Stride, a live blockchain designed specifically for liquid staking, is looking to be part of the ATOM economic zone, moving away from its existing security model to join Interchain Security (ICS) designed by the Cosmos Hub.
Built using the Cosmos software development kit, Stride leverages inter-blockchain communication protocol to talk to other blockchains on the Cosmos hub. It is currently the liquid staking provider for seven different Cosmos chains and makes up 80% of the liquid staking market share in the Cosmos ecosystem.
In an interview with Blockworks, Aidan Salzmann, the co-founder of Stride Labs, the company behind Stride blockchain said that there are two main reasons why Stride wants to join ICS: economic security and economic alignment.
“For this proposal to work, it’s not just security or economic alignment, I think it has to be both,” Salzmann said.
Salzmann explains that the economic security of Stride can be measured roughly by the market capitalization of the blockchain.
“The market cap of Stride can fluctuate hugely but the number of tokens Stride controls can exceed the market cap, so we wouldn’t want to be in a position where the value of assets that are securing the network is bigger than the market cap as it might be an incentive to do an economic attack,” Salzmann said.
On the economic alignment side, Salzmann notes that the ATOM token is considered the “crown jewel” of the cosmos economic system.
Users may not want to post ATOM as collateral on the lending protocol as they will lose its staking rewards. With the new burgeoning DeFi ecosystem on Cosmos, Slazmann predicts that there will be a lot of demand for ATOM in the coming years.
“There’s going to be lots more demand for staked ATOM in the coming years as Cosmos DeFi grows,” Salzmann said. “We want Stride and the Cosmos Hub to be very aligned.”
If users pass the proposal for Stride to join ICS, the network transitioning process will be similar to that of the Ethereum merge, where the entire Stride validator system will be swapped for Cosmos Hub validators.
“It’s kind of like changing the engine of the plane while it’s flying…the Stride validator set will swap out entirely for the Cosmos Hub validator set,” Salzmann said. “Stride validators will remain on Stride as something we’re calling governors, the idea is that governors will do everything that validators used to do besides actually produce blocks.”
Governors will run RPC nodes and relayers and produce educational content, but more importantly, Salzmann notes that governors will continue to vote on proposals and take delegations from Stride stakers.
“Node costs will go to zero, but their profit and revenue stay the same, the only they do lose is in the proposal — 15% of Stride inflation, and tx fees and MEV will go to the Cosmos Hub — so their revenue would be reduced by 15% but their costs are reduced by 100%,” Salzmann said.
Blockworks Research Analyst David Rodriguez said that if the proposal passes, he feels Stride would be a strong partner to have in the ATOM Economic Zone.
“Liquid staking is a major unlock for Cosmos DeFi that has long been hampered by lack of liquidity,” Rodriguez said. “This proposal not only has Stride inheriting the Hub’s security, it also creates a trade agreement between Stride and the Hub’s first partner chain, Neutron. If the proposal passes, the Hub will liquid stake a portion of its community treasury through Stride and LP it on a Neutron DEX to create deep liquidity for the LST.”
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Source: https://blockworks.co/news/stride-blockchain-cosmos-interchain-security