Slot Auction Liquidity Protocol (SALP) unlocks liquidity through derivatives, providing robust liquidity pools and yield opportunities, reducing opportunity costs for Kusama Crowdloan participants.
Parallel Chain Slot Auctions
Polkadot/Kusama features a sharded multi-chain architecture where relay chains grant shared security to parachains. However, relay chains have limited capacity to connect parachains. To allocate scarce parachain slots to high-value projects, Polkadot/Kusama employs auctions, requiring projects to stake DOT/KSM. Higher stakes increase the likelihood of winning a slot—a process known as Slot Auction.
Projects can crowdsource DOT/KSM via Crowdloan, allowing token holders to vote for favored projects. However, this locks participants' DOT/KSM, sacrificing liquidity.
What Is SALP?
SALP (Slot Auction Liquidity Protocol) is a Bifrost Finance initiative that releases liquidity locked in parachain auctions by issuing derivative assets pegged to staked DOT/KSM.
For Crowdloan participants, SALP offers:
- Zero-lockup participation: Earn project rewards without losing DOT/KSM liquidity.
- Preserved opportunity cost: Maintain flexibility while supporting projects.
For parachains, SALP:
- Attracts more supporters by mitigating opportunity costs.
- Boosts auction success rates.
👉 Explore Bifrost SALP’s decentralized solutions
How SALP Works: Mechanisms Explained
1. UMP Transact via XCM
With Kusama Proposal #129 approval, Bifrost SALP leverages XCM UMP Transact to decentralize auction contributions. Here’s how cross-chain communication operates:
- UMP (Upward Message Passing): Parachains → Relay chain.
- DMP (Downward Message Passing): Relay chain → Parachains.
- XCMP (Cross-Chain Message Passing): Parachain-to-parachain.
Bifrost uses XCM UMP Transact to submit Crowdloan contributions to the relay chain, enabling trustless slot auctions.
2. Message Confirmation
Current XCM limitations (e.g., no XCM Response) require Bifrost’s confirmation service to verify relay-chain transactions via multi-signature attestation.
3. Query Responses (XCM v2)
Future XCM v2 upgrades will allow Query Responses to track cross-chain transaction statuses—enhancing reliability.
vsToken & vsBond: Dual Derivatives
SALP participants receive two derivative assets:
- vsDOT/vsKSM (Voucher Slot Token): Fungible tokens pegged to staked DOT/KSM.
- vsBond (Voucher Slot Bond): Non-fungible bonds tied to specific projects/lease periods (e.g.,
vsBond-Bifrost-2023/05/13).
Both derivatives can:
- Be traded in liquidity pools (Bifrost or third-party).
- Be combined post-lease to redeem staked DOT/KSM 1:1.
👉 Learn more about vsKSM trading strategies
SALP in Action: vsKSM’s Debut
On July 20, 2021, Bifrost won Kusama’s 5th parachain slot with 142,430 KSM. Notably:
- 79% of KSM (112,303) came via SALP.
- Demonstrated SALP’s pivotal role in auction success.
Round 2 Auctions & SALP Expansion
Kusama’s second auction (September 2021) saw SALP integrated with projects:
- Basilisk (HydraDX): Unified liquidity pools for cross-chain assets.
- Altair (Centrifuge): Real-world asset tokenization.
- Calamari (Manta Network): Privacy-focused DeFi services.
Farming Derivatives
Participants earn:
- Project-specific Crowdloan rewards.
- vsKSM/vsBond liquidity pool yields.
- Joint Farming: Stake vsKSM + vsBond for compounded returns (rules TBA).
FAQs
1. How does SALP reduce opportunity costs?
By converting locked DOT/KSM into tradable derivatives (vsToken/vsBond), users retain liquidity while earning rewards.
2. Can vsBond be traded before lease expiry?
Yes, vsBond is tradeable in liquidity pools but redeems 1:1 only post-lease.
3. What’s SALP’s advantage for parachains?
Higher Crowdloan participation via liquidity incentives increases auction success odds.
4. Is SALP available outside Bifrost?
Yes! SALP now supports Basilisk, Altair, and Calamari—expanding its ecosystem role.