Overview
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 from liquid staked token to unstaked token whenever they want. Given the importance of this trading liquidity, forward guidance about future incentives has always been given, so that stToken holders and stToken liquidity providers are never surprised.
The current Incentive Program began on August 5th and will conclude on September 3rd.
On September 4th a new thirty-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 nine 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 200K will remain in the Stride DAO incentives pool after the expenses of this new Incentive Program.
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. Also, Cosmos blockchain DAOs and other blockchain-aligned entities are beginning to deploy their own liquidity to stToken pools, reducing the need for liquidity incentives. To give a few examples, Cosmos Hub, Evmos, and Juno DAOs have deployed protocol owned liquidity to stToken pools.
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 thirty-day program
Here is what the next 30 days of Stride DAO stToken incentives will look like, starting September 4th:
* Incentives deployed to Evmos and Sei are not synchronized with the overall incentive plan. For details on incentives to Evmos, read this Evmos governance proposal. For details on incentives to Sei, read this Astroport governance proposal. All other incentivized pools are synchronized to the same thirty-day plan.
Observations
As compared with the previous thirty-day program, this new thirty-day program has reduced STRD emissions by roughly 20%.
As mentioned above, roughly 200K USDC will remain in the Stride DAO incentive pool at the conclusion of this new incentive program. Therefore, at the burn rate in this new thirty-day program the remaining USDC will last ninety days, starting September 4th. Depending on subsequent programs, that ninety-day runway may lengthen or shorten.
Depending on market conditions, in the future the Stride DAO may 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.
Conclusion
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.