Stride, the fluid staking protocol built on top of Cosmos, is set to undergo a significant transition from its existing token model to the Cosmos interchain security system (ICS) powered by the ATOM token. This move aims to increase the security and economic resilience of the protocol against potential hacks. The transition is scheduled to take place on Wednesday at block elevation 4616678, as confirmed by Stride contributor Ian Unsworth.
Improved Economic Security and Block Production:
Currently, Stride boasts over $35 million in total locked value, but only $19 million in economic security via tied network tokens. However, after the transition to ICS, the protocol will transfer block production and security responsibilities to the ATOM set of validators. The changes will provide a substantial 11,935.2% increase in the network’s economic security, increasing it from an estimated $25 million to $2.3 billion, according to Unsworth.
Cosmos Interchain Security Role:
Cosmos interchain security allows consumer chains like Stride to take advantage of Cosmos network security by hiring ATOM-backed validators. This system allows chains to use ATOM tokens instead of their native tokens to benefit from the security of Cosmos. In this case, Stride will transition to being secured by staking ATOM instead of STRD tokens. Cosmos Hub, which acts as an intermediary between independent blockchains within the Cosmos network, uses a proof-of-stake consensus mechanism involving the ATOM token.
Changes to Tokenomics and Staking Rewards:
After the transition, Stride will operate as a consumer chain, with Cosmos Hub validator sets participating in consensus and block production. While STRD tokens will maintain utility and continue to generate staking rewards, tokenomics will adjust. Stakers have agreed to reduce the STRD distribution as a staking reward by 50%. In addition, 15% of the STRD staking prize will be shared with Cosmos Hub.
Prep and Hard Cap Upgrades:
As part of the build chain enhancements prior to the transition to ICS, STRD emissions as staking rewards will be halved. Tokenomics originally set emissions at 2,608,200 STRD in the first year, but will adjust to 1,304,100 STRD on a yearly basis. It is important to note that STRD has a hard cap of 100 million tokens.
Stride Protocol’s transition to the Cosmos interchain security system backed by the ATOM token marks a significant step towards enhancing the economic security of the protocol. This shift will provide a substantial increase in economic security and hand off block production responsibility to the ATOM set of validators. This move demonstrates the protocol’s commitment to resilience and sets the stage for a more robust and secure liquid betting environment.