Bifrost, a leading liquid staking protocol, unveiled LoopStake, a new product aimed at simplifying leverage staking for users within the Polkadot (DOT) ecosystem, as per the information shared with Finbold on March 13.
What is LoopStake?
Leverage staking, i.e., staking assets to obtain a liquid staking token (LST) and then using it as collateral to borrow staked assets, is a complex and resource-intensive strategy.
LoopStake eliminates the need for manual looping, democratizing leverage staking, and offering users a one-click solution to amplifying yield on their staked assets.
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Built on the Substrate framework and leveraging Polkadot’s interoperability, LoopStake represents a significant milestone in liquid staking adoption.
With around $150 million in total value locked (TVL), Bifrost is currently the largest liquid staking protocol on Polkadot.
Initially, LoopStake will support assets such as DOT, although there are plans for expansion to encompass a broader range of assets, including cross-chain offerings.
The rising prominence of liquid staking
Liquid staking now represents the largest category within decentralized finance (DeFi), boasting approximately $50 billion in TVL.
Lurpis Wang, Bifrost CEO and co-founder, emphasized the platform’s dedication to providing investors with unparalleled opportunities in crypto asset management, stating:
“With the launch of LoopStake by Bifrost, we are opening a new chapter in crypto asset management and providing investors with unprecedented value-added opportunities. This innovative solution aims to give users greater flexibility and higher potential returns through a lending curve customized for liquid staking tokens, marking our commitment to continuous exploration and innovation in decentralized finance.”
— Lurpis Wang, Bifrost CEO and co-founder
Bifrost’s liquid staked tokens, vDOT and vKSM, have seen commendable growth, with vDOT surpassing the 7,000,000 DOT ($68M) threshold in TVL and vKSM getting close to 500,000 KSM ($25M).
This success testifies to the rising prominence of liquid staking in the decentralized finance (DeFi) space, particularly following Ethereum’s (ETH) Shapella upgrade, which facilitated ETH withdrawals from staking contracts.
Liquid staking tokens are emerging as preferred collateral within DeFi thanks to their versatility and “risk-free” yield similar to fixed-income products seen in traditional finance.
LST adoption is thus on an upward trajectory, indicating a paradigm shift in crypto asset management and investment strategies.
