An Overview: The Stride Ecosystem
Networks governed by the Proof of Stake mechanism have revolutionized how users interact with products and services in the web3 space. PoS not only enabled the mass adoption of defi, but also provided a novel way of passively earning from one’s vested assets through staking. However, users must decide between staking their tokens for passive yield or participating in DeFi, thus exposing themselves to greater risk in the pursuit of higher yields. To address this, proof-of-stake ecosystems such as Ethereum and Solana have long been using staking derivatives, and the Cosmos ecosystem is further advancing this effort with the launch of Stride. Stride is a state-of-the-art, multichain liquid staking experience that allows users to liquid-stake their assets on any Cosmos chain.
Stride, founded in March 2022, is a blockchain protocol led by Vishal Talasani, Riley Edmunds, and Aidan Salzmann. The protocol provides liquidity for staked assets, enabling users to earn both staking and DeFi yields across the Cosmos IBC ecosystem. Built using Cosmos SDK and Tendermint, Stride leverages the Inter-Blockchain Communication protocol, Interchain Accounts and Interchain Queries to allow users to liquid stake any IBC-compatible Cosmos SDK native appchain token. As of now, Stride has provided liquidity worth $10 Million USD in the form of ST, quickly taking it to the first spot of the Cosmos liquid staking hub in terms of rankings.
Currently Stride provides support for the largest Cosmos chains: they launched with ATOM and extended compatibility with high volume assets like OSMO, JUNO, STARS, and INJ. Stride plans to support all IBCv3-compatible tokens as “st”-Tokens. With the ultimate aim to expand their reach throughout the Cosmos ecosystem, the network plans to onboard the following chains and tokens in the coming months:
How does it work?
Under the hood, the Stride protocol works by exchanging native assets (such as ATOM) for derivative assets (such as stATOM). Staking derivatives like stATOM are a digital voucher for underlying ATOM. stATOM can be traded and used in DeFi. This can be done while ATOM staked with Stride accrues staking rewards. These rewards accumulate in real time and there is no minimum amount to stake. stATOM can be transferred or sold without having to either wait through a lengthy unstaking period or foregoing staking rewards. Stride also charges no gas fees, a decision that only reinforces their commitment toward facilitating a seamless liquid staking experience.
The Stride protocol has automated logic that stakes the underlying tokens on users’ behalf. If the user ever desires to redeem their minted stATOM for their native staked ATOM, the stATOM can be burnt using the protocol. This will trigger an unbonding of the native ATOM. Once the unbonding period elapses, the user will receive their native ATOM in their wallet. Please note that the process outlined applies to all chains and tokens supported by Stride with ATOM being used as an example for the sake of this report.
Stride lets users redeem the stTokens for the original asset at any time. This ability helps mitigate risks of locked-in liquid staking, which can render users stranded and with more risk than benefit if the staked and original assets start to decline in value.
The native token for the Stride network is called ST. ST is the staking and governance token for Stride. The token, however, can be found written in two different ways: STRD and ST. In their attempt to enhance the Nakamoto coefficient of the network, the network has vouched to distribute 50.3% of the ST token supply to the community across various airdrops, staking rewards, and incentive programs. Given ST’s significant influence on the network operations through governance, this initiative hands the reigns to the Stride community, truly upholding the ethos of the decentralized web. A more comprehensive explanation of the token allocation in the network is illustrated below:
At genesis, the circulating supply of ST was 9,200,000 ST. The maximum supply of ST is capped at 100,000,000 ST. As revealed by the Stride team, 50% of the set cap will be in circulation by the middle of next year, and almost 95% will be in circulation by the end of its third year. Additionally, a total of 31,000,000 ST, or 31% of the total supply, is expected to be distributed as incentives.
The ST token serves two critical functions:
- ST holds governance power:
It can be used to provide a secure and transparent voting process for the selection of validator sets for Stride’s host chain. As the TVL of Stride sees new highs every day, the network is making sure to take appropriate measures to enhance and maintain its governance strategies. Currently, ST holders can decide the validators to stake liquid staked tokens with, how to weigh said validators, how to distribute ST incentives, how to spend community pool funds, what additional features should be designed for the protocol, and so on.
- ST is the fee collected by the network:
Stride collects 10% of the staking rewards of all liquid staked tokens. This amount serves as a fee for the multichain liquid staking provided by Stride. Although the Stride Foundation is the default recipient of all generated protocol fees, ST-holders exercise the power to other ways of handling protocol revenue. Further information on the tokenomics of Stride and the various ways to manage protocol revenue can be found here.
Trends and Prospects:
In early August, Stride completed a $6.7 million seed round and announced that they will be broadcasting ST tokens to ATOM, OSMO, and JUNO pawns. On September 6, the protocol was launched on the main net. Despite the onslaught of hawkish market policies, the token was warmly welcomed by the web3 aficionados, valued at ~$1.6 at launch. However, the following weeks saw a steady decline in its value due to damage inflicted on the general market sentiment by news and speculation of some fraudulent activities in the sphere.
In early November, Stride also announced the details of the STRD token airdrop. This airdrop accounts for 63.4% of the 63,00,000 ST set aside for the community airdrops and was made live in the last week of November 2022. The STRD airdrop programs are divided into three categories: server chain airdrop, conversion cost refund program, and test net reward. Stakers of ATOM, OSMO, JUNO, STARS, and INJ were eligible to receive the airdrop. Following the airdrop, the native asset saw a 48% jump from its all-time low of $0.26 to $0.50. Having been live only for a couple of months now, the analysis of the on-chain metrics of the network would be premature.
Recently, Stride secured a partnership with Coin98, a non-custodial, multi-chain wallet and Defi gateway. With the integration of Stride in the Coin98 Super App users can earn ATOM, OSMO, JUNO, and STARS for lucrative liquid yields on Stride. Provided the interoperability offered by Cosmos’s IBC, as more such collaborations gain form, the network holds tremendous potential to emerge as one of the leading liquid staking providers in the web3 market.
Since its launch, Stride has seen significant growth in terms of adoption and usage. According to CoinGecko, Stride is currently ranked in the top 20 of all Cosmos-based projects in terms of market capitalization. This shows that Stride is becoming increasingly popular among developers and investors.
As the development of Stride continues, we can expect to see more developers and users adopt the platform in the near future. This will in turn lead to more applications being built on Stride, which will further increase its visibility and user base. Ultimately, we can expect Stride to become a major player in the blockchain space in the coming years.