Bifrost SALP now supports Litmus Kusama Crowdloan with Liquidity Farming! You can release the liquidity of the Crowdloan Locked Kusama by voting for Litmus at SALP to obtain the derivative assets vsKSM and vsBond. Staking vsKSM and vsBond for Litmus liquidity farming!
Date: January 29 10:45 am - February 5 10:45 am UTC+8
Rewards: 5500 BNC
Litmus Kusama Crowdloan: Bifrost
Litmus Liquidity Farming: Bifrost
The decoupling method increases the complexity on the surface but releases the liquidity to the greatest extent. Suppose only one derivative is designed, with only vsDOT / vsKSM and no vsBond. In that case, the heterogeneity must be handled by vsDOT / vsKSM, which means supporting different parachains will generate different vsDOT / vsKSM (e.g., vsDOT-Parachain X, vsDOT-Parachan Y). Vsdot/vsKSM cannot be used as a complete homogenization token to form the maximum liquidity.
vsBond is not an NFT, but vsBond is not the same homogenization pass as vsDOT/vsKSM. We call it “semi homogenization pass.” A specified vsBond is a homogenization token: vsBond (20220515-KSM-BNC), and vsBond is the total of multiple specified vsBonds, which is the sum of a class of homogenization tokens.
During and after the cashing period, vsBond can cooperate with vsDOT / vsKSM to redeem DOT / KSM. Redemption utility is the essential utility of vsBond, and it is also the basis and support for the existence of other utilities.
2、Independent trading and portfolio trading
Although vsBond is not directly convertible in DEX like vsDOT / vsKSM, it can also be traded at any time. Bifrost has created a particular market for vsBond, and the holder can trade vsBond alone or in combination with the same amount of vsDOT / vsKSM.
We can start with the price attribute of vsDOT / KSM + vsBond, because we can understand it in the future framework. The so-called futures refers to the assets that can be cashed in the future. (Which is much easier for you to understand in English.)
vsDOT+vsBond (20220808-DOT) refers to the DOT that can be cashed after August 8, 2022. It is a typical DOT futures. The English expression will be more intuitive - future DOT! The price attribute of futures is closer and closer to the spot price as the maturity date approaches. The price of the future dot should be the price of DOT multiplied by a specific discount rate.
Bifrost once envisaged providing a function that supports the synthesis of vsDOT / vsKSM and vsBond into a new derivative fDOT / fKSM (where f is the abbreviation of future), but adding another derivative will further increase the complexity, so the function was finally abandoned. We provide a portfolio trading market, and you can combine the two derivatives and trade them as one derivative. This combined trading market can be fully understood as DOT / KSM futures market.
Next, we can understand the price attributes of vsDOT / vsKSM and vsBond. Assuming that vsBond has reached the payment period, the price of vsDOT+vsBond(y/m/d-DOT) should be completely equal to the price of DOT. In theory, the price of vsDOT is 0.5 DOT, while the price of vsBond(y/m/d-DOT) is also 0.5 dot. If vsBond fails to reach the cashing period, then vsDOT+vsBond(y/m/d-DOT) < 1 DOT. We assume that the discount is 80%, and the sum of the two prices is 0.8 DOT. Since vsBond bears the cashing period attribute, in the theoretical state, the price of vsDOT is still 0.5 DOT, while the price of vsBond(y/m/d-DOT) is 0.3 dot. Of course, many factors affect the price. Both vsDOT/vsKSM and vsBond will fluctuate around the reasonable value.
If someone hoards one of vsKSM/vsDOT and vsBond, will the other be unable to redeem for a long time and depreciate?
It is a typical concern about the SALP double derivatives scheme. There is no need to worry about this problem because slot bidding is a regular and continuous process, and new vsKSM/vsDOT and vsBond will continue to be produced. Hoarding is unprofitable and makes hoarders lose the opportunity cost of their funds.
As mentioned above, vsBond does not refer to a single pass, but the sum of a class of passes, which means that there are many categories of vsBond. If Bifrost establishes its liquidity in DEX, it will need to develop many transaction pairs. However, if a third party has found liquidity in DEX, you can also trade. Still, the upper limit of liquidity is the casting volume of a specific vsBond, and its depth is likely to be insufficient, which may lead to a too large transaction slip point.
The vsBond individual trading market and portfolio trading market provided by Bifrost are more general and appropriate vsBond trading channels. You can pay the bill or sell the invoice according to your intention. Of course, the disadvantage of thin orders is that you have to wait for no suitable opponent order.