AMA Review | Farming Campaign AMA with Zenlink

Bifrost x Zenlink AMA

Part 1: Standard Q&A

Q1: Would you like to introduce yourself and give a brief statement about Zenlink?

Hello, everyone. I am Leo. I am thrilled to be here.

Q2: Leo, would you like to talk about the partnership between Zenlink and Bifrost?

Zenlink is an underlying cross-chain DEX protocol based on Polkadot and is committed to becoming the DEX composable hub of Polkadot. By accessing the ultimate, open, and universal cross-chain DEX protocol based on Substrate, Zenlink DEX Protocol enables all parachains to build DEX and achieve liquidity sharing in one click. Zenlink DEX Protocol includes Module, WASM, and EVM implementations, which are flexible and adaptable, allowing for customizable compositions and interoperability with different DeFi modules.
As a native cross-chain DEX of Polkadot, Zenlink can be integrated with more high-quality parachains and support more native assets is what we focus on, which can also bring more trading needs for our users.
Polkadot ecosystem is still in the early stage, and the asset types are constantly enriched and growing. The support of Bifrost’s derivative asset vETH specially designed for ETH2.0 increases the types of derivatives assets of the Polkadot ecosystem. It opens a door for users of the Ethereum ecosystem to enter the Polkadot ecosystem.
We always want to build the best user-friendly DEX for users.
We may see more and more native derivative assets on-chain in the future, for example, vETH and vsKSM for releasing staking liquidity designed by Bifrost, as well as some exponential derivatives. These assets seem to have gradually become popular in the Polkadot ecosystem, and we are also looking forward to more and more applications and tradings of such assets.

Q3: So, Tyrone. Could you please elaborate on what vETH precisely is?

The full name of vETH is Voucher Ethereum, which is a staking derivative issued by Bifrost for ETH 2.0. vETH will be launched in 4 stages and eventually become an ERC20 and Substrate Based dual-protocol asset. Hold vETH to obtain staking annualized income. vETH can be traded at any time without waiting for the ETH 2.0 online redemption period that is expected to be as long as 1 or 2 years.
The current ETH-based staking annualized return is 4.4%. Staking payoffs will be issued to vETH holding accounts in the form of vETH. At present, vETH and ETH are anchored at a fixed exchange rate of 1:1. Staking 1 ETH will get 1 vETH. When vETH enters the third stage, it will be adjusted to a variable exchange rate, and the staking gains will be settled through the exchange rate rise.
At present, the total amount of vETH casting exceeds 18,000 ETH, so it has enormous liquidity and potential arbitrage space. vETH is the first ETH 2.0 derivative to enter the Polkadot ecosystem. It launched vETH Bootstrap jointly with Zenlink at 4 pm yesterday.
This time, vETH is also the first asset to apply to the Zenlink Farming 2.0 module. Users can share high rewards during Bootstrap, and jointly launch 10,000 ZLK user Bootstrap incentives with Zenlink. According to the current Bootstrap scale, the current annualization is as high as 700%. Therefore, timely participation in Bootstrap is essential to obtain high returns. There are 20 hours left to end Bootstrap, and there is still time to continue participating.
To learn more about ETH 2.0 and Staking derivatives, you can check this article

Q4: As the first Polkadot native cross-chain DEX, Zenlink provides good support for vETH to enter the Polkadot ecosystem. Could Leo please talk about the significance of vETH entering the Polkadot ecosystem through Zenlink?

Polkadot ecosystem is still in the early stage, and the asset types are constantly enriched and growing. The support of Bifrost’s derivative asset vETH specially designed for ETH2.0 increases the types of derivatives assets of the Polkadot ecosystem. It opens a door for users of the Ethereum ecosystem to enter the Polkadot ecosystem.
After vETH live on Zenlink, the TVL reaches $10m. It is very successful.

Q5: Tyrone this question is for you… Early December, we saw that Anyswap had launched vETH, which supports a two-way cross-chain between ETH and Moonriver. So, how to improve the liquidity of vETH in the future, and will there be more ways to enhance the utilization of vETH to generate more revenue so that more people can participate?

First of all, I want to share the characteristics of vETH itself. At present, when users participate in ETH 2.0, they do not need to mortgage 32 ETH or go through the cumbersome staking process. When you hold vETH in your address, you can use Bifrost Dapp at 00:00 UTC every day. Receive ETH 2.0 staking proceeds.
As long as you hold vETH, you indirectly participate in ETH 2.0, which significantly reduces the threshold of ETH 2.0 staking. At the same time, vETH has six aspects: decentralization, governance, cross-chain, entire reserve, replaceable, and full scenarios.
Even if there is no additional incentive, it has enough application scenarios. At the same time, vETH has been combined with high-quality projects such as Zenlink to provide more liquidity incentives, making vETH’s holding value even more impressive.
When ETH 2.0 enters Phase 1.5 and redemption starts, vETH can also redeem ETH 1:1. If vETH is purchased at a price lower than 1 ETH and held to 1:1 redemption, it is a risk-free arbitrage Chance.
The only cost you face is the time cost, but if you are a long-term holder of ETH, it is wise to buy and hold vETH when the price is low. I estimate that the redemption time for ETH 2.0 will be approximately within 6 months. At the same time, as liquidity increases, the discount of vETH will return to a smaller range sooner.
I just took a look. The current market price of vETH is around 0.72 ETH, which means that when ETH 2.0 is redeemed, there is only 28% of arbitrage space.
But if there is no ETH position or no plan to hold ETH for a long time, then the time cost of buying vETH needs to be considered, because after all, ETH 2.0 has not yet announced a precise available redemption date.

Q6: Leo, According to the official announcement, vETH/ETH LP Farming will be started with Farming v2. Could you please tell us the difference between Farming v2 and Farming v1?

As we all know, our 1st month of farming was conducted in two periods, each half a month. During this time, we listened extensively to the community’s opinions and continuously optimized our products, including staking contracts. So the farming contract is upgraded from V1 to V2. V2 mainly has the following improvements:
(1) One staking contract manages all farming pools. Users no longer need to migrate their LP tokens from one cycle to another. Once staked, you can continue to participate in farming until the end of the incentive.
(2) The calculation method of the reward is different. According to the economic white paper, the staking reward for each cycle is distributed according to the proportion of the staking value, stakingValue = stakingAmount × stakingTime. In this way, the estimated reward that everyone sees on the DApp may continue to fluctuate. It may increase or decrease because the proportion of your staking value will change with the total staking value of the entire farming pool. , The user is very confused. Therefore, we only have one parameter for V2, which is the reward amount of each block, the “reward rate” (XX ZLK / block). All users distributed the block reward according to the staking amount of each block. The more amount you are staking, the more blocks, the more rewards you can get. The final receivable reward is the sum of all blocks reward so that the reward you see on the DApp is receivable. It will not decrease.
(3) The way of receiving is slightly different. All farming pools will have a “minimum reward collection interval”. This interval is uniform for everyone. Each account can only claim a reward once in each interval. Users can refer to the countdown displayed on the Zenlink DEX DApp to get the next claim reward time. “Available reward block” = “Start block” + n * “Minimum reward collection interval”, where n ≥ 1. For example, suppose the “start block” is 100, and the “minimum reward collection interval” is 200. In that case, the “rewardable block” is [300, 500, 700…], and everyone can claim the cumulative reward in the number of blocks mentioned above.
(4) The reward setting is more flexible. V2 can adjust the reward intensity of each farming pool at any time, that is, the “reward rate”. So please refer to the DApp for the specific rewards and APY each day.

Q7: Tyrone, How will vETH accomplish the conversion to Substrate assets and cross-chain to Bifrost in the future, and will more new plays be explored on Zenlink?

Thanks, Tom. Yes, like I just mentioned that vETH would be launched in four stages. It is currently in the second stage (ERC20 stage). Next, vETH will cross-chain into Bifrost and be introduced into the Kusama & Polkadot ecosystem.
Because it is issued based on Substrate, vETH can be used as a cross-chain asset, and it is easy to enter the use of other parachain applications. Still, liquidity is the foundation of all applications, and establishing liquidity is the current key. After a certain amount of liquidity accumulation, it will naturally take advantage of its application scenarios, such as lending, mortgage generation stablecoins, GameFi, etc. Bifrost put vETH in the first stop of Polkadot’s ecological liquidity in Zenlink because in the future, in the usage scenario of vETH, more ways to play will be introduced in conjunction with Zenlink.
About the implementation path of vETH:

Q8: The last question is for Leo. With 2021 coming to an end, when will Zenlink update its 2022 Roadmap? Also, can you briefly reveal any significant plans to the community?

The roadmap of 2022 has been discussed within our team for several rounds, and we are still in the process of finalizing the roadmap, we strive to announce it to the community at the end of the month.
In 2020 and 2021, our team has completed every milestone following the prescribed roadmap.
What I can share with the community currently is that in 2022 we expect to work hard in the three directions:
NFT, DEX aggregator, and combined DEX.
We will explore NFT in 3 aspects marketplace, equity NFT applications, and DAO.
For DEX aggregator, we will work hard on homogeneous substrate aggregation and heterogeneous aggregation. In the last, we will cooperate with parachains and ecological projects to create universal DEX combined products.

Part 2: Community Q&A

Q1: Tyrone, How is vETH used to hedge against market volatility while still earning rewards?

Good question. Yes, it depends on your strategy. It provides you the opportunity to do cash-out during the staking. So it’s a kind of hedge against market volatility.

Q2: Tyrone, What roles do you think vETH plays in the evolution of DeFi?

It’s going to be the new cross-chainable asset in DeFi, not limited to the Ethereum or EVM, but also Substrate and more parachains and bridges. So, let’s see how it can be.

Q3: Leo, this last one is for you…One of the problems with so many platforms is interoperable slippage and speed of operations. How does Zenlink/Bifrost solve this to provide the best service to its users?

Why did we choose Polkadot ecosystem? Not only for the Substrate framework but for the XCMP. If you tried the HRMP between Bifrost and Karura, you would not use other bridges. It’s speedy. And we will focus on it. Stay tuned!