Stride Blockchain Will Move to ATOM-Powered Security Model

Stride's native token STRD trades 0.7% higher as the transition is expected to beef up the liquid staking protocol's security by several thousand percent.

AccessTimeIconJul 19, 2023 at 5:55 a.m. UTC
Updated Jul 19, 2023 at 5:58 a.m. UTC
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Stride, the Cosmos-based liquid staking protocol, is scheduled to transition to Cosmos' interchain security (ICS) system powered by ATOM tokens from the existing stride (STRD) token model.

"The transition will likely happen on Wednesday between 17:00 UTC and 21:30 UTC at block height 4616678," Stride's contributor Ian Unsworth told CoinDesk.

"While Stride has $35 million plus in total value locked, it only has $19 million of economic security via bonded network tokens. Following the ICS transition, block production/security will be passed to the ATOM validator set, providing roughly a 11,935.2% increase on the economic security of the network," Unsworth added.

Per the official blog, the shift to ICS will boost Stride's economic security from roughly $25 million to $2.3 billion, making the liquid staking protocol more resilient to hacks.

Cosmos' interchain security leases ATOM-backed validators to consumer chains, allowing them to share Cosmos' security using ATOMS instead of their native tokens. Cosmos Hub, a blockchain intermediary among all independent blockchains created within the Cosmos network, runs a proof-of-stake consensus mechanism that involves ATOM tokens.

It means that post-transition, Stride will be secured by staked ATOM instead of STRD tokens and Cosmos' validator set will take over block production from the existing Stride validator set. Stride will essentially become a consumer chain, allowing Hub's validator to participate in its consensus. STRD will continue to have utility, generating staking rewards. At press time, the market capitalization of STRD tokens was $86.7 million, while ATOM boasted a market value of $2.73 billion, per data source Coingecko.

The transition will also impact STRD's tokenomics, given stakers have decided to reduce STRD distributed as staking rewards by 50%. Further, 15% of the STRD staking rewards will be shared with Cosmos Hub.

"STRD has a hard cap of 100 million tokens. According to the original tokenomics, in the first year, 2,608,200 STRD is emitted as staking rewards. As part of Stride’s transition to ICS, that figure will be reduced by half, to 1,304,100 STRD annualized. This reduction will be implemented in a preparatory chain upgrade prior to the transition to ICS," the official blog said.

Edited by Parikshit Mishra.


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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

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