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Expert Review | OpenGov Referendum #432 | Bifrost vDOT liquidity loan

OnlyDeFiGuy
a year ago
experts
defi
opengov

Hello all, 

My name is @OnlyDeFiGuy on Twitter, but you may also know me as TheOyster on discord. 

I was asked if I would like to do a review of OpenGov proposal #432. As many here may know I love financial markets and decentralised finance. I have dedicated  the entirety of my adult life to financial markets, my background before I joined crypto was the tradtional securities business so you will have to forgive me if I air on the side of mirroring what I learned in that industry.  I also have been highly active in the Polkadot ecosystem for many years now and I am an active and enthusiastic member of Chaos Dao. 

This is my first time doing an expert review but I did enjoy this and would love the opportunity to do more analyst reports regarding future OpenGov proposals. I insist on only sticking to my area of expertise which is financial markets and decentralised finance. 

I have tried to keep the report as short as possible, as I don't want to be writing reports that are even harder to read than the proposal itself. But if the community has any feedback or would like me to change the format or style of the reports I am happy to. 

Also, I will stand by everything I write. If I make a post and you disagree with it. I'm more than happy to come onto a live event ( moderated by a third party ) and debate my findings with you, alternatively you can contact me directly on Twitter. 

All I ask while reading any of my proposals or interacting with me is intellectual honesty in the arena of ideas. Everything I put forward will be in good faith and I will disclose any and all invesments, holdings or biases I may have when writting about each topic. 

I will attach my report below. If you do not like clicking on random links ( understandable ) I will also make a twitter post where I screenshot each page and you can review it there, my Twitter handle is @OnlyDeFiGuy. 

Thanks in advance for your time. 

https://docs.google.com/document/d/16ipOhYr_8hkCXxHyh63lHMGAdFVKS-hwqVve68Sju9U/edit?usp=sharing

Comments (2)

a year ago

Sorry but the analysis is refering to the old proposal, not the current one up for voting.
— Interlay is not anymore in the propsoal
— 500k are requested as a loan (not 1M)

a year ago

See Tyrone's comment on Jan 11th:

Dear community members,

Following various one to one conversations with community contributors, and partners, and taking their feedback constructively, we have mutually decided with Interlay, to unbundle our treasury proposal. In other words, both teams  will independently make their requests directly to the Polkadot treasury. The community will be able to vote for each initiative separately.

In the next few days, Bifrost will go ahead and submit for vote its request for a 1 year loan of 500,000 DOT to the treasury which will be repaid in full with staking rewards. Please note that given the unbundling of this proposal with Interlay, the borrowing process of distributing half of the requested 1M DOT amount to Interlay is removed and Bifrost is requesting for its half (500,000 DOT）of the initial liquidity proposal. The management of funds and repayment of the loan remain the same and do not change, we have provided them below.

Bifrost will push this treasury liquidity loan proposal to OpenGov early next week.

We would like to thank the community for its support and feedback and we look forward to continuing to contribute and to drive Polkadot DeFi.

Borrowing Process

  • Polkadot side
  1. Apply to Polkadot Treasury to borrow 500,000 DOT to the ParaId2030 (13YMK2eeopZtUNpeHnJ1Ws2HqMQG6Ts9PGCZYGyFbSYoZfcm) beneficiary through the (Treasury::propose_spend) method of the treasury module on Polkadot._

Management Process on Bifrost

  1. Call currencies:setbalance method, an additional 500,000 DOT will be issued on Bifrost treasury address;
  2. Dispatch Bifrost Treasury to call vtoken_minting to mint 300,000 DOT to vDOT ;
  3. Provide 200,000 DOT and 300,000 DOT worth of vDOT to Bifrost DOT-vDOT Stable Pair (Note: the actual liquidity provision proportion is subject to real-time DOT:vDOT ratio.)

Repayment process

Repayment process Bifrost

  1. Dispatch Bifrost Treasury to remove liquidity from vDOT-DOT Stable pair.
    1. 100% of the 500,000 DOT LP is repaid and does not incur impermanent loss (IL), given the nature of correlated assets in this case staked assets and their respective liquid staked assets and the underlying principle which remains unchanged at LP withdrawal.
  2. Redeem withdrew vDOT to DOT.
  3. Dispatch Bifrost Treasury transfers all 500,000 DOT + Staking Reward (estimated 54,000 DOT) back to Polkadot Treasury via XCM.
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    Polkassembly - Expert Review | OpenGov Referendum #432 | Bifrost vDOT liquidity loan #2094