Proposal Overview

This proposal consists of two core initiatives:

1. Raising the vDOT Borrow Cap: The current vDOT borrow cap on Hydration protocol has reached its limit, restricting users' leverage opportunities. We propose increasing the cap to unlock additional liquidity.
2. 3.14 DOT Halving Joint Marketing Campaign: Around the upcoming DOT Staking reward halving (March 14) critical window, Bifrost will provide 100,000 BNC to incentivize users to mint vDOT and deposit into Giga DOT, and invites Hydration to contribute HDX equivalent to 1,000 USD to match Giga DOT mining incentives, capturing migrating user flow together.

Additional Support: Bifrost Dapp's vDOT minting page will add Hydration price reference, making it convenient for users to jump to Hydration for vDOT purchases when better prices are detected.

Background & Opportunity

1. DOT Reward Halving Window

The Polkadot network will undergo DOT Staking reward halving on March 14, 2026, presenting a historic opportunity to attract native stakers to migrate to vDOT. A significant number of users currently staking DOT natively will face reduced yields, creating strong migration incentives.

2. vDOT Borrow Cap Has Reached Limit

The vDOT borrow cap on Hydration protocol has hit its ceiling, limiting users' leverage operation space. Specifically:

• Users cannot further borrow DOT to re-mint vDOT
• This constrains the vDOT → borrow DOT → re-mint vDOT → deposit into Giga DOT looping strategy
• It impacts advanced users' capital efficiency and yield amplification needs

Proposal Details

Part 1: Raising the vDOT Borrow Cap

Proposal: We recommend that Hydration protocol raise the vDOT borrow cap from 2.222M vDOT to 3.333M vDOT.

Strategic Significance:

Dimension	Description
User Side	Unlocks leverage space, enabling users to amplify yields through the "vDOT collateral → borrow DOT → mint vDOT → deposit into Giga DOT" strategy
Protocol Side	Increases Hydration lending pool activity and protocol revenue
Ecosystem Side	Promotes deep integration of vDOT into the Hydration ecosystem, forming a "mint-borrow-reStake" closed loop

Connection to This Campaign:

While the 3.14 campaign directly incentivizes vDOT minting and depositing into Giga DOT, raising the borrow cap can indirectly amplify campaign effectiveness:

• Advanced users can leverage borrowed funds to mint more vDOT for Giga DOT mining with the same principal
• Creates a triple effect of "minting incentives + leverage amplification + LP yields"
• Enhances overall campaign participation depth and capital volume

Part 2: Hydration Joint Marketing Campaign Contribution

Proposal: We invite Hydration to contribute to Bifrost's 3.14 DOT halving marketing campaign, contribution amount: HDX equivalent to 1,000 USD.

Campaign Core Framework

Campaign Name: 「DOT Pi Day: Yield Defense」

Campaign Period: March 14 - April 14, 2026

Core Objectives:

• Primary objective: Attract Polkadot native DOT stakers to migrate to vDOT
• Secondary objective: Guide vDOT holders to deposit into Hydration Giga DOT, forming a yield closed loop

Bifrost's vDOT Minting Incentives (Campaign Background)

As background information, Bifrost will provide the following vDOT minting incentives for this campaign:

Fee Reduction

• Unstake Fee: Reduced to 0% during the campaign
• Commission Fee: Reduced from 10% to 5%

BNC Prize Pool Allocation

• Total Prize Pool: 100,000 BNC
• 70,000 BNC: Incentives for users minting vDOT on Bifrost
• 30,000 BNC: Incentives for users depositing vDOT into Hydration Giga DOT

Hydration Contribution Allocation

Item	Description	Budget
Giga DOT LP Mining Incentives	Match Bifrost's BNC rewards with HDX incentives	HDX equivalent to 1,000 USD

Incentive Distribution Plan

Giga DOT Mint-to-Earn

• Period: March 14 - April 14, 2026
• Incentive Pool:
  • Bifrost provides: 30,000 BNC
  • Hydration provides: HDX equivalent to 1,000 USD

Period	Timeframe	BNC Pool	HDX Pool	Distribution Date
Weeks 1-2	Mar 14 - Mar 27	15,000 BNC	HDX equivalent to 500 USD	Mar 28
Weeks 3-4	Mar 28 - Apr 14	15,000 BNC	HDX equivalent to 500 USD	Apr 15

Qualified Address Definition: Only addresses that mint vDOT on Bifrost AND deposit into Hydration Giga DOT during the campaign period (Mar 14 - Apr 14) are eligible for rewards.

Bilateral Benefit Analysis

Bifrost Benefits

• Expand vDOT minting volume, solidifying LST (Liquid Staking Token) market position
• Enhance vDOT utility and stickiness through Hydration's Giga DOT use case

Hydration Benefits

• Direct benefits: Giga DOT TVL growth during campaign, increased protocol revenue
• Indirect benefits:
  • Raising vDOT borrow cap → increased lending pool activity → increased protocol revenue
  • Capture high-quality DeFi users referred by Bifrost
  • Establish long-term strategic partnership with Bifrost

Execution Timeline

Date	Milestone
Before Mar 7	Hydration confirms proposal, completes HDX allocation
Mar 10	Joint announcement from both parties, warm-up begins
Mar 11-13	Warm-up period: Early migration window opens
Mar 14	DOT Pi Day: Yield Defense launches (DOT halving day)
Mar 14-27	Weeks 1-2: Giga DOT mining
Mar 28	First round reward distribution
Mar 28 - Apr 14	Weeks 3-4: Giga DOT mining
Apr 15	Second round reward distribution, campaign ends

Conclusion

This proposal represents a significant opportunity for deep collaboration between Bifrost and Hydration. Through the dual-drive of raising the vDOT borrow cap and joint marketing campaign, we can:

1. Seize the historic DOT halving window to capture migrating users together
2. Form a "mint-borrow-reStake" closed loop to enhance both protocols' performance metrics
3. Establish a foundation for long-term strategic partnership to enable future collaborations

We look forward to a positive response from the Hydration team.

Proposed by: Bifrost Team