Liquid Crowdloan (SALP)
Base mechanism
User contributes 1 Token to the crowdloan and receive 1 vsToken + 1 vsBond. At redemption, the user brings back 1 vsToken + 1 vsBond to get his contributed Token back.
vsToken (vsDOT & vsKSM) are fungible: they are standardized between any crowdloan
vsToken represents the asset part that can be exchanged at any time with no siloed liquidity between crowdloans.
vsBond are semi-fungible: each vsBond has unique crowdloan properties (duration & lease)
vsBond reprensents the Bond part associated with a maturity date. The closer you are from the maturity date, the more the vsBond price increase.
Major characteristics:
SALP enables users to release their locked liquidity (See How to release the liquidity of vsToken if you decide not to wait till the end of the lease period.)
No automatic redemption: users need to follow their investment to be able to redeem in time (see How to redeem KSM/DOT)
vsBond expires after 84 days on Kusama side and 168 days on Polakdot side following the opening of the redemption. After that a discount rate will be applied based on market price (see Expired vsBond)
vsKSM Repurchase & Burn
Each SALP crowdloan requires users to redeem their underlying DOT (KSM) manually, if not doing so, the vsBond will expire resulting in a discount rate (see Expired vsBond) Bifrost uses unredeemed underlying DOT (KSM) to repurchase vsDOT (vsKSM) and burn them to maintain a long-term healthy price of vsDOT/DOT (vsKSM/KSM). The repurchasing and burning structure is as follow:
Repurchase 75% unredeemed DOT (KSM) to vsDOT (vsKSM)
Remaining 25% DOT (KSM) goes to Bifrost treasury
Repurchase & Burn History
| vsBond Name | Unredeemed Amount | Repurchased & Burn (75%) | Transfered to Treasury (25%) |
|---|---|---|---|
20220708-KSM-BNC | 417.099782 KSM | 313 KSM to 755.55 vsKSM | 104.099782 KSM |
vsBond Redemption
vsToken can be traded at any time or merge with vsBond for 1:1 redemption after the end of the parachain lease term (See How to release the liquidity of vsToken).
Go to https://bifrost.app/vcrowdloan?tab=redeem check your vsBond redemption period.
Youtube tutorial:
You can have a full tutorial on the How to redeem DOT/KSM section
Bond Market
The bond market is a function that automatically matches vsToken and vsBond and packages their redemption period and yield, which has the same properties as the traditional bond market.
For new users, there is no need to pay attention to the operation mechanism and underlying structure of slot auction and Crowdloan, but only need to understand the basic financial knowledge of traditional bonds, buy high and sell low to make the difference, and seize favorable opportunities such as interest rate fluctuations and redemption periods. , increase the rate of return, and obtain the return on investment.
Enter bifrost.app and click"Bond" under "Explore more" in the main navigation menu on the left
The Bond market is displayed with the information of stock and APY.
Stock is usually low to null because the stock comes from people converting their vsBond to release their liquidity before the end of the lease period and dropping the ability to redeem when the redemption opens.
And their is of course the arbitrage opportunity to buy Bonds at a discount price (compared to full redemption), so usually the available vsBonds don't laste long in the Bond market.
In case if there is no certain period vsBond remaining in SALP protocol, so its unable to Buy from stock:
Bonds in Bond Market are automatically compounded and paired with vsTokens by SALP protocol, the redemption period of vsBOND determines the remaining days of each Bond. Using Bond market = automatic arbitrage with vsToken+vsBond, thus if there is no existing vsBOND for a certain period, so no Bond either.
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