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 July 7th and will conclude on August 4th.
On August 5th 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, 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. In addition, more non-STRD tokens can be deployed as incentives 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 300K 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.
The 30 day program
Here is what the next 30 days of Stride stToken incentives will look like, starting August 5th:
*These pools are not synchronized to the 30 day Program, and thus their incentives may be renewed or altered during the duration.
Observations
As compared with the previous 30 day program, this new 30 day program has a meaningfully lower STRD and USDC burn rate.
As mentioned above, roughly 300K 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 70 days, starting August 6th. However, depending on subsequent programs, that 70 day runway may shorten or lengthen.
Depending on market conditions, Stride governance 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 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.