The first batch of Kusama vsBond will expire on August 6, be sure to process the redemption on time.
The redemption period for Bifrost Kusama, one of the supported programs under the SALP (Slot Auction Liquidity Protocol), vsBond-20220516-KSM-BNC, expires on August 6, 2022. Go to the bifrost.app to complete the redemption.
In the SALP protocol, vsKSM represents a homogeneous pass-through property, while vsBond represents the contributed redemption rights and lease expiration time of a parachain with non-homogeneous properties.
When a parachain expires, a vsBond is paired with a vsKSM to complete a 1:1 redemption of KSM for 84 days, after which vsBond will shut down redemption and trading capabilities.
A deeper look into the design mechanism of SALP: The Path to the Creation of the First Slot Auction Liquidity Release Protocol SALP
Why does vsBond expire?
In order to avoid malicious hoarding of vsBonds, which could lead to a single point of control risk for certain vsBonds and adversely affect normal redemptions, SALP has designed the protocol with an 84-day redemption period for vsBond, after which vsBond cannot be redeemed, thus eliminating the incentive to hoard vsBond in bad faith.
How to use an expired vsBond
For expired vsBond, the Redeem and Order functions are closed.
However, users can still use the Convert Function to convert expired vsBond to vsKSM, thus recovering some of their losses.
If you have expired vsBond in your possession, the conversion steps are
- Convert the expired vsBond to vsKSM via the Convert interface: the conversion rate is fixed at 1 vsBond : 0.5 vsKSM (refer to the Wiki for the updated convert rate).
- Convert vsKSM to KSM in the Swap interface for KSM redemption purposes.
Based on our experience, the vsKSM / KSM conversion rate is mostly around 0.4, so assuming it is 0.4 at this point, 1 expired vsBond can be converted to 0.5*0.4=0.2 KSM by following the steps above.
This is the reason why, we strongly recommend to redeem your vsBond before it expires to avoid unnecessary losses.
Learn more about the SALP 2.0 optimized upgrade: Bifrost launches SALP 2.0, unlocking unlimited liquidity for slot derivatives
vsKSM converted from expired vsBond will result in incremental vsKSM issuance. To handle this incremental issuance, Bifrost will periodically initiate a repurchase process to buy back vsKSM with unredeemed KSM to rebalance the vsKSM position.