We present science cases and instrument design considerations for the BIFROST instrument that will open the short-wavelength (Y/J/H-band), high spectral dispersion (up to R=25,000) window for the VLT Interferometer. BIFROST will be part of the Asgard Suite of instruments and unlock powerful venues for studying accretion & mass-loss processes at the early/late stages of stellar evolution, for detecting accreting protoplanets around young stars, and for probing the spin-orbit alignment in directly-imaged planetary systems and multiple star systems. Our survey on GAIA binaries aims to provide masses and precision ages for a thousand stars, providing a legacy data set for improving stellar evolutionary models as well as for Galactic Archaeology. BIFROST will enable off-axis spectroscopy of exoplanets in the 0.025-1" separation range, enabling high-SNR, high spectral resolution follow-up of exoplanets detected with ELT and JWST. We give an update on the status of the project, outline our key technology choices, and discuss synergies with other instruments in the proposed Asgard Suite of instruments.