An important aspect of Stride has always been the trading liquidity available for stTokens on DEXes throughout the Cosmos. This liquidity gives stToken holders the ability to instantly swap to the unstaked token whenever they want. Given the importance of this trading liquidity, forward guidance about future incentivization has always been given, so that stToken holders and stToken liquidity providers are never surprised.
The current incentivization program began on April 7th and will conclude on June 5th.
At the end of the current program, a new 30 day program will begin. This blog post gives everyone transparency into what is going on, and gives reliable guidance about the future of stToken incentivization.
Past and future of stToken trading liquidity incentivization
Since the launch of the first stToken in early September 2022, the Stride DAO has reliably incentivized stToken liquidity on DEXes throughout the Cosmos. The need for incentives has increased as the number of stTokens has expanded. There are currently eight stTokens, most with at least one incentivized liquidity pool.
Since April, STRD incentives have been supplemented with incentives in the form of various other tokens. The Stride DAO has the capacity to deploy non-STRD tokens as incentives thanks to its decision in February to diversify the STRD incentive pool. In an OTC deal, 3M STRD was swapped for 1.5M USDC, with the purchasers agreeing to a one-year lockup and subsequent vesting schedule. Of that 1.5M USDC, roughly 750K remains in the Stride DAO incentive pool.
The Stride DAO will always continue to incentivize strategically important stToken pools on DEXes throughout the Cosmos. Supplementing STRD incentives with various other tokens, acquired using the USDC in the incentive pool, reduces STRD emissions. Furthermore, various communities across the Cosmos - such as Osmosis, Evmos, and Shade - are now helping to incentivize stToken pools. And communities are also beginning to deploy protocol owned liquidity to stToken pools, such as Cosmos Hub’s recent signaling proposal to provide 450K ATOM to an stATOM liquidity pool.
Combining these several methods of attracting and maintaining stToken trading liquidity, stToken liquidity is becoming more and more sustainable. Sustainably ensuring stToken trading liquidity will enable Stride to continue to serve the Cosmos indefinitely, by providing the most secure, most useful, and most user-friendly liquid staking experience possible.
The 30 day program
Here is what the next 30 days of Stride DAO stToken incentives will look like, starting June 7th:
As compared with the previous 60 day program, this new 30 day program has a slightly lower STRD and USDC burn rate.
As mentioned above, roughly $750K USDC remains in the Stride DAO incentive pool. Therefore, at the burn rate in the new 30 day program, the remaining USDC will last 100 days, starting June 7th. However, depending on subsequent programs, that 100 day runway may shorten or lengthen.
Given market conditions, it is likely that in the coming months the Stride DAO will have another opportunity to swap additional STRD in the incentive pool for USDC via an OTC deal. As always, it will be up to STRD stakers to make this potential decision.
A liquid staking token isn’t really that liquid without trading liquidity! That’s why the Stride DAO has always ensured sufficient trading liquidity for stTokens. What’s more, out of respect for stToken users and stToken liquidity providers, forward guidance about Stride DAO liquidity incentives has always been provided.
The Stride DAO will continue to indefinitely ensure stToken trading liquidity and will always provide adequate forward guidance on incentives. By ensuring stToken trading liquidity in various different ways, as discussed above, liquidity is being ensured in an increasingly sustainable manner.