Recently, Stride, a liquid staking protocol built on Cosmos, has announced its plan to transition from the current STRD token model to Cosmos’ interchain security (ICS) system, which utilizes ATOM tokens for operation.
According to Lan Unsworth, a contributor to Stride, the transition is scheduled to occur on a Wednesday between 17:00 UTC and 21:30 UTC, specifically at block height 4616678.
Currently, Stride’s economic security is around $19 million through bonded network tokens, despite having over $35 million in total locked value.
However, the implementation of the ICS system will transfer block production and security responsibility to the ATOM validator set.
This will result in a significant increase of approximately 11,935.2% in the network’s economic security, as stated by Unsworth.
The official blog confirms that the adoption of the ICS system will bolster Stride’s economic security from roughly $25 million to an impressive $2.3 billion.Â
This transition aims to enhance the resilience of the liquid staking protocol against potential hacking attempts.
Cosmos’s interchain security works by leasing ATOM-backed validators to consumer chains, enabling them to utilize the security provided by Cosmos using ATOM tokens instead of their native tokens. Cosmos Hub acts as an intermediary blockchain for all independent blockchains within the Cosmos network, employing a proof-of-stake consensus mechanism that involves ATOM tokens.
As a result of the transition, Stride will shift from relying on STRD tokens to being secured by staked ATOM tokens, while the Cosmos validator set will take over block production from the existing Stride validator set.
Stride will transform into a consumer chain, allowing validators from Cosmos Hub to participate in its consensus mechanism. Despite this change, STRD tokens will retain their utility and continue to generate staking rewards.
At present, STRD tokens have a market capitalization of approximately $87.61 million, while ATOM tokens hold a market value of $2.707 billion, according to Coingecko.
Additionally, the transition will impact STRD’s tokenomics. Stakers have agreed to reduce the distribution of STRD as staking rewards by 50%.
Furthermore, 15% of the staking rewards from STRD will be shared with Cosmos Hub, further strengthening the interconnectedness between the two protocols.
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