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 June 7th and will conclude on July 6th.

On July 7th, 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.

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Past and future of stToken trading liquidity incentivization

Since the launch of the first stToken in early September 2022, stToken liquidity on DEXes throughout the Cosmos has been reliably incentivized. 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. Additional non-STRD incentives can continue to be deployed, thanks to Stride governance's 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 500K will remain in the Stride incentives pool after the expenses of this new Incentive Program.

Strategically important stToken pools on DEXes throughout the Cosmos will always continue to be incentivized. 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.

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Cosmos Hub’s POL on Astroport Neutron

On June 27th, Cosmos Hub is set to deploy 450K ATOM as protocol owned liquidity to an stATOM/ATOM pool on Astroport Neutron. This liquidity is expected to remain there indefinitely.

Osmosis currently hosts the bulk of stATOM trading liquidity, with $24.6M currently in its stATOM pool. With the Astroport Neutron liquidity in place, there will be an additional $4.1M worth of stATOM trading liquidity in place. And of course, there is also substantial stATOM trading liquidity in place on Secret’s ShadeSwap and Evmos’ Forge.

While stATOM liquidity levels may fluctuate slightly on individual DEXes, total stATOM liquidity in the Cosmos is rising.

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The 30 day program

Here is what the next 30 days of Stride stToken incentives will look like, starting July 7th:

* Incentives to the Osmosis stIBCX pool aren’t synchronized with other incentives. Current incentives to this pool will last from June 20th - July 19th, after which they may be renewed at the same rate or changed.

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Observations

As compared with the previous 30 day program, this new 30 day program has a slightly lower STRD and USDC burn rate.

As mentioned above, roughly $500K USDC will remain in the Stride incentive pool at the conclusion of this new incentive program. Therefore, at the burn rate in this new 30 day program the remaining USDC will last 94 days, starting August 6th. However, depending on subsequent programs, that 94 day runway may shorten or lengthen.

Given market conditions, it is likely that in the coming months Stride governance 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.

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Conclusion

A liquid staking token isn’t really that liquid without trading liquidity! That’s why sufficient trading liquidity for stTokens has always been incentivized. What’s more, out of respect for stToken users and stToken liquidity providers, forward guidance about Stride liquidity incentives has always been provided.

Sufficient stToken trading liquidity will continue to be indefinitely maintained, and there will always be 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.

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