Background

With vETH 3.0 now operating stably, a portion of vETH 1.0 assets remain unmigrated within the protocol, resulting in persistent excess ETH reserves.

Given that the vETH 1.0 to vETH 2.0 migration path has been available for several years, the remaining unupgraded assets are likely associated with long inactive on-chain addresses.

Continuously maintaining full on-chain manual upgrade access for legacy versions causes multiple contract versions to operate in parallel, increasing system maintenance complexity and potential security exposure.

To better serve active users and enhance overall protocol value, we propose optimizing the allocation of these excess reserves for ecosystem development and yield enhancement.

Implementation Plan

1. Self-service Migration (DDL: January 31, 2026)

From now until January 31, 2026, all services will continue operating normally. Users may manually complete the vETH 1.0 → 2.0 → 3.0 migration through the following steps:

Step 1: Converting vETH 1.0 to vETH 2.0

1. Approve: Visit the Etherscan contract page and call the approve method to authorize the vETH 1.0 amount you wish to convert to the management contract: 0x74bAA141B18D5D1eeF1591abf37167FbeCE23B72
2. Renew: Visit the Etherscan proxy contract page and call the renew method, entering the specified amount to complete the conversion

Step 2: Converting vETH 2.0 to vETH 3.0

• Visit omni.ls, switch to Ethereum Mainnet, and click the conversion tab at the top to proceed

2. Manual Migration (Effective February 1, 2026)

To optimize resource allocation, beginning February 1, 2026, the vETH 1.0 self-service migration function will transition to a manual processing model:

• Bifrost will provide a migration application form
• vETH 1.0 holders may submit applications at any time to upgrade directly to vETH 3.0
• The Bifrost team will periodically process and fulfill all migration requests through on-chain governance procedures

Important Note: This adjustment does not affect user rights. All vETH 1.0 holders may still request migration to the latest version at any time.

3. Excess Reserve Reallocation Plan

Following the above adjustments, we will recalculate the excess reserve amount and allocate these assets to different scenarios through on-chain governance to enhance overall protocol efficiency and user yields.

Initial Allocation Plan:

• 10% - Retained as vETH excess reserves for Boost mechanisms and addressing user migration requests
• 30% - Deployed to vETH-ETH liquidity pools across multiple networks to enhance cross-chain liquidity
• 30% - Supporting LoopStake lending liquidity to enrich vETH DeFi use cases
• 30% - Held in treasury as vETH 3.0 to serve as flexible reserves for protocol development

Note: Actual allocation ratios will be dynamically adjusted based on community feedback, market conditions, and protocol development needs.