This proposal aims to add a Balancer gauge for vETH/wETH pool on Ethereum, with a 10% emissions cap. The initial gauge enabled by BIP-269 will be migrated due to a change in the rate provider contract. The new gauge in this proposal would be approved and the prior gauge killed 2 weeks later to allow LPs to migrate funds.
Bifrost (https://bifrost.finance) is a substrate based Kusama and Polkadot parachain that provides non custodial decentralised cross-chain liquid tokens for staked assets. By leveraging on Polkadots cross-consensus message format (XCM) it provides standardised cross-chain liquid staking services for multiple chains (currently 6+ chains).
Bifrost is currently one of the largest liquid staking protocols on Polkadot with a current total TVL of $63M. vETH, Bifrost liquid staking token (LST) for staked ETH was launched in late November of 2020, and is the protocols largest LST in terms of TVL with $36M. vETH is an ERC-20 decentralised yield bearing dual protocol asset that supports both ERC 20 and Substrate Based (via the Ethereum ↔ Polkadot transfer bridge) in the future.
In order to adapt Ethereum Shanghai update, vETH 2.0 is a new contract which involves two main new functions:
- Once The Merge is completed, the exchange rate of vETH/ETH will gradually increase as staking rewards accumulate.
- vETH 2.0 supports vETH unstake.
At the initial stage of vETH 2.0 launch, two steps of multi-signature still remain (sign by 5 members in Bifrost governance council + technical committee):
- Deposit confirmation: SLP deposit contract executes the final step to deposit ETH to Beacon Chain validators. Before that, it needs Bifrost multisig contract to confirm that the withdrawal credential hash in deposit json (validator deployed by Infstones) is the same as Bifrost generated.
- vETH-ETH rate relayer: The relayer bot deployed by Bifrost foundation, synchronize the volumes of ETH in staking and vETH total issuance to SLP contract. The SLP contract has been set a rate increased cap to prevent if the replayer feeds malicious data to dramatically increase vETH price.
Bifrost plans to replace multisig steps by using Secret Shared Validators (SSV), which encrypts a validator key and splits it into several KeyShares. These KeyShares are distributed to four non-trusting nodes run by operators, delivering a robust, fault-tolerant, active-active redundancy for Ethereum staking. Thus, the current multisig process will be abandoned.
Learn more details about vETH 2.0 mechanism and open-sourced contracts here.
Useful Links regarding vETH
Primary motivation of the new gauge is to maintain the liquidity source of vETH on Balancer more efficiently and no longer incentivize the suboptimal pool which is currently in use. The prior motivation can be seen in the original proposal.
- Governance: Bifrost on-chain governance and Bifrost forum
- Oracles: vETH Balancer Rate Provider (pending link)
- The Orb integrations team has reviewed the rate provider code and confirm that this RateProvider will return the correct exchange rate of vETH2 in terms of ETH, as long as it is constructed with
slpCorepointing to this contract.
- Two main notes from the review highlighted that there are specific, but highly unlikely conditions that can cause the rate to be equal to zero or calculation to revert. Also, the the trust granted to the owner and vaults corresponding to these contracts can be potentially problematic in the case of a bad actor.
Slowmist; vETH 2.0 Contract
Slowmist; Bifrost Protocol
Certik; Staking Liquidity Protocol Pallet
- Centralization vectors: The protocol is decentralised, the multisig confirmation steps are mentioned in Protocol Description section, here are specification of details:
- Market History: Prior vETH composable stable pool
vETH has been a tradable asset since the 27th of November 2020.
Recap of vETH 1.0 initial launched in 2020
Publish of vETH 1.0 deposit history
Bifrost vETH officially listing on Uniswap
AMM Liquidity Mining of vETH in Loopring
vETH listed on DODO
- Value: Bifrost aims to make vETH/ETH pool on Balancer as its primary source of liquidity for vETH on Ethereum. As a result, this should result in volume and trading fees for Balancer.
The Balancer Maxi LM Multisig
eth:0xc38c5f97B34E175FFd35407fc91a937300E33860 will interact with the
0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function with the following arguments:
Kill old gauge
2 weeks after the execution of this transaction the killing of the old gauge will take place. (July 3, 2023)
The DAO Multisig
eth:0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will interact with the AuthorizerAdapterEntryPoint
0xf5dECDB1f3d1ee384908Fbe16D2F0348AE43a9eA with the following arguments:
0xab8f0945 which corresponds to the function for kill()