SLP 2.0 Framework has enabled Bifrost in seamless instant Liquid Staking of cross-chain ETH asset
Bifrost’s SLPx 2.0 Upgrade enhancing users’ staking experience of cross-chain ETH asset
Bifrost Liquid Staking evolves for enabling true Multi-Chain Liquid Staking with its SLPx 2.0 architecture.
Bifrost with its existing SLPx architecture has already established a niche as Polkadot’s Top Omni Chain Liquid Staking Protocol actively issuing LSDs for 8 assets – vDOT, vGLMR, vASTR, vManta, vETH, vBNC, vKSM, vMOVR.
Bifrost currently issues vToken LSDs for these assets
SLPx powered Liquid Staking mechanism already removed complexities of cross-chain asset transfer – as it powered remote minting of LSDs in Native Chain with base asset locked in Native chain.
However, this Omni staking mechanism of Bifrost was not working seamlessly for staking of ETH asset like it did for Parachain assets.
This is why, SLPx 2.0 upgrade was done so ETH staking and unstaking processes happen quickly, removing previous cross-chain frictions that caused delays and inefficiencies.
Readers can read my introductory article on Bifrost which explains its Omni Staking Mechanism and how this makes Bifrost’s vToken LSDs a unified asset that’s compatible to be used cross-chain.
Bifrost: The Only Omni-Staking Protocol with a Unified Token Standard for LSDs
SLPx 2.0 Solution to facilitate low latency Liquid Staking processes of ETH LSDs
SLPx architecture enabled efficient cross-chain Liquid Staking of Parachain tokens as XCM facilitated message transfers between Bifrost parachain with other Parachains.
However since Ethereum is not a parachain, cross-chain message transactions between Bifrost Parachain and Ethereum involved more complicated steps.
Since Heterogenous Blockchains have different syntax, transaction execution and verification mechanisms, cross-chain interactions between them experience delays and execution lags.
This is why even though Decentralized Cross-chain messaging protocols like HyperBridge can facilitate message transfers between Bifrost Parachain and Ethereum, there is bound to be message confirmation delays with visible frictions in cross-chain process execution. Apart from this there is cost over-heads with Cross-chain transaction fees.
The limitations of SLPx in Liquid Staking of ETH was delay in issues of vETH and redeems of ETH, apart from cross-chain message transaction costs.
SLP 2x Architecture was therefore designed to equip Bifrost to facilitate instant, low-cost issues and redeems of ETH.
As we dive further to understand how SLPx 2.0 Architecture enables the above – we will see that a different approach was followed for staking of ETH and the components added into SLPx 2.0 architecture power Modular Liquid Staking Processes.
SLPx architecture powered chain’s remote Liquid Staking processes – Omni-Staking
Before understanding Bifrost SLPx 2.0, we need to understand the approach adopted by SLPx to power Bifrost’s Omni Liquid Staking Process.
SLPx architecture transformed Bifrost into an Omni-Liquid Staking Protocol from a standalone Liquid Staking dapp.
Bifrost’s original LSD issuance process was built in Bifrost with Bifrost’s SLP Pallet powering Bifrost’s minting and redeem functions.
At that stage – to mint vToken, it was necessary for base asset to be transferred to Bifrost, with the SLP Pallet running the functional logic of locking the base asset and issuing LSD asset.
However, Bifrost approach was to simplify issuance of LSDs without requiring cross-parachain transfer of base asset. Here base asset is locked in native chain with minting of LSD initiated in the same chain after Bifrost completes issuance of LSD vToken.
There is no asset transfer between Bifrost and interacting chain – but there is cross-parachain communication between them – that confirms mint/redeem State to coordinate synchronized issuance and redeems of LSDs between chains.
XCM is the messaging protocol transferring messages cross-parachains.
SLPx powered parachains to remotely mint and redeem vToken by calling functions of SLP through XCM.
Parachains remotely mint vToken only after Bifrost issues vToken in SLP Pallet and sends confirmation message through XCM.
The principal was – remote minting of LSDs without base asset transfer but unified minting of LSDs. SLPx had a synchronized system powering mints and redeems of LSDs – where LSD issuance was valid only after Bifrost and the chain using Bifrost’s LSD service processes the LSD transaction (mint/redeem).
XCM here removed the need for remote chain to transfer base asset as it delivered State updates and coordinated LSD issue and redeem action processes between chains.
Let’s picture how SLPx powered Bifrost’s Omni- Staking process with an example.
Bifrost’s Omni Liquid Staking process happened this way –
Astar (Parachain) processes a user’s LSD minting request. Astar Local SLPx Pallet locks Astr token in Astar chain and sends the minting-initiated State to Bifrost through XCM.
Bifrost SLP mint function is triggered when this message is read.
As soon as Bifrost SLP Pallet reads the message – it mints vAstr.
Bifrost relays mint confirmation status message to Astar Chain, which then mints vAstr in Native chain.
These cross para-chain synchronized LSD issuance and redeem processes take place quickly with XCM powering communication and fees remain low.
SLPx framework was not able to enable quick and low-cost Omni-staking of ETH, which is why the SLPx 2.0 Framework was introduced adopting a different approach to enable Liquid Staking of ETH.
Bifrost article explaining SLPx architecture – powering cross-parachain to remotely mint vToken
Approach behind SLPx 2.0 – facilitate instant Liquid Staking of vETH asset
Under SLPx architecture Ethereum had a Remote Smart Contract that could communicate with Bifrost’s SLP Pallet through decentralized cross-chain messaging protocols like HyperBridge.
SLPx 2.0 was developed with a new approach – where vETH minting and redeem transactions execute locally in Ethereum Blockchain, without every user transaction needing cross-chain processing in Bifrost – to facilitate synchronized vToken issuance and confirm vToken State processes.
Thus, SLPx 2.0 created a Modular Framework for powering the Liquid Staking process of ETH Asset with the goal of enabling low-cost, instant vETH issues and ETH redeems.
The principle behind SLPx 2.0 Modular Liquid Staking Framework being – once ETH Liquid Staking Process get completed in Ethereum, vETH issues and redeems happen instantly for the Ethereum user. These processed transactions get updated to Bifrost eventually – that consolidates mint, redeem records, computing vETH rates accordingly.
In other works Liquid Staking execution processes happen locally in Ethereum – with Bifrost being a vETH global account keeping headquarters – accurately consolidating Liquid Staking transaction records, computing rates maintaining asynchronized accounting system for vETH LSD.
Components of SLPx 2.0 that power Bifrost’s Multichain Modular Liquid Staking Functions
Now let’s get acquainted with SLPx 2.0 Core components that power its Modular Liquid Staking mechanics
SLPx 2.0 Framework powering vETH issues & ETH redeems in EVM chains – Ethereum, Base, Arbitrum, Optimism
Ethereum Liquid Staking processes happen inside vETH token Vault Contract as part of SLPx 2.0 Framework.
This framework is designed with these parts to power Modular Liquid Staking process in external Blockchains like Ethereum.
Async Mint Pool
Pool with records of ETH staked and vETH minted. it is the confirmation layer inside SLPx 2.0 – with proof of ETH staked and vETH minted. This component facilitates secure local vETH mints without the need for immediate cross-chain transaction with Bifrost to confirm vETH issue event.
Redeem Que Token Pool
Pool streamlines vETH redeem processes with redeem requests qued to be executed in batches. This way redeem processes are processed quicker.
ERC -4626 Vault
vETH issues confirm to ERC-4626 standard. This makes vETH a plug and play LSD, ready to be used in Ethereum DEFI protocols like AAVE and Uniswap. More will be explained in another article for this is part of vETH 3 upgrade.
Bifrost SLPx 2.0 Architectural Upgrade that removes cross-chain frictions in Liquid Staking of ETH
These components of SLPx 2.0 facilitate Modular Liquid Staking Process without any further LSD transaction reprocessing required in Bifrost. This way every transaction is not required to be executed cross-chain.
SLPx component connected to the vETH token vault contract executes Liquid Staking functions of Mints and Redeems within Ethereum Blockchain.
Supporting components in Bifrost connecting it with Ethereum SLPx 2.0
Bifrost’s SLP Pallet is embedded with components to facilitate its connection with Ethereum’s SLPx 2.0; vETH Token Vault Contract.
These components gather necessary records of – vETH mints and ETH Redeem transactions processed in vETH Token Vault Contract, and the vETH rates prevalent there.
**Async Mint Proxy and Async Redeem Proxy. **
Hyperbridge delivers mint and redeem transaction records to Bifrost into these components periodically.
XCM Oracle
Tracks rate of vETH in vETH Vault Contract that is based on the amount of ETH staked to number of vETH issued.
Bifrost maintains asynchronized vETH accounting system – updating rates and records
Since Bifrost does not simultaneously record vToken transactions as they happen in Ethereum SLPx 2.0 – the records in Bifrost will have discrepancies with eventual consistency taking place on the whole.
What finally matters is the positive end result for the Ethereum user. The user experiences instant vETH issues and redeems with no bridging costs to pay for. The mint/redeem UX is user-friendly with composable, scalable LSD transaction as vToken issue and redeem events happen in a Modular Framework within Ethereum chain itself.
Bifrost role is to keep accurate accounting for unified vETH rate that is consistent with records of vETH mints and redeems done in Ethereum chain, with its accounting system being Asynchronized.
The SLPx 2.0 approach succeeds in facilitating seamless Liquid Staking of Multi-chain ETH asset
In the movie, ‘Kunfu Panda’ just like how Shi Fu realized that he cannot train Panda Po to master Kunfu, the way he trained his other pupils -the famous 5, Bifrost team realized they cannot facilitate Liquid Staking of ETH seamlessly using the same SLPx approach that worked for seamless Omni Staking of Parachain tokens.
Therefore a new approach was implemented with SLPx 2.0. This model was designed recognizing that Ethereum was a Different Blockchain – with its working processes already secured by its own robust consensus mechanism which can be trusted.
It was acknowledged that simultaneous coordination with Ethereum for synchronized minting/redeems of vETH/ETH tokens would necessitate cross-chain delays, diminish user’s UX experience and have high transaction costs.
Therefore a Modular Liquid Staking Mechanism was introduced with SLPx 2.0 - where Liquid Staking transactions get executed locally in Ethereum. Bifrost only periodically collects transaction records – maintaining an asynchronized vETH global accounting system
Bifrost is unpaired from vETH minting and ETH redeem processes in SLPx 2.0 Modular Multichain Liquid Staking Framework.
Now, Liquid Staking of ETH has become as seamless as Omni-Staking of Parachain tokens.
Bifrost’s SLPx 2.0 Mechanism has make seamless, instant Liquid Staking of Multichain ETH asset possible
This is just like how in the movie, Shi Fu finally successfully trains Po into a Kunfu warrior– adopting a approach that worked matching Po’s temperament and motivational dynamics.
SLPx 2.0 Framework would be used to power Modular Liquid staking of tokens of other L1 chains in futures. It’s a framework to enable Modular Liquid Staking of Multichain asset.
Readers are welcome to read my other Articles on Bifrost Protocol -:
Winning Real Web3 Reward Drops: My bbBNC Riders Campaign Experience
Bifrost Sets a New Standard in Web3 Tokenomics With Its bbBNC 2.0 Upgrade
Image credits
Banner created by author in Canva