Find out from Thibault Perréard, Head of Strategy at Bifrost Finance, how OnFinality’s node sharing API helps Bifrost mitigate barriers of entries and save costs on infrastructure, while providing the team with valuable query insights to support mission-critical decisions.
Watch Rob and Thibault launch into a discussion about the impending Shanghai update, SEC’s (U.S. Securities and Exchange Commission) crackdown on stablecoins and staking (on Kraken), as well as how the permissionless and decentralised staking protocol is navigating the current regulatory ambiguity.
🎙️ Watch the full video here ⬇️ or scroll down to read the full transcript!
(Disclaimer: The below transcript has been automatically transcribed hence there may be minor discrepancies with what was mentioned in the actual interview.)
Welcome to onfinality’s customer interview series where we learn more from leaders in the blockchain space about how onfinality’s infrastructure helps them build the decentralized future faster. I’m Rob head of growth at onfinality and today it’s my pleasure to have Thibault from Bifrost a web3 derivatives protocol to join us for a chat on how they’re using onfinality’s expertise empowering their staking protocol hey Thibault, great to meet you and can you tell us more about Bifrost
hey Rob nice to finally meet and thanks for the opportunity yeah of course so as you mentioned um I mean there’s been sort of a change of terminology around the Liquid Staking Derivatives recently so we’ve sort of adjusted to Liquid Staking Tokens so LSTs now to you know from the old uh pretty cool one which was LSDs but yeah bifrost is a is a substrate based uh Kusama and Polkadot parachain and we provide non-custodial decentralized cross chain Liquid Staking Tokens to uh to the staked assets um I guess you know to give a bit of a context to the audience you know we believe that POS systems have become a backbone to uh to sort of the narrative that we’re seeing nowadays a backbone to DeFi as well and what’s being built on on different layer ones and the different protocols and we think that staked assets and their yield bearing features are going to be very interesting and very important for sort of the next generation of the financial products which will take place in web3. so um we think liquid staking as we’ve noticed in the market recently there’s been a very strong narrative up to the Shanghai update which is sort of imminent it’s been next month um and we’re seeing there’s there’s a lot of growing alternatives to to to staking and we we fundamentally think that liquid staking solutions are going to be fundamental in the new era of DeFi and what’s being built around that you know in terms of capital efficiency uh liquidity and um we just think that they’re going to be a key tenant in um in ensuring a healthy and composable dynamic between sort of protocol security protocol staking and then where it gets really interesting is on the on the whole DeFi ecosystem uh and how people are building on top of these Liquid Staking Tokens so that’s currently where we we stand and that’s sort of our our thesis
awesome you mentioned just maybe a bit of an aside the Shanghai um update coming up do you have a personal view on uh like what’s going to happen to all that eth that becomes unlocked I’ve seen a lot of people saying that you know people are going to re-lock it and and a lot of doomers as well saying it’s just going to be this massive um you know sell-off that you’re interested in what you’ve what do you think
yeah I mean I definitely think that we’re in an interesting market uh in terms of sentiment and different the different dynamics that we’ve seen since the beginning of the year in terms of you know market dynamics market prices and how certain projects tokens have reacted and there’s different sort of narratives there but related to the Shanghai update um I’m obviously of the view that there’s going to be some sort of like correction you know there’s going to be some users who are going to to withdraw and perhaps you know take profit if you like um but then again it’d be interesting to see how that’s been redistributed into the market and then how how things take off um I think there’s going to be an interesting play between the different liquid staking token protocols out there the likes of you know Lido who have a significant market share and then the frxETH who have a suite of products which are sort of interconnected so we’re going to see some interesting sort of market um dynamics around market share redistribution and and then potentially how certain protocols are positioning around that but from a user’s perspective I think a lot of them might sort of reassess where they stand in the market um so I think there’s going to be some sort of like volatility some sort of market but end of the day I don’t think it’s going to be that significant
um yeah you mentioned a lot of a lot of things that are happening at the moment you know one thing obviously is the SEC coming after stable coins and even staking on Kraken uh in the US and then you see you know Lido and other liquid staking providers get a massive pump you know after that news does any of that affect and you kind of alluded to any of your plans going forward
I mean the liquid’s taking uh derivative or LST narrative has obviously been quite beneficial for Bifrost um I mean obviously we lack the the visibility of the likes of Lido Rocket pool Frax because as you know we’re we’re very niche in terms of where we are right now in terms of the Polkadot ecosystem but um there’s been a lot of interest coming towards Bifrost on that on that side and hopefully as we see things moving forward within Polkadot different protocols within Polkadot you know coming to fruition with their road maps and their protocols being you know built out we’re going to see some interesting dynamics around the utility the use cases of XCM which which is really quite I’d say positive for Polkadot if everything goes right but coming back to your your question regarding the actual conditions the the regulatory ambiguity and stuff like that obviously um you know we are confronted to uh to these to these dynamics um I think there’s there’s obviously a good case for permissionless and decentralized protocols which is good for us but then again when you are looking to to sort of get you know user adoption exposure institutional um coverage um which are the big tickets really in terms of volume and in terms of where things can go within the industry that is sort of taking a step back so we are seeing that there are kyc you know AML sort of requirements around certain institutions looking at our solutions and there’s integrations as well which have to take place which are quite significant from an economics point of view so there’s really two factors on the community side we’re getting a lot of like you know exposure and I think there’s a good case for protocols like ourselves which are decentralized and permissionless and non-custodial but to the other side where you’re looking at sort of the big guys out there um depending on their nativeness and how they want to interact on on chain we’re seeing some sort of friction there and I think probably the big problem we’re having as well is the regulatory framework is not clear right Kraken um I mean took a hit I mean it’s not a consequence of anything they just decided you know it was part of like the ongoing discussion that was that were taking place but when we see Coinbase you know CBE which is their liquid staking protocol um a lot of people coming out now saying that Liquid Staking Derivatives are actually not uh you know Securities in that sense so that’s where there’s also this this constant change of wording just to be you know to be safe on that front so it’s going to be interesting to see how things play out but regulatory um scrutiny is bigger than ever after what happened last year and we just have to be sort of really cautious
absolutely and what about uh given the current state of the market um in terms of liquidity uh like in how does how’s that affecting Bifrost and the things you can you can do at the moment
yeah definitely I mean in terms of liquidity um as I said you know when you’re speaking to to institutions liquidity discussions are a bit more complicated when there’s a given macroeconomic uh you know backdrop which is not favorable uh which is you know risk off however when there’s also regulatory uh scrutiny and pressure it makes it even harder and especially when sentiment is quite low so um liquidity discussions I think overall are quite more I mean are quite fragile um and then specific to Polkadot that’s also something that we’ve seen uh you know liquidity is quite difficult within Polkadot I think liquidity siloed amongst parachains hopefully we’re going to be seeing a bit more sort of interoperability between protocols with XCM and liquidity being spread out with with utility use cases taking place amongst parachains which is really sort of the narrative I’m really sort of being really optimistic about this year but liquidity discussions are always quite complicated especially when when you have these sort of market conditions
sure um you touched on Polkadot and obviously um you know Bifrost come from the Polkadot ecosystem can you share more about the cross-chain messaging um you know piece within there and why that’s so important for you
it’s definitely important for us because you know we we built strategically on Polkadot for that you know for the tech obviously for Substrate um you know in terms of the ease of development there in the runtime upgrades which are seamless but the whole idea of cross chain is obviously not to rely on these you know you know trusted bridges or whatever we’ve seen you know sort of um disappoint uh recently or in the past so we are looking at these trustless interactions between parachains which are done via XCM and these are things which we’re only seeing now because you know XCM is only sort of coming to a fruition um and you know the latest updates as well and parachains are now opening up you know HRMP channels amongst amongst um parachains and and we’re sort of trying to leverage off that so I mean we’re still very much in development phases we are we are sort of looking to interact far more with XCM in within sort of our product offering we have some interesting you know developments taking place which hopefully will come to light within the end of this this quarter but um but XCM is really something which which now has to be an important narrative for the Polkadot ecosystem around uh you know trustless asset teleportation and communication between blockchains without having to go through through a bridge
and I mean onfinality also started within Polkadot uh but we’re now in multiple ecosystems we just announced Polygon uh yesterday and ETH recently and I noticed on your roadmap that you’re building bridges to Cosmos and ETH can you talk more about that
yeah so we’re not we’re not building uh bridges per se what we’re looking to do is we you know we want to be a liquid staking uh token protocol um Hub right so we want to be niche within that that sort of uh small angle of the industry which means that currently um I mean these are on our roadmap we’re still very much assessing the fees you know that how how that can be achieved but um but we are sort of waiting on on sort of the solutions that come out in terms of you know trustless bridges you know we had seen Snowfork which is supposed to be come out with a trustless bridge between ETH and Polkadot within Q3 of this year and that will allow us to move our vETH which is our Liquid Staking Token for you know if to Polkadot and then in terms of like the other um the other ecosystems we are working with with Filecoin as well in terms of launching a Liquid Staking Token there um but there again there are developments which we’re sort of looking at so currently it’s it’s multi-sig which is not optimal but we are working with third parties around around these bridges so they’re currently on our roadmap but given that technically um you know we’re not going to sort of push these developments we’re going to wait on teams to with their own expertise to build these these sort of um you know trustless communications among the ecosystems we’re currently only focusing on on Polkadot and and trying to really work on the narrative around the utility and use cases of these Liquid Staking Tokens because there’s a lot of work still on that front
sure and I I noticed that uh Filecoin was there as well what was the story behind that or how does that come about
yeah I mean Filecoin has obviously been an interesting um ecosystem you know um the storage sort of providers and and we think that um there’s obviously a pretty big presence in Asia um and we had sort of a network uh we had spoken to a lot of people within that that community it used to be quite big a couple years ago and then there was sort of a few sort of shutdowns and stuff and now it’s coming back to light and we had discussed with a storage provider which we have a relationship with around potentially understanding what are the current constraints capital capital efficiency constraints uh within sort of their network and how that works between you know storage providers lenders and stuff like that and we noticed that you know staking and obviously the upgrade that’s taking place within Filecoin with uh you know the Filecoin Virtual Machine and you know smart contracts being deployed on on Filecoin there’s going to be an interesting sort of use case around liquid staking so so that’s sort of where it came about we we we realized that there were certain barriers and storage providers needed that different users within that ecosystem were in need of that as well in terms of you know the lenders um centralized lenders storage providers and holders of Filecoin and that’s sort of where it came about so it was more about you know finding sort of a problematic and then seeing how our expertise can add value and and currently where we stand on that front we are going to too much detail we are looking to launch uh the Liquid Staking Token for Filecoin um within the next couple weeks once FVM is live on Filecoin
so Bifrost is quite a technically challenging project can you share you know maybe some of the key challenges you’ve had in the past few years and how you’ve overcome them
yeah most definitely I think I think the on the technical side there was I mean I think the problem is is more about as an ecosystem as a whole so you have a solution you know we initially started with Liquid Staking Derivative for for ETH which was before being a Parachain we then became a Kusama parachain in one of the first five parachains on Kusama where we were doing the liquid crowdloans which I think was an interesting you know value proposition back then when crowd loans work was sort of very interesting compared to where we currently stand now with the whole crowdloan situation and then we launched our liquid staking protocol uh in May of last year once we had obtained a Polkadot parachain so I think on the technical side there was also the understanding of how XCM sort of can be part of that design and how we can use it so there was more of an understanding of XCM and then its implementation within the solution um but now where we stand in terms of our challenges is twofold firstly it’s liquidity which is something that I referred to earlier which is still not a sufficient or large enough compared to other ecosystems and um there’s also this idea about you know we’re dealing with situations or with with narratives currently which other ecosystems might face in the coming months or coming years so I think people have had to be quite patient with with Polkadot and as I said earlier I think parachains now are coming to sort of to light with their their utility and value proposition and we can now start seeing how that dynamic works among amongst parachains so see that these are really the challenges it’s the sentiment the overall sentiment outside and inside Polkadot uh on the liquidity front because you need liquidity as well to to sort of to attract people to your product you need liquidity to sort of push for utility but then utility you need use cases and there are still certain things which I think you’re looking at layer twos on on program Arbitrum um where you’re seeing a lot of interesting you know DeFi protocols building on top whereas I think we’re a bit different on protocol on the Polkadot side
for sure for sure um yeah great uh the reason for us talking today also just to learn a little bit more about your relationship with onfinality and we’ve got a history of supplying uh scalable and reliable node and API infrastructure for Bifrost so users can deploy nodes can you tell us more about your relationship with onfinality and how that benefits builders and Bifrost
yeah most definitely so I mean how we came about to to knowing onfinality was quite clear because you know you’re pretty much the leader in that term in terms of infrastructure right you’re providing key infrastructure to to the majority of Polkadot and Kusama parachains so that was sort of a no-brainer in terms of when we wanted to to strategically work with someone on that front in terms of how we’re currently using onfinality our services use onfinality API from the dApp perspective and on the staking liquidity protocol data indexing side and I mean there’s a number of benefits that we’re clearly sort of really you know fortunate for on our front I think it’s always a question of mandating outsourced parties who have the expertise you know allowing us to build and to do things that you know we’re sort of focusing on it’s obviously helped us you know mitigating sort of the barriers of entries you know in terms of you know sharing node API and we’ve been able to sort of save costs you know on the infrastructure side but also on the you know node expansion site which has been sort of really really valuable and I think in terms of the scalability has actually been really sort of key on that front as well and redundancy in terms of you know outsourcing that and having an efficient process taking place and on my end where I had sort of more of the on the strategy side I think you know there’s been key valuable insights as well in on the data front in terms of you know the queries and stuff where I can sort of take a step back and and look at you know who’s creating the the platform the dApp and then sort of relate that to my strategy and the things I’m doing going forward for for Bifrost
awesome here thanks for the feedback the guys have spent a lot of time lately especially on the analytics front trying to build out more and more features inside the app to make it you know more useful so yeah great great to have that feedback um and I guess the same with Bifrost that you know you’re really an innovator in this space you know what you did with the SALP protocol to help you know Polkadot users you know sort of leverage their tokens into their crowd loans and things like that can you tell us what’s coming up or what you’re personally excited about in terms of either the liquid staking area or just DeFi in general
yeah most definitely I think I mean without going into two sort of you know technical developments um I think what’s going to be really interesting on our ends is how we’re going to sort of use XCM as part of uh the key value proposition of our liquid staking uh tokens on that front and we’re going to see much more use cases of our liquid staking assets uh within other protocols uh on on Polkadot and Kusama so I mean we’re currently working on on an XCM action palette for V token sort of communications between Bifrost and other parachains which I think is going to be really interesting uh both you know EVM compatible and Substrates and what that will allow if you like is is the is the integration of functionalities for cross-chain liquidation so you know lending and borrowing V tokens which are our liquid Liquid Staking Tokens on other parachains which will be really key for for sort of V token utilities and use cases and on another point the the staking liquidity protocol um SDK development so what will that mean is you’ll be able to deploy a contract calling sort of XCM action talent minting and redeeming and swapping the V tokens natively on a parachains network which will mean that the V token being minted there will be part of their TVL so there’s some interesting things that we’re deploying on that front um and we are also sort of pushing forward with with a sort of a Builder’s Program Initiative where people can come forward and provide sort of their their expertise and their views in terms of where V tokens you know should be sort of deployed and in terms of how we could leverage off um you know V tokens being a fundamental pillar within within DeFi and what people have in terms of their views of how that can be brought forward uh from a sort of technical perspective and Builders perspective and looking to reward them on that front so a bit a bit like a Grant um so that’s typically what we’re really really excited about this year in terms of pushing XCM
awesome really neat um last question um I think you’ve got a background in hedge funds if I’m not mistaken and I was wondering do you have any advice for people coming from web 2 or even outside of crypto completely and want to get into this crazy game
yeah I don’t know um come into this crazy game for sure uh but you know try and make it as healthy as possible you know do do enjoy it like taking some some breaks and you know valuing sort of what’s going on what’s happening in the real world I think that’s probably the the key Insight I have to give but yeah I mean my background’s in in TradeFi so you know FX um but I think no I think the key here is I mean we’re we’re in DeFi so it’s quite specific but I think overall is you know if you have some skills you know some key skills which you think are are valuable and you think that you know you have a specific premise in terms of where things are potentially going in terms of industry you know industry movements or what could potentially happen in the next couple years uh when there’s that transition between web2 and web3 I think it’s important to sort of dip your toes in and understand what’s going on from a sort of very easy you know superficial uh you know basis and then sort of dive into more details in regard to what you’re particularly interested in and then understanding sort of the basics of the technology around it and then just diving in and doing as much reading as you as you want once you’ve found that sort of that that you know that area of interest but um I think it’s it’s a difficult area because it’s obviously constantly you know innovating um there’s quantity things going on left and right but I definitely think that um it’s it’s becoming more and more important to at least start looking at what’s happening in in web3 um because that’s where most people are moving into in terms of like companies to people who have skills within a niche a niche sector
absolutely and I think DeFi is the most obvious thing for most people in terms of what they can kind of touch and understand right it’s just inevitable that all of these solutions will be everywhere as long as the regulators don’t hurt it too much but uh yeah thanks Thibault really awesome learning more about Bifrost and liquid staking if you’d like to learn about Bifrost you can check out their website which I’ll put in the description and if you’re a web3 builder and want to get stuck in you’re at the right place onfinality is Blockchain Infrastructure Made Smarter you can check out our website at app.onfinality.io and you know run run infrastructure for Bifrost perhaps or take your own app to the next level with all of our different analytics and other services so yeah thanks for having been on here today again Thibault and uh yeah all the best
thanks again Rob have a good one take care bye
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