BiFrost — A guide to stake your Kusama
Primer — Bifrost is a web3 derivatives protocol that provides decentralized cross-chain liquidity for staked assets. It leverages cross-consensus message (XCM) to provide cross-chain liquid staking services for multiple chains. With the release of 1.2 Mil KSM from the second batch of Parachain auctions, Bifrost’s SLP lets users maximize rewards through cross-chain staking.
Bifrost is a derivatives protocol that offers cross-chain liquid staking through Polkadot’s XCM. For more info on Polkadot’s architecture, read this article. Users can earn staking rewards without locking their assets. With the help of cross-chain messaging scheme (XCM), users can transfer assets between parachains without the risks of using a bridge.
XCM format defines a language around how the message transfer between two interoperating blockchains should be performed. XCM channels serve as a stable and reliable inter-chain messaging channel between parachains themselves as well as smart contracts. These channels are secured at the same level as the Relay chain. It thus facilitates the exchange of any type of data allowing for true interoperability and creating a new paradigm of interchain services, communities, and economies.
A significant problem with staking is locked capital, and during bear markets, it can get you REKT.
The second batch of Kusama crowdloan, expected to be 1.2 Mil KSM (worth $80 million), will be unlocked in the next few days. The lockdown period for staking Kusama is 7 days. However, Bifrost offers liquid staking for investors without losing access to the liquidity of their assets through Staked Liquidity Protocols or liquid staking (SLP). SLP is facilitated by minting derivative tokens on-chain that are liquid representations of staked assets.
In this guide, we will cross-in KSM through XCM on Bifrost, stake KSM for vKSM, and explore ways of earning yield on KSM.
Cross-In Kusama to Bifrost
Users can cross-in KSM from the Kusama network to Bifrost.
1. Log onto Bifrost and connect your wallet. (A dark mode will be amazing)
2. Click on vStaking and select vKSM which offers an APY of 29.24%.
3. Click on Cross-in.
4. Enter the amount of KSM and click on confirm.
5. Click on confirm once again for settlement confirmation of KSM from Kusama relaychain to Bifrost and sign the transaction in your wallet.
Stake & Farm KSM
vKSM offers a staking APY of 29.24% that includes the base rate of 23.21% (optimized node intelligence staking) and a farming rate of 6.14%.
1. Let us swap the crossed-in KSM for vKSM to start earning the staking rewards. Enter the amount of KSM that you want to swap to vKSM and click on Mint.
2. Click on confirm under settlement confirmation and sign the transaction in your wallet. Once confirmed, you will see your staked balance at the top.
3. Staking vKSM offers the additional farming reward of 6.14% offered in BNC and vKSM. Click on the Farm option to navigate to the farming section and select vKSM farm.
4. Enter the amount of vKSM that you want to deposit and click on deposit. Click on confirm under settlement confirmation and sign the transaction in your wallet.
Provide liquidity in KSM-vKSM pool
Providing liquidity in KSM-vKSM pool offers an APY of 21.87%. The pair consists of assets that are correlated minimizing the IL (Impermanent Loss) under stable market conditions.
1. In order to provide liquidity, click on Swap and select the liquidity option. Enter the amount of vKSM and KSM and click on add liquidity. Click on confirm and sign the transaction in your wallet.
2. Click on Farm again and deposit your LP tokens into the KSM-vKSM pool. Click on confirm and sign the transaction in your wallet.
With this, we have crossed-in KSM, staked KSM, farmed vKSM, provided liquidity in KSM-vKSM, and then staked the KSM-vKSM LP tokens. While millions are being lost through bridges, Bifrost offers liquid staking through cross-chain interoperability with new opportunities and possibilities in DeFi.
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