Summary

This proposal aims to execute Phase 2:

In order to welcome the launch of Bifrost Tokenomics and Commission Channels this year, we hope to gradually adjust the vDOT reward fee back to 10%. This will go through three stages:

• Phase 1: Adjust to 1% for one month.
• Phase 2: Adjust to 5% for several months until Tokenomics 2.0 live.
• Phase 3: Adjust to 10% once Tokenomics 2.0 live.

The goal of this proposal is to restore the vDOT reward fee from 1% to 5%. The reasons for this are as follows:

1. The last time the vDOT reward fee was reduced from 10% to 0.1% was to incentivize the first two unlocking events of the Polkadot Crowdloan, and now these two events have ended;
2. In the Polkadot Treasury Subsidy, there are 287317.96 DOTs minted into vDOT, restoring the reward fee will generate more income for the Biforst Treasury;
3. To prepare for the upcoming Commission Track Pallet;
4. To prepare for the planned launch of Tokenomics 2.0 this year.

Proposal Details

The End of Unlock Havest

Since October 24, 2023, after two Unlock events, Bifrost vDOT TVS has grown by more than 5,400,000 DOT. Since the size of the DOT released in the first two Crowdloan Unlocks was the largest, I believe that there is no need to incentivize the minting of vDOT by reducing the reward fee in the future.

Reward Capturing From The Subsidy

In the proposal of Polkadot Treasury Subsidy, Bifrost minted 287317.96 DOT into vDOT and provided Stable Swap liquidity. If calculated according to the vDOT reward fee of 10%, Bifrost will increase the treasury income by about 5,000 DOT when returning the subsidy next year.

Preparing for Commission Channel

Commission Channel is an important module of promoting Bifrost's expansion of products and ecological cooperation. It allocates a portion of the reward fee collected by Bifrost partners. The normal operation of the reward fee can maintain a good cooperative relationship between Bifrost and external partners. The mode of partners entering Commission Channels is similar to VBL. It needs to initiate a proposal in Bifrost OpenGov and vote after discussing its cooperation value in the community. Therefore, using 10% of the vDOT reward fee to welcome the launch of Commission Channels would be a good choice.

Preparing for Tokenomics 2.0

In the upcoming Bifrost Tokenomics 2.0 this year, vToken will serve as the main source of protocol revenue to support BNC's stable ecological and economic cycle. All the vToken Commission will be kept in the treasury, and will be used for BNC repurchase after the new tokenomics goes live and continue to incentivize veBNC holders, vToken Farming and etc.