Enhancing Bifrost Governance: A Proposal for Incentive Mechanisms

The Bifrost protocol is entering a new phase, focusing on buybacks and profit sharing. As we evolve, ensuring that long-term participants are also active governance contributors is paramount. To address current challenges in governance participation and foster a more engaged community, we are proposing the introduction of explicit governance incentive mechanisms.

This proposal seeks community consensus on whether Bifrost should integrate an incentive structure within its existing on-chain governance framework. We are presenting two alternative models for community consideration and will determine the final implementation path through an on-chain vote.

The Need for Governance Incentives

Currently, Bifrost’s governance faces several practical challenges:

• Limited Intuition for bbBNC Holders: Participation for those holding bbBNC is not sufficiently intuitive.
• Awareness Gap: Many BNC and vBNC holders have limited awareness of governance entry points and the value of their participation.
• Engagement Discrepancy: There is a noticeable gap between the activity in proposal discussions and the actual voting turnout.

To overcome these hurdles, we aim to achieve two key objectives through product-level UX upgrades combined with explicit economic incentives:

1. Accessibility: Make governance participation easier and more accessible for all users.
2. Integration: Make governance behavior a meaningful part of the protocol’s long-term incentive structure.

Upcoming Product Upgrades

Regardless of the chosen incentive mechanism, Bifrost Dapp will undergo significant governance-related product upgrades. Key features will include:

• A clear proposal list with an overview of voting data.
• Direct governance participation using bbBNC, vBNC, or BNC.
• A transparent display of active votes and lock status.

If Option A is selected, users will see a clear visualization of how their governance activity impacts bbBNC APY ranges. If Option B is chosen, dedicated pages for lottery ticket accumulation and draws will be implemented, showing prize pool sizes, draw frequencies, and personal ticket balances.

Incentive Mechanism Comparison: Two Paths Forward

The community will vote on one of the following two referenda:

Option A: Governance Participation Affects bbBNC APY

• Incentive Type: Long-term, yield-based incentive.
• Incentive Strength: Directly tied to the core bbBNC yield.
• Target Users: Long-term bbBNC holders and committed participants.
• Impact on Behavior: Encourages sustained governance engagement.
• On-chain Changes Required: Yes, involving bbBNC module and reward logic upgrades.
• Development Complexity: High.
• Estimated Time to Launch: ≥ 6 months.
• Parameter Flexibility: Lower after deployment.
• Short-term Participation Boost: Limited.

Consideration: If the community prioritizes long-term alignment between governance and economic incentives, and is willing to accept a longer development timeline, Option A provides a more structurally integrated solution.

Referendum Link: https://bifrost.subsquare.io/referenda/189

Option B: Governance Participation Earns Lottery Tickets

• Incentive Type: Short-term probabilistic rewards.
• Incentive Strength: Independent reward pool.
• Target Users: Broader BNC/vBNC user base.
• Impact on Behavior: Encourages episodic participation.
• On-chain Changes Required: No (front-end and campaign configuration only).
• Development Complexity: Low.
• Estimated Time to Launch: 2 months.
• Parameter Flexibility: High, adjustable per campaign.
• Short-term Participation Boost: Strong.

Consideration: If the community prioritizes fast deployment and near-term participation growth, and prefers to test incentive effects quickly with low technical risk, Option B is more suitable as an immediately actionable solution.

Referendum Link: https://bifrost.subsquare.io/referenda/190

How to Participate

We urge all Bifrost stakeholders to review the details of each proposal via the provided referendum links. Your vote is crucial in shaping the future direction of our governance. Please cast your vote on SubSquare by selecting AYE for the option you support and NAY for the other.

Let’s work together to build a more robust and participatory governance system for Bifrost.