Bifrost has initiated the process of repaying the Polkadot Treasury's 1 million DOT liquidity loan. The latest proposal shows that this treasury-backed funding has generated 53,185 DOT in yield over the past year, representing an annualized return of approximately 5.3%.
The funds are deployed in two parts.
The proposal indicates that the loan was initially split between staking and liquidity operations. Approximately 672,469 DOT were converted into Bifrost's liquidity staking token vDOT, and approximately 327,455 DOT were used to provide liquidity.
Bifrost stated that the staking portion directly generates returns, while the liquidity portion is used to improve the trading depth of vDOT within the Polkadot ecosystem and expand the use of liquidity staking in DeFi scenarios.
Related positions began to be withdrawn.
According to the proposal, Bifrost is gradually unwinding the deployment of these funds, including withdrawing funds from the DOT-vDOT liquidity pool, unstaking vDOT, and preparing to return the generated interest to the Polkadot Treasury.
This means that the year-long Treasury liquidity support program is nearing its end, with the focus shifting from expanding ecological liquidity to recovering funds and returning benefits.
Treasury funds place greater emphasis on efficiency of use
In its proposal, Bifrost described the loan as a more transparent and traceable example of treasury fund deployment. Its core approach is to provide tangible returns to the ecosystem's treasury while supporting DeFi infrastructure.
- The loan amount is 1 million DOT.
- The return over the past 12 months was 53,185 DOT.
- The overall annualized return is approximately 5.3%.
The proposal currently shows unanimous support from voters for the repayment arrangement. This also reflects that parts of the crypto ecosystem are more actively exploring how DAO treasury funds can be used in on-chain infrastructure.












