Make vDOT a Zero-Fee Liquid Staking Token

Proposer: Lurpis (on behalf of the Bifrost Foundation)
Track: Root
Status: On-chain Referendum
Date: 2026-06-29

TL;DR

We propose to make vDOT a fully zero-fee liquid staking token by removing its two remaining protocol fees:

Commission on staking rewards: 10% → 0%, returns 100% of staking yield to vDOT holders. This is the primary lever.
Redemption fee: 0.1% → 0%, makes exiting vDOT free.

vDOT already charges no mint fee, so once these two changes land, minting, holding, and redeeming vDOT will be free, and holders will capture the full underlying DOT staking yield.

This proposal is scoped to vDOT only. All other vTokens (vKSM, vETH, vMANTA, etc.) keep their current fees.

Current vs. proposed fees

Fee	Current	Proposed	Notes
Mint / Stake fee	0%	0%	vDOT has never charged a mint fee, no change.
Redeem / Unstake fee	0.1%	0%	Removed.
Commission on staking rewards	10%	0%	Removed, the dominant change by revenue.

The 10% commission is the meaningful number here. The 0.1% redeem fee is small in absolute terms but removing it eliminates the last point of friction and lets us market vDOT as genuinely zero-fee end-to-end.

Motivation

Liquid staking is a commoditized, fee-sensitive market. Users compare net APY across providers, and every point of commission is a direct, permanent reduction in the yield delivered to vDOT holders. A 10% commission means vDOT holders receive only 90% of the DOT staking rewards they are entitled to.

Removing it does three things:

Maximizes net APY. Holders capture the full DOT staking yield, immediately making vDOT one of the highest-net-yield DOT LSTs available.
Removes all friction. With mint already free and redeem now free, capital can move in and out of vDOT at zero cost, which tightens the secondary-market peg and lowers the risk premium on holding vDOT.
Drives TVL and integrations. A best-in-class net yield with zero friction is the strongest possible pitch for attracting TVL back into the vDOT pool and for getting vDOT adopted as collateral across DeFi.

The bet is straightforward: deeper TVL, broader integrations, and a stronger competitive position create more durable value than the fee revenue we forgo.

Strategic context

As Bifrost repositions as a chain-agnostic Staking Yield Layer and migrates its core to Ethereum, vDOT remains a flagship product and a key proof point for the thesis. Choosing to compete on net yield rather than fee extraction is consistent with our 2026 priorities, growing TVL and ecosystem integrations, and signals a clear, user-first posture. This can be packaged publicly as part of the Bifrost Liquidity Reinforcement Plan.

Foregone fee revenue on the vDOT line is treated as a deliberate growth investment rather than a loss.

On-chain execution

The two changes are not equally easy to scope to vDOT, because of how the vtoken-minting pallet stores fees:

Commission (10% → 0%) The hosting/commission fee is configured per currency via Token2(0),protocolFeeRate. Setting DOT's commission to zero affects vDOT only and can be executed immediately.
Redeem fee (0.1% → 0%) Mint and redeem fees are stored as a single global pallet-level parameter (set_fees(mint_fee, redeem_fee)).

Call Data:

0x3202088b00050800e80300000700e40b5402824f120000ca9a3b0000000000000000000000000000000000708aa3a8831067dd44fbbf318b17fa00c3285259597f3d9b136330ded07632368c01010073090000000000000000

Impact analysis

For users (positive):

Full DOT staking yield, with the 10% commission no longer skimmed off, the dominant benefit.
Free entry and exit (mint already free, redeem fee removed), supporting a tighter vDOT peg.

For bbBNC holders (tokenomics):

bbBNC Revenue and BNC Buyback: Bifrost Foundation plans to operate Polkadot Validators in-house, supplementing protocol revenue through Validator operation after DAP shift. Furthermore, when there are no protocol profits, bbBNC's revenue will be subsidized through the Bifrost Treasury.

For the protocol / Treasury (cost):

Reversible: fees can be reintroduced via a future referendum if the growth thesis does not materialize.

For competitiveness / TVL (the goal):

Positions vDOT as a highest-net-yield, zero-friction DOT LST, supporting TVL growth and broader use of vDOT as DeFi collateral.

Risks & mitigations

Risk	Mitigation
Revenue loss not offset by TVL growth	Set a review window (e.g., 2 quarters); fees are reversible by a follow-up referendum.

Voting

Aye, Remove vDOT's 10% staking-rewards commission and 0.1% redemption fee (scoped to vDOT only), executed per the confirmed on-chain mechanism.
Nay, Keep vDOT's current fee structure.

Discussion

Please leave your feedback and vote in the Subsquare thread. Once the current referendum passes, vDOT's commission and unstake fees will be set to 0 immediately, and vDOT will be exempt from all fees.