First round of buybacks for vsKSM & vsToken(BNC) governance redemption rules

In line with the previous SALP economic model Bifrost Council has recently completed the first buybacks of vsKSM, details of which are as follows.

Buyback Number Bifrost Block Height Number of KSMs used Buyback vsKSM Quantity Average buyback price Transaction details
1 2345011 500 1088.361221607 0.459406298271 Subscan | Aggregate Substrate ecological network High-precision Web3 explorer
2 2345980 500 1084.650313614109 0.460978062445 Subscan | Aggregate Substrate ecological network High-precision Web3 explorer
3 2346163 500 1035.431922279986 0.482890269501 Subscan | Aggregate Substrate ecological network High-precision Web3 explorer
4 2346771 350 730.593499727222 0.479062570541 Subscan | Aggregate Substrate ecological network High-precision Web3 explorer
5 2350423 300 620.927857297398 0.483147915614 Subscan | Aggregate Substrate ecological network High-precision Web3 explorer
Total - 2150 4559.964814525715 0.471494866178

About Buyback

Bifrost will use the KSM in the buyback fund pool to continue to buyback vsKSM when the price of vsKSM is lower than 0.5. Buybacks are triggered by the Bifrost Council and executed entirely by on-chain logic. The goal of the buyback is to create a stable and healthy vsKSM derivatives trading environment and promote vsKSM’s liquidity and application scenarios. Users of Bifrost are welcome to supervise and suggest on-chain buyback behavior at any time.

vsKSM Buyback Fund Usage Overview

The vsBond (BNC) in the SALP Fund in the Bifrost network has expired after two full leases (84 days) since expiry. The use of funds for the unlocked KSMs corresponding to this expired vsToken is as follows:

Date Behavior KSM Changes Buyback reserve balance Governance of redemption of set-aside balances
2022-08-11 Bifrost Fund expired + 21058.626784765337 4574.56882 16484.057964765337
2022-08-25 vsKSM buyback - 1850 2724.56882 16484.057964765337
2022-08-26 vsKSM buyback - 300 2424.56882 16484.057964765337

Terms and Conditions for vsToken(BNC) Governance Redemptions

vsBond Expiry

In the SALP protocol, vsKSM and expiring vsBond can be redeemed in a 1:1 combination of 1 KSM. As vsBond is tradable and redeemable, there is a risk of malicious hoarding, so in the SALP protocol there is a rule that vsBond cannot be redeemed after 2 leases of expiry, and the corresponding assets will be used to buy back the vsToken. This is to prevent the malicious hoarding of vsBonds and to clean up the chain of low value information to make the network more efficient and to improve the utilisation of funds on the chain for the benefit of active users of the Bifrost SALP protocol.

vsToken(BNC) Governance Redemption Background

After vsBond(BNC) expired as per the SALP protocol, we closed the redemption channel for vsBond(BNC) at the corresponding time as per the SALP protocol.

At the same time we observed that there were still 20000+ KSMs that were not redeemed, some of which were not redeemed due to early release of liquidity, but based on on-chain analysis there were still 10000+ unredeemed KSMs corresponding to users that had not touched vsKSM and vsBond(BNC) derivatives at all.

It is likely that the majority of these users have either forgotten due to the length of time that has elapsed, or have not been aware of the redemption notifications and therefore have not redeemed properly during the redemption period. This is one of the reasons why many users did not redeem properly, as the SALP protocol was not available at the time of the Bifrost Kusama Crowdloan and the rules were not as clear as they are today. Although it is still possible to convert expired vsBond (BNC) to vsKSM and then sell it on the market via the Convert function, the market price and transaction costs would have been prohibitive for this group of users.

For these reasons, and thanks to the powerful governance platform provided by Polkadot, Bifrost has decided to retain the assets not normally redeemed by this group of users and not to participate in the SALP buyback process, but to keep them in the Bifrost chain as a reserve for those users who meet the requirements and submit applications to redeem their corresponding KSMs through the governance.

Criteria for users who can redeem KSM via governance.

  • Users with expired vsBond(BNC) (subsequent vsBond expirations will no longer provide access to governance redemptions)
  • Number of vsKSMs in address = Number of vsBond(BNC)
  • No vsKSM / vsBond transactions or transfers have been made on the chain
  • No frequent operations recorded on the chain

*Addresses that meet the above criteria are initially judged to be redeemable through governance

Governance Redemption Process

  1. For addresses that meet the requirements for managing redemptions, the user can submit a request for managing redemptions via the form
  2. Bifrost will summarise and manually review the redemption requests submitted in the previous month on the last working day of each month and will publish the results
  3. 1 week after the results are published, if there is no objection from the community, the Bifrost Council will launch a referendum for the corresponding governance redemptions
  4. The regular referendum will last 7-14 days from launch to execution, during which time all BNC holders will be able to vote on the referendum to decide whether the governance redemption for the month will be approved and executed
  5. If the referendum passes, the redemption will be executed normally, which will destroy the vsKSM and vsBond(BNC) in the application address and transfer the corresponding number of KSMs from the reserved pool to the application address.
    If the referendum does not pass, Bifrost will continue to gather community input and rework the solution
3 Likes

I think it is a fair proposal :+1:t3:
Some concerns have been raised by the community and this is a fair solution.

Some improvements are going to be implemented in the next version of SALP for a better management of vsBond expiry.

It remains weird that people put their money in a protocol without following the news.
I know we are in a bear market but, about money, i feel it’s not normal to stay away for 6 months forgetting what you did it with it.
At some point it’s just about basic money management, which does not have to be the responsability of the Bifrost team.

So from my point of view it’s a fair solution, and a transpareny action that shows Bifrost does not want to capture user’s value for nothing.

1 Like