Bifrost, a liquid staking middleware, received a 500,000 DOT treasury loan from Polkadot (DOT) on February 23, as per the information shared with Finbold.
Following a successful treasury proposal by the Bifrost Foundation in January, the one-year loan is set to accelerate the expansion of vDOT, Bifrost’s liquid-staked version of DOT.
What can Bifrost do with the DOT loan?
Built on the successful model established by the protocol’s previous 50,000 KSM treasury liquidity loans from Kusama, the initiative is set to reinforce the adoption and utilization of the asset throughout the Polkadot ecosystem, spanning Substrate and EVM parachains.
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Bifrost has committed to repaying the DOT liquidity loan in full, along with the yield generated from its staking rewards.
What can Bifrost and Polkadot bring to the broader DeFi market?
According to the January proposal presented to Polkadot, the creation of vDOT for the Polkadot treasury represents a “strategic diversification approach, effectively putting its DOT capital to productive use over a 1-year period, while ensuring the return of its 500,000 DOT principal with staking rewards.”
The referendum garnered significant support, with 98.9% of voters in favor (69.2 million DOT) and only 1.1% opposed (748.100 DOT). With approval secured, the funds will be disbursed to Bifrost within 12 days.
The loan, valued at $3.9 million at the time of announcement, marks a notable achievement for Bifrost, the current leading liquid staking protocol in the Polkadot ecosystem.
What does the initiative mean for the Polkadot ecosystem?
Bifrost’s influence extends across various Polkadot parachains, including Astar and Manta, and transcends the Polkadot ecosystem by supporting Ethereum (ETH) staking for several years. Additionally, Bifrost introduced one of the initial liquid staking solutions for Filecoin (FIL) last year.
The green light for the loan emphasizes the evolving sophistication of Polkadot’s decentralized governance platform, OpenGov, along with the practicality demonstrated by its canary network, Kusama.
While the blockchain treasury wasn’t initially linked with decentralized finance (DeFi), entities like Bifrost have demonstrated Polkadot’s willingness to endorse base-layer DeFi projects that drive adoption by catering to diverse financial use cases.
