Note: this is a joint post by the Stride core contributors Vishal, Riley, Aidan, and John. It contains our personal opinions, and does not represent Cosmos Hub or Stride protocol. We are merely four of many Cosmos Hub and Stride stakeholders.
It has been a full week since the idea to convert the entire STRD supply to ATOM was first revealed at Cosmoverse. In that time, there’s been vigorous public discussion about the idea.
The “Convert entire STRD supply to ATOM” post has received 160 replies, giving it the most replies of any Cosmos Hub governance forum post in history. There’s been a huge amount of engagement with the idea on Twitter as well. And lastly, the Stride Discord has also been buzzing with discussion.
This is great!
It’s always been our intention that the conversion idea - and indeed all ideas that affect the future of Stride - be shaped through open, transparent, public discussion - not behind closed doors. So thank you to the Cosmos Hub and Stride communities for providing so much thoughtful feedback. Whether you support or oppose the token conversion, your feedback has been much appreciated.
Regarding the feasibility of the conversion idea, judging by the reaction of both the Cosmos Hub and Stride communities there is currently too much division and not enough consensus. Perhaps that will change at some point in the future, but currently we feel it would be inappropriate to move forward to working on concrete details about the conversion.
Given the above, Stride contributors will continue to fully focus on furthering Stride’s mission in the Cosmos. We intend to keep our full attention on our mission to unlock as much liquidity as possible through liquid staking. We hope that Cosmos Hub community members will continue to explore and champion some of the ideas we set forth here, as we think it could be an exciting path forward for the ecosystem.
Down below, we’ll explain the full vision and some reasons we think it might be a good idea. If the idea intrigues the Cosmos Hub and Stride communities, we would encourage them to continue discussing it.
Now that Cosmos Hub and Stride community members have had a full week to process and discuss the conversion idea, we as Stride contributors would like to provide what we see as the justification for this novel idea.
To put it briefly, converting the STRD supply to ATOM would help Cosmos Hub fulfill its destiny as the undisputed center of the Cosmos ecosystem, which would in turn be a huge growth catalyst for the entire Cosmos.
We’ve always felt that focusing on helping Cosmos Hub and benefiting the entire Cosmos ecosystem is the best strategy for growing Stride protocol.
The Cosmos Hub blockchain and its token ATOM created the Cosmos ecosystem, as virtually the entire Cosmos stack was funded through the sale of ATOM tokens. Even as Cosmos Hub built up a vibrant ecosystem around itself, it chose not to exploit its ecosystem by extracting value. But nonetheless, Cosmos Hub’s central position in the Cosmos ecosystem has always tantalized people with the hope that it may one day accrue value to ATOM.
So due to Cosmos Hub’s ecosystem leadership and because of the hope of value accrual, Cosmos Hub became a schelling point for the Cosmos. This has given it a strong brand and resulted in significant distribution of the supply of ATOM, making it one of the most well-distributed tokens in crypto.
As the Cosmos ecosystem became more developed, Cosmos Hub began searching for a place in the ecosystem it had created. One popular idea from 2021 saw Cosmos Hub as a port city. According to the port city idea, Cosmos Hub would be the central chain in the Cosmos ecosystem, where users from across the Cosmos would come to exchange tokens, use core services, and develop culture. According to the article, “this…includes essential interchain services like chain registries, automated market makers, bridges to Bitcoin, Ethereum, and the wider digital economy.” But for various reasons, the port city idea didn’t pan out.
Another role Cosmos Hub thought it could fill in the Cosmos ecosystem was that of security provider. And so interchain security (ICS) was planned and built. At this point, Neutron and Stride blockchains are consumers of Cosmos Hub’s security. However, many people are skeptical about the future of ICS. The income from ICS has so far been less than expected, with Neutron paying only about $5,000 annualized and Stride paying about $230,000 annualized for $1B+ worth of economic security. It’s possible this income level will grow in the coming years, but currently this low level of income creates economic difficulties for Cosmos Hub. With these existing difficulties, scaling to even five ICS chains would present serious economic challenges. And to make matters worse, there’s significant competition in the shared security space from teams like Eigen, Celestia, and Mesh Security.
So while Cosmos Hub continues to enjoy the prestige and neutrality of having built the Cosmos ecosystem, and while Cosmos Hub remains the most secure and decentralized chain in the Cosmos - it has struggled to find a place in the ecosystem it created. And as a result, Cosmos Hub is slowly losing relevance.
Despite the disappointments of the past, Cosmos Hub has been on the right track all along. The port city idea still makes sense, and so does interchain security. We as Stride core contributors believe these were the right ideas for Cosmos Hub, and that the main issue was a lack of strategic direction.
That’s why we proposed the token conversion idea - because it would be the fulfillment of both the port city idea and the interchain security idea.
If the entire STRD supply were converted to ATOM, then Cosmos Hub would fully control the core Cosmos utility of liquid staking. Ideally, this would be one of many services offered by the port city of Cosmos Hub. Convert OSMO to ATOM and you’ve added an exchange to the city; convert STARS to ATOM and you’ve added culture to the city.
But unlike Ethereum, this city would not be monolithic - it would be a city composed of several chains, all secured by interchain security and linked by IBC. Thus Cosmos Hub would retain its minimalism and resilience - its purity - while still controlling a suite of interchain services and receiving rewards therefrom. Cosmos Hub, and its satellite chains governed by ATOM and secured by ICS, would form the center of the vast and vibrant Cosmos ecosystem.
This grand plan would fulfill Cosmos Hub’s destiny, achieving the full promise of both the port city and interchain security ideas. It would secure Cosmos Hub’s relevance in the Cosmos ecosystem for decades to come.
If STRD, OSMO, and STARS converted to ATOM it would be extremely positive not just for Cosmos Hub, but for the entire Cosmos ecosystem.
Currently, BTC and ETH have achieved consensus as monies of the Web 3 economy. They both serve widely as stores of value and media of exchange. We as Stride core contributors believe ATOM has the potential to achieve consensus as money as well.
Each of these three tokens created something bigger than itself, which is the ultimate achievement for a token. As such, each one has the prestige, neutrality, and distribution to serve as money. But in the case of ATOM, it still lacks a sufficiently compelling story.
Consider the stories of BTC and ETH:
- BTC is the oldest and most decentralized token, and has a fixed supply
- ETH is the oldest and most decentralized token for smart contracts, and has huge demand as gas
But what about ATOM? What is ATOM’s succinct yet compelling story? We would like ATOM’s story to be:
- ATOM is the oldest and most decentralized governance token, and controls a suite of interchain services
We believe this would give ATOM an equivalent status to BTC and ETH. ATOM is already prestigious, neutral, and well-distributed - but this would give it a sufficiently differentiated and compelling story.
If this were to happen, it would usher in a renaissance for the Cosmos ecosystem. ATOM would capture the imaginations of many crypto market participants, bringing them to the Cosmos to use ATOM onchain. A surge of economic activity would follow, creating a virtuous cycle as the price of ATOM increased. All this activity would spark new ideas and create demand for new Cosmos chains.
The whole Cosmos would benefit massively.
But for an STRD to ATOM token conversion to take place, both Cosmos Hub and Stride would have to agree. So let’s talk about Stride.
From its launch in September of 2022, the Stride protocol has always sought to serve the Cosmos. Indeed, we as core contributors decided to work on liquid staking because we felt that what Cosmos needed most was liquidity. Stride’s North Star has always been to serve the Cosmos.
That’s why Stride didn’t work to build its own DeFi apps, and instead created liquid staked tokens for other Cosmos chains to use.
That’s why Stride obsessively focused on security, to ensure that the Cosmos chains who used our LSTs would be maximally secure.
That’s why Stride didn’t claw back any airdrops, and instead kept recycling them to the users who wanted to claim.
That’s why we worked extensively with Cosmos Hub teams to ship ICS and LSM, instead of solely focusing on our own chain.
Stride’s strategy has always been to put the Cosmos ecosystem first; we believe this is the main reason for the meteoric growth of Stride over the past year. Serving the Cosmos and focusing on growing the pie has proven to be a winning strategy for increasing usage of Stride protocol. So helping Cosmos Hub achieve its destiny and thereby catalyzing a renaissance in the Cosmos ecosystem would be the best thing Stride protocol could do to achieve its own success. Moreover, the increased decentralization that would come from being governed by the ATOM token would make chains and users from across the Cosmos more comfortable using Stride.
Ultimately, we believe that what’s best for the Cosmos ecosystem is best for Stride.
We as Stride core contributors are fired up about this new vision for the Cosmos Hub! And we have been enthusiastically discussing this vision with various individuals for weeks.
However, we recognize not everyone feels the same way we do. In our assessment, public sentiment about the conversion is currently leaning against it. This is totally fine. While we are passionate about helping Cosmos Hub fulfill its destiny as the port city and sustainable security provider of the Cosmos, we fully respect the opinions of others. And ultimately, we recognize that we are merely several of many Cosmos Hub and Stride stakeholders, and that broad consensus is required for big changes.
The alternative to the grand vision of Cosmos Hub and ATOM presented here is the status quo, which isn’t too bad for Cosmos Hub. Over the years, Cosmos Hub has proven itself to be not only resilient in a technical sense, but also in a cultural sense. Even with the status quo, Cosmos Hub remains a very important chain.
In the case of Stride, there are many opportunities in the Cosmos and the status quo is promising - indeed, very exciting! The liquid staking rate for ATOM stands at a mere 1.5% and will no doubt rapidly increase over the coming year, while new liquid staked tokens such as TIA, DYDX, and NAM will diversify Stride’s TVL. Stride’s explosive growth over the past year shows no sign of slowing down, as Stride is well-positioned to capture the upside of DeFi growth in the whole Cosmos.
When the STRD to ATOM token conversion idea was floated at Cosmoverse, it was just an idea. And we as Stride core contributors repeatedly stressed that discussing and deciding the idea would be left to the Cosmos Hub and Stride communities.
While our perspective shared in this post may change the discussion, given the feedback we’ve received so far it appears additional time may be needed to build consensus around the token conversion idea - if sufficient consensus can be achieved at all.
If the token conversion idea introduced at Cosmoverse and its justification presented in this post really excites and intrigues some Cosmos Hub stakeholders, perhaps they will continue the conversation and eventually draft a formal proposal for the Stride community to consider.
Going forward, we plan to continue to do what we’ve been doing for the past year and a half - focusing relentlessly on unlocking liquidity for Cosmos DeFi through super secure liquid staking. As the conversion idea percolates over the next few months, maybe sufficient consensus will materialize. Maybe not.
But one thing is for sure: as Stride core contributors, we will never try to push or force a demonstrably unpopular idea, even if it’s an idea we strongly believe in. Because at the end of the day, the soul of crypto is consensus.
-Vishal, Riley, Aidan, John