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Bifrost Secures 500,000 DOT Treasury Liquidity Loan from Polkadot to Boost Liquid Staking Adoption

February 23, 2024 – Dedicated liquid staking middleware Bifrost has announced that it has received a 500,000 DOT treasury loan from Polkadot. 

The one-year loan, facilitated following a successful Treasury proposal by the Bifrost Foundation in January, is intended to bolster the growth of vDOT, Bifrost’s liquid staked version of DOT, supporting the asset’s adoption, utilities and use-cases across DeFi dApps within the Polkadot ecosystem, including Substrate and EVM parachains.

Notably, the Polkadot-powered Bifrost has committed to repaying the DOT liquidity loan in full along with the yield derived from the staking rewards it generates. This arrangement mirrors the successful precedent set by the protocol’s previous two successful 50,000 KSM Treasury liquidity loans from Kusama.

According to the latest proposal made to Polkadot in January, the minting of vDOT for the Polkadot Treasury “represents a strategic diversification approach, effectively putting its DOT capital to productive use over a 1-year period, while ensuring the return of its 500,000 DOT principal with staking rewards.”

The referenda was passed by a healthy majority, with 98.9% of voters in favor (69.2m DOT) and just 1.1% opposed (748.1k DOT). With the approval, the funds will be disbursed to Bifrost within the next 12 days.

The 500,000 DOT loan, equivalent to $3.9 million at the time of writing, marks a significant milestone for Bifrost which now has over 6.5 million DOT tokens staked on its platform, making it the most popular liquid staking protocol in the Polkadot ecosystem. Bifrost’s influence extends across multiple Polkadot parachains including Astar and Manta, as well as beyond the Polkadot ecosystem having supported ETH staking for several years. Bifrost also launched one of the first liquid staking solutions for Filecoin last year.

The approval of Bifrost’s loan reflects the growing sophistication of Polkadot’s decentralized governance platform OpenGov, as well as the usefulness of its canary network Kusama. While the blockchain’s treasury was not always associated with DeFi, Bifrost and others have shown that Polkadot is willing to support base-layer DeFi primitives that promote adoption by catering to multiple financial use cases. The network’s OpenGov process, meanwhile, ensures Polkadot community members have a say in how the treasury’s funds are allocated.

About Bifrost

Bifrost is a dedicated liquid staking middle layer serving the omni-chain ecosystem. Built on Substrate and powered by Polkadot, it provides standardized cross-chain liquid staking solutions for multiple chains.