonbeam for utilisation.
This procedure necessitates multiple transactions, resulting in delays and increased costs. Bifrost eliminates the complexity of inter-blockchain asset transfers with its SLPx module.
Rather than deploying staking contracts on each chain, it permits various blockchains to establish remote connections to Bifrost’s established staking infrastructure.
The operational process is as follows:
- When minting vGLMR on Moonbeam, users need only initiate a request there.
- Bifrost automatically transfers the GLMR, mints vGLMR, and returns it, all within a single, streamlined process.
This same efficiency applies to redeeming or exchanging vGLMR back to GLMR. This system functions comparable to a franchise model:
- Individual blockchains (e.g., Moonbeam) operate as branches.
- The central staking system on Bifrost-Polkadot serves as headquarters.
- Users interact with the branch without concern for the operational processes occurring at headquarters.
Advantages of Bifrost’s Cross-Chain Architecture
- Unified Liquidity – Instead of distributing liquidity across multiple chains, Bifrost consolidates it in a single location, thereby reducing fees and enhancing transaction efficiency.
- Improved Pricing – Users benefit from more favourable swap rates by accessing a single, substantial liquidity pool rather than multiple smaller pools.
- Simplified DeFi Integration – DeFi projects are not required to deploy staking contracts on every blockchain. They need only connect to Bifrost’s SLP module, expediting integration and reducing complexity.
Bifrost’s objective is to render staking and DeFi truly omni-chain, facilitating the unrestricted flow of assets between blockchains.
With its cross-chain composability, vTokens can be utilised across numerous chains effortlessly, establishing the foundation for a more interconnected blockchain ecosystem.
BNC Tokenomics
The BNC token serves a fundamental role in sustaining and operating the Bifrost network and may be utilised for:
- Transaction fees – These fees are collected for transfers, transactions, and staking activities conducted on the Bifrost network and maintained in a treasury to support network development.
- Collateral – Participating nodes stake BNC to ensure appropriate conduct. Collateral will be adjusted based on node performance.
- Governance – BNC holders acquire the ability to propose and/or vote on network upgrades, with each vote proportional to the quantity of BNC cryptocurrency they possess.
Bifrost’s Tokenomics 2.0 plan employs 100% of its profits to repurchase $BNC tokens, benefiting holders and reducing supply.
The mechanism functions as follows:
- 90% of the repurchased $BNC is allocated to bbBNC holders (bbBNC = Buy Back BNC, a specialised token that distributes Bifrost’s profits).
- 10% of the repurchased $BNC is permanently removed from circulation, reducing the total supply and increasing scarcity.
Token Details:
- Native Token: $BNC
- Liquid Staking Native Token: $vBNC
- Revenue Sharing Token: $bbBNC
- Total Supply: 80 million
- Circulating Supply (March 2025): 60 million
- Market Cap: $40 million
- All-Time High: $5 (mid-2022)
$BNC Distribution:
- Ecosystem: 40,000,000 BNC (50%)
- Team: 16,000,000 BNC (20%)
- Early Investor: 12,000,000 BNC (15%)
- Marketing & Community Campaign: 4,000,000 BNC (5%)
- Treasury: 8,000,000 BNC (10%)
Conclusion
Bifrost represents a significant advancement in the evolution of staking within the broader cryptocurrency ecosystem.
By addressing the fundamental challenge of liquidity in staking through its innovative vToken system, Bifrost effectively eliminates the traditional compromise between earning rewards and maintaining asset accessibility.
As the DeFi landscape continues to mature, Bifrost’s approach to liquid staking positions it as a potential cornerstone technology in the Polkadot/Kusama ecosystem and beyond.
By breaking down barriers between previously isolated blockchain environments, Bifrost takes meaningful steps toward realising the vision of a truly interoperable, omni-chain future for decentralised finance.