Bifrost Finance seeks $2.5 million loan from Kusama treasury

Quick Take

  • The loan proposal is requesting 50,000 Kusama (KSM) tokens currently worth $2.5 million from the Kusama treasury.
  • The loan will be used to provide liquidity for Bifrost’s liquid staking derivative vKSM.

Bifrost Finance, a liquid staking protocol on Kusama (KSM), has requested a 50,000 KSM ($2.5 million) loan from the Kusama treasury.

The request is currently up for a vote by both the Council — the Polkadot and Kusama governing body — and the general community.

Bifrost users receive “vtokens,” a staking derivative token, in exchange for coins staked on the platform. These vtokens can be deployed on decentralized finance protocols in the DotSama ecosystem, enabling users to enjoy staking rewards and DeFi yield at the same time. "Dotsama is a portmanteau of Polkadot and Kusama.

The project won the fifth Kusama parachain auction in July 2021. These auctions were to determine the projects that will earn slots on the Kusama parachain which is a canary network for Polkadot.

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According to the proposal from Bifrost, the loan will be used to bootstrap liquidity for the platform’s staked KSM derivative called vKSM (similar to staked ETH on Ethereum). This liquidity is to enable Bifrost to incentivize vKSM utilization across DotSama DeFi protocols.

The requested loan has a one-year tenure at an interest rate of 19%. Bifrost will split the loan equally between Solarbeam and Taiga Protocol. Solarbeam is a decentralized exchange in the Moon