Onboard stATOM as collateral


This proposal aims to onboard stATOM as collateral for IST. stATOM is a liquid staked token (LST) of ATOM, issued by the Stride blockchain.

Throughout DeFi, it is becoming very popular to back decentralized stablecoins with LSTs. When unstaked tokens are used as collateral, such as ETH or ATOM, users effectively forfeit their staking rewards. But when using an LST as collateral, users get to keep their staking rewards. This increased capital efficiency makes it much more attractive to mint stablecoins with LSTs.

Stride’s stATOM has the most users, most integrations, and deepest onchain liquidity out of all the ATOM LSTs. Furthermore, the Stride blockchain has numerous advanced security features, such as interchain security (ICS). Adding stATOM as collateral for IST would be a good next step for Inter Protocol.

This proposal is being put forward by the Stride Association.



The collateral in question, stATOM, is issued by the Stride blockchain. The Stride blockchain has been processing blocks since September 2022, which is also when the first stATOM was minted. stATOM is a liquid staked token representing staked ATOM, and is fully backed by ATOM at all times.

The first Stride testnet was launched in July 2022, and mainnet followed shortly after. As the first ATOM LST native to the Cosmos, stATOM quickly became a popular and trusted Cosmos token. Today, stATOM is integrated on nearly every major Cosmos DeFi chain, and represents over 85% of ATOM LST market share. In July 2023, the Stride blockchain transitioned to interchain security (ICS). Through this security arrangement, the Stride chain now has over $2 billion of economic security - which is an extraordinarily high level of economic security.

stATOM on Agoric

As an ICS-20 token minted on Stride chain, stATOM can be bridged to Agoric through IBC. The transfer channels are: Stride channel-110, and Agoric channel-48.

Token Economics


The supply of stATOM is currently 2.8M. There is no supply schedule and no allocations; rather, stATOM is minted and burned by users - similar to IST. In order to mint stATOM, users must deposit ATOM. When stATOM is burned, users redeem the underlying ATOM. As such, stATOM is fully backed by ATOM at all times.


The staking rewards earned by the staked ATOM underlying stATOM are auto-compounded and accrue to the value of stATOM. Due to this feature, the amount of ATOM redeemable by burning one stATOM constantly increases. And so the value of stATOM against ATOM continually rises. At genesis, 1 stATOM could be used to redeem 1 ATOM. But due to the aforementioned auto-compounding staking rewards, today 1 stATOM can be used to redeem 1.193 ATOM. Handling staking rewards this way makes it easy for applications to integrate stATOM.

The way stATOM works has never changed. As a crucial building block of Cosmos DeFi, it’s likely stATOM never will change.

As a representation of ATOM, stATOM inherits the properties of ATOM. Since ATOM is a top-thirty cryptocurrency with high confidence and minimal volatility, these properties are passed down to stATOM, making stATOM likewise very suitable for collateral.

stATOM control

The Stride blockchain - and by extension the stATOM token - is controlled by the STRD governance token. Any changes to the current functionality of the Stride blockchain must be proposed in an open and transparent manner, and STRD holders must vote in favor.

In addition to this standard governance process, as an ICS chain Stride is run by the Cosmos Hub validator set. If STRD holders pass obviously malicious code, validators can choose not to run that code. (Of course, the Cosmos Hub validators that run the Stride chain are constrained by Tendermint Consensus. If a small group of validators attempted to act maliciously, its ATOM stake would be slashed.)

stATOM documents

Stride Documents: Stride: The Liquid Staking Zone

Stride Audits: GitHub - Stride-Labs/audits

Stride Labs Github project: GitHub - Stride-Labs/stride: Stride: Multichain Liquid Staking


Currently, Inter Protocol uses a custom oracle implementation for the price of ATOM. That solution is described on the Inter Protocol website, here.

It is recommended that Inter Protocol use this existing oracle implementation to retrieve the price of stATOM, pulling stATOM price data from the Osmosis stATOM pool and the Neutron stATOM pool.

Specifically, the oracle flow should follow these three steps. First, Inter Protocol’s Oracle Network Operators should each provide an average stATOM price in ATOM drawn from the Osmosis and Neutron stATOM pools (for example - here). Second, Agoric’s Fluxaggregator smart contract should average out the price feeds and calculate a thirty-minute TWAP. Third, the Fluxaggregator should multiply the price of stATOM in ATOM by the dollar price of ATOM, which is already available on the Agoric chain. This process would provide a continuous dollar value for stATOM, which could be used for stATOM liquidations.

Note that this is merely one recommendation. It is a starting point. If the Economic Community and the Agoric community are broadly in favour of stATOM as collateral, then Stride devs, Agoric devs, and EC members can discuss this recommended oracle implementation in more detail.

Financial characteristics


To reiterate, stATOM is a liquid staked token with an indeterminate supply. Users may mint or burn stATOM at will. All stATOM in existence has been created in the same way, namely through users minting it by depositing ATOM with Stride. The entire stATOM supply is circulating.

Trading venues

As the most popular ATOM LST in the Cosmos, stATOM is traded on DEXes throughout the Cosmos. All of the following DEXes are hosted on IBC-enabled chains within the Cosmos ecosystem.

*The listed stATOM/ATOM liquidity on Neutron will be available in approximately one week, pending the passing of this Cosmos Hub governance proposal.

stATOM history

Below is a chart of stATOM denominated in ATOM. As you can see, stATOM gradually appreciates against ATOM at the staking reward rate - due to auto-compounded staking rewards accruing to the value of stATOM:

And below is a chart of the stATOM supply, denominated in dollars. Note that stATOM’s dollar market cap has been relatively stable despite ATOM’s softening price this summer, showing that the amount of stATOM in circulation has been increasing (indeed, as of August 3rd it is at an all time high).

Legal characteristics

As a Cosmos SDK blockchain, the Stride blockchain has a governance system whereby the chain is effectively a DAO. This DAO has no legal dimension and is completely autonomous.

The Stride Protocol Association, a Swiss entity, received an allocation of STRD at genesis.

Portfolio characteristics

stATOM makes sense for Inter Protocol

There is a strong business case to be made for adding stATOM as collateral.

It boils down to this: stATOM is the best collateral available in Cosmos that does not 1) forfeit staking rewards and does not 2) entail bridge risk.

Unstaked ATOM itself is of course the best collateral native to the Cosmos, having a large and stable market cap and Cosmos Hub being considered a serious and resilient blockchain. And this is why Inter Protocol’s first vault was for ATOM. But the downside to using unstaked ATOM as collateral is the forfeited staking rewards. Given ATOM’s 20% APR staking the current 250% collateralization ratio for the ATOM vault, $1 of IST minted with ATOM results in over $0.50 of forfeited staking rewards per year. In other words, a hidden fee of 50% APR. The lackluster usage of the ATOM vault so far can perhaps be attributed to this high cost of forfeited staking rewards.

As much bigger tokens, BTC and ETH are of course preferable to ATOM as collateral. However, neither of these tokens are available natively within the Cosmos ecosystem, meaning that bridged BTC or ETH would be required. Regardless of the considerable security improvements that bridges have made in the past year, it remains a fact that hundreds of millions of dollars worth of crypto was hacked from bridges last year. To pick an example close to home, the Nomad bridge hack last year devastated the burgeoning Evmos DeFi ecosystem, as Nomad was the canonical Ethereum <> Evmos bridge.

This is why stATOM is such a popular collateral token in the Cosmos - neither does it require users forfeit their staking rewards nor does it entail bridge risk. And stATOM inherits the properties of ATOM that make it good collateral.

stATOM backing other Cosmos stablecoins

Notably, of the largest Cosmos CDP stablecoins are significantly backed by stATOM. This shows that there is strong product-market-fit for backing Cosmos CDP stablecoins with stATOM. This data strongly suggests that the supply of IST would meaningfully increase if stATOM were introduced as a collateral option.

On Ethereum

As a relevant data point, consider that MakerDAO accepts the premier LST of ETH, Lido’s wstETH. Marker issues DAI, Ethereum’s premier CDP stablecoin. In fact, just recently wstETH collateral backing DAI eclipsed ETH collateral. See the blow chart:

For Inter Protocol, the example of Marker and wstETH can be considered a proof of concept. Clearly, users have a strong desire to back CDP stablecoins with LSTs, due to the increase in capital efficiency. And just as on Ethereum, in the Cosmos it makes sense for IST to be backed by the premier LST of the main store of value token - stATOM.

stATOM collateral parameters across Cosmos

With regard to the proposed parameters for the Inter Protocol stATOM vault, it is useful to refer to the existing Cosmos DeFi landscape. Multiple different leverage applications operated by different teams have been facilitating stATOM collateralization for over nine months. So far, none of these applications have suffered bad debt due to suboptimal parameters - which is very reassuring. See the following table.

Proposed parameters for stATOM on Inter Protocol

Given this context, it is proposed that Inter Protocol implement these parameters for its stATOM vault:

  • Collateralization ratio: 180%
  • Mint fee: 0%
  • Stability fee: 1%
  • Initial IST cap: 500,000

These parameters would be very safe relative to the existing Cosmos DeFi landscape. Moreover, these parameters would still be competitive. With no mint fee and a stability fee of just 1%, Inter Protocol would have a relatively low rate for stATOM. Combined with Agoric’s / Inter Protocol’s strong reputation and well-known professionalism, this could make Inter Protocol one of the most popular applications for leveraging stATOM, expanding the supply of IST greatly.

stATOM risks

All DeFi entails risk. It is the job of DeFi applications to mitigate these risks as much as possible. That said, using stATOM as collateral does carry certain risks - but they have all been substantially mitigated.

Though stATOM inherits the price stability of ATOM, there remains the risk of the price of stATOM deviating from its ATOM backing. While stATOM is always fully backed by ATOM, users must wait approximately twenty-one days to redeem the underlying ATOM. In extreme market conditions, this latency could lead to the price of stATOM diverging from the price of ATOM, making the former temporarily more volatile than the latter.

However, this risk is minimal. First, stATOM has deep liquidity on several DEXes throughout the Cosmos - by far the deepest of any ATOM LST. Second, stATOM is a popular, trusted, and well-known ATOM LST. This wide familiarity means that when stATOM falls slightly in value against its underlying ATOM, many small and large entities are quick to arbitrage the price of stATOM back to par. And as Stride and Cosmos DeFi continue to grow, it’s likely stATOM trading liquidity will continue to increase.

As proof of the above assertions, consider the following chart. It shows that the value of stATOM relative to its backing ATOM has been remarkably stable since stATOM’s launch last September:

What risk associated with stATOM’s parity to its underlying ATOM may remain is further reduced when stATOM is only lent and not borrowed, which would be the case with Inter Protocol. When users can’t borrow stATOM, that means upward price manipulation poses zero risk. Finally, using a quality oracle that averages the price of stATOM over a period of time can further reduce risk.

Beyond the risk of stATOM’s price deviating from its underlying ATOM, there is the risk that the Stride blockchain is somehow imperiled. But again, a wide array of precautions make this risk minimal. Most prominently, Stride has adopted interchain security, giving it an extraordinary level of economic security. Stride’s code-base has been fully audited by three separate security firms, and Informal Systems has been retained to provide continuous auditing. And Stride is a minimalist chain, like the Cosmos Hub. Since Stride only does liquid staking and nothing else, it has few moving parts and a low attack surface - relative to other Cosmos chains. Lastly, if something were to go wrong, Stride has IBC rate-limiting, which would strongly limit potential losses.

In addition, Stride currently checks invariants every block. If an anomaly is detected, the chain is halted to protect against malicious transactions. Every time a user liquid stakes, Stride checks that the exchange rate between native assets and liquid staked assets is within reasonable bounds. And Stride has a rigorous five-step deployment process for any mainnet changes, to ensure that upgrades work as expected and no core functionality is ever altered unexpectedly.

There is no way to change the code of Stride blockchain, aside from the open, transparent, and decentralized method of Tendermint Consensus. Stride’s liquid staking logic has no admin access and no multisigs.

Final thoughts

In conclusion, adding stATOM as collateral for IST would be a good next step for Inter Protocol.

stATOM neither forfeits staking rewards nor entails bridge risk, and it inherits the qualities of its underlying ATOM. For these reasons, stATOM has become a hugely popular collateral token for DeFi applications throughout the Cosmos.

By implementing safe and competitive parameters for the stATOM vault, Inter Protocol could possibly become a major destination for leveraging stATOM, expanding the supply of IST greatly.

Now… let’s discuss! Everyone is welcome to ask questions and share comments. Looking forward to a fruitful discussion about how Agoric and Stride can work together to advance Cosmos DeFi.


Thanks for this excellent proposal!

Agoric OpCo doesn’t weigh in on the economic merits of specific collateral onboardings for Inter Protocol, but I wanted to provide a response from the engineering side. We are collecting the engineering work that would be required for this onboarding and working out a test plan. Moving from 1 collateral type to 2 collateral types implies some changes and effort that likely won’t be necessary for future collateral onboardings. All expected changes are client side, so this shouldn’t require contract upgrades unless issues are found in testing.

We’ll also help to flesh out a test plan that the community can drive for new onboardings moving forward.


One follow-up here:

Specifically, the oracle flow should follow these three steps. First, Inter Protocol’s Oracle Network Operators should each provide an average stATOM price in ATOM drawn from the Osmosis and Neutron stATOM pools (for example - here). Second, Agoric’s Fluxaggregator smart contract should average out the price feeds and calculate a thirty-minute TWAP. Third, the Fluxaggregator should multiply the price of stATOM in ATOM by the dollar price of ATOM, which is already available on the Agoric chain. This process would provide a continuous dollar value for stATOM, which could be used for stATOM liquidations.

I want to be sure we aren’t overspecifying the oracle approach / engineering changes. Simply Staking has been in contact with the Economic Committee to discuss approach, which as far as Agoric OpCo understands would live offchain in the oracle node logic. If on-chain contract changes are required, as the above wording suggests, then the implementation time would be pushed out. Agoric OpCo is not working on the belief that these contract changes are needed.


Thanks for the clarifying question.

The proposed oracle solution above is really more of a suggestion, not a requirement.

The best source for the price of stATOM is a combination of the stATOM pools on Osmosis and Neutron. With this as the source, there are many conceivable ways to process the raw price data and provide it on the Agoric chain.

Given Simply Staking is heavily involved in providing the price of ATOM on Agoric, we’re confident in whatever approach they ultimately decide to take for stATOM.


A new Stride <> Agoric channels has been opened for the integration

chain-id: stride-1
client-id: 07-tendermint-129
connection-id: connection-118
channel-id: channel-148

chain-id: agoric-3
client-id: 07-tendermint-74
connection-id: connection-68
channel-id: channel-59

It would be highly appreciated if any of current validators could help in relaying those channels. Your support in this matter would be of immense help.


Having expressed interest in LST vaults for ATOM, I am happy to see this proposal!

I have been testing the addVault proposal flow with some help from @dckc. The proposal includes adding stATOM to vbank, creating an oracle/price feed, and adding a new vault collateral type.

We are testing on ollinet and (soon) devnet, and coordinating in this repo and the #dev and #devnet Discord channels. One testing flow involves a fake ibc_denom (“toy_statom”) and another using the real denom / live ibc channel.

Devnet validators - we’ll probably reach out via discord to coordinate a voting on the proposal.

@Kristaps_Jahimovics - thanks for setting up the ibc channel!

If any validators run both Agoric Devnet and Stride (Devnet?) validators, it may be worthwhile to set up a relayer for more thorough testing. If the Stride team has guidance in this area (getting “real” test stuatom) or would like to coordinate - that would be greatly appreciated!


I see that there are no longer free transactions on Stride, and that transactions can be paid in either STRD, stATOM, or stOSMO.

If stATOM becomes an IST collateral asset, will Stride allow for transactions to be paid in IST?

Hi everyone, as @yamrani has mentioned in an earlier thread, the EC has commissioned a report from Gauntlet into stATOM. The stATOM report provided by Gauntlet is available here.

The report outlines Guantlet’s analysis of the economic characteristics of stATOM and suggests some appropriate parameters. It is the EC’s view that subject to further and ongoing analysis - particularly as the process of onboarding stATOM progresses - these parameter recommendations are an appropriate starting point. (@RedRabbit - we will inquire into stkATOM and qATOM report but I believe they will be viewed as different outputs.)

The EC has been particularly focused on identifying best structure for an oracle. As @francescoSimply has advised, this seems to be the Stride redemption price. Francesco would you mind updating the community on the Simple Staking’s view about this approach and the appropriate safety mechanisms?

The EC would very much like to see stATOM subject to appropriate testing in testnet conditions, as @0xpatrick has outlined. If the community chooses to onboard stATOM, we look forward to supporting this new collateral type.


Hey @chrisberg and @0xpatrick, happy to give an update on our end, following our research and meetings with the EC/Stride.

We investigated the 2 methods of sourcing stATOM pricing:

  • Stride’s onchain stATOM redemption rate
  • DEX stATOM TWAP pricing

Following this, we reached the conclusion that the redemption rate is the more reliable method for the following reasons:

  • Stride’s redemption rate is stable.
  • Onboarding stATOM
  • The rate is the true redeemable value in ATOM of stATOM, effectively making it the primary market. A vault liquidator will be able to redeem this exact amount of ATOM.
  • Relying on DEX pricing is problematic due to the dependency on sufficient liquidity and the stability of the DEX markets, which, at this point, is not consistently reliable.

By onboarding stATOM as IST collateral, there’s an inherent trust placed in the security of Stride. Therefore, leveraging the on-chain Stride redemption rate doesn’t introduce any additional risks beyond what’s already accepted.

About the redemption rate:

  • It’s determined by the ratio of existing ATOM to stATOM on the Stride network, post protocol fees.
  • The rate is updated every 6 hours. Within these 6 hours, any redemptions of stATOM are done at that given stATOM:ATOM ratio.
  • A governance-gated parameter exists to halt the chain if the rate deviates outside the 1-1.5 range. We’re incorporating this limit into the oracle middleware to prevent any anomalies that might lead to a price submission outside this range. If this range is breached, the oracle software will error, until the operators triage the issue and adjust the limits accordingly.

On the testnet, our current price feed operates using the following procedure:

  1. The oracle operator fetches the current redemption rate from their Stride RPC.
  2. Multiple ATOM:USD price providers are queried and the median ATOM/USD is taken.
  3. These values are then multiplied to determine a final stATOM value.
  4. Individual operators then submit their final prices on-chain, and these multiple inputs are aggregated using a median operation.

We’ll be coordinating with the other oracle operators to get this feed set up on devnet, and gather further feedback from everyone involved.

Let me know if you have any other questions and thoughts please!


We’ll be talking about stATOM testing in dev office hours, starting in a few minutes.

Sorry for short notice.

1 Like

notes and recording of office hours are available:

The stATOM testing topic comes up at around 23:30 in the recording. We discussed a few other things first.

devnet stATOM is not quite open for business yet. I goofed and messed up the original IBC channel / denom, and we’re learning what it takes to recover from that :slight_smile:

1 Like

stATOM is now live on devnet, thanks in large part to @0xpatrick :

We don’t have an stATOM faucet on devnet, but if you come to discord and ask around, we can send you some.


Hi BLD and IST Community -

I wanted to provide a quick update on stATOM support in Inter Protocol Vaults from the Agoric OpCo side. I.e., “WEN stATOM?? WTF why is it taking so long?”

After multiple testnet deployments of the collateral addition, we found an intermittently-occurring high severity issue with liquidation auctions in one testnet. This issue took a bit of investigation to isolate and root-cause. In combination with product security, the team coalesced around a plan last week that will require additional effort that wasn’t previously planned.

This process has been complicated by the simultaneous work needed to prepare for the Agoric platform’s first third-party partner launch - the KREAd dapp by Kryha. KREAd is targeting a launch ahead of CosmoVerse (October 2nd), and so we’ve prioritized completing required platform work (see walletFactory upgrade vote!) as well as contract-level assistance. Once that effort is complete, executing the plan for stATOM becomes the team’s highest priority.

Looking forward, adding new vault collaterals should be considerably faster. The stATOM launch required client side work that won’t need to be repeated, and also blazed the trail for testing and operational processes, and exposed issues like the one above. We also are excited to have onboarded additional help on Inter Protocol development from BytePitch, which will drive feature enhancements moving forward.

We appreciate the community’s patience while we juggle a number of exciting launches and upgrades.



Thanks for the great update, @rowland

Good things come to those who wait.

1 Like

Hey all, I am collaborating with folks from OpCo and DCF to get this live. Our current plan:

Emerynet Proposal: Today, 10/13
Mainnet Proposal: Monday, 10/16
Mainnet Go-live: Thursday, 10/19, pending a successful vote

The IBC Denom for stATOM on agoric-3 we are planning to include in the proposal is:

$ agd --node https://main.rpc.agoric.net:443 query ibc-transfer denom-trace ibc/B1E6288B5A0224565D915D1F66716486F16D8A44BF33A9EC323DD6BA30764C35
  base_denom: stuatom
  path: transfer/channel-59

Great work putting all the details together.

Release 2023-13-10-emerynet-8 · 0xpatrickdev/agoric-vault-collateral-proposal · GitHub ce8d580


Looks like further details on getting to a mainnet on-chain proposal for stATOM are happening in the CoreEval Governance category: