stATOM is severely illiquid

Today I tried to use KEPLR to trade stATOM and it showed

Due to the lack of liquidity, there is a significant difference in the dollar value of the asset before and after the conversion. If you still want to continue, click Next.

The value of 3,500 US dollars can only be exchanged for the value of 3,350 US dollars, and the floating loss will be as high as 120-150 US dollars.

Using stATOM to trade atoms will result in insufficient liquidity

If you exchange atoms for stATOM, there will be no liquidity problems.

Could STRD still be used in atomic warfare?

If transaction friction is so high, stride will have difficulty growing

What’s the solution? Adding more liquidity ATOM/stAtom ?

I saw on Osmo forum a proposal to add Osmo/stride liquidity, which didn’t received good feedback from the Osmo community atm.

Considering the close relationship between Stride and atom I’m surprise they didn’t put a proposal here already.

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Its liquidity is very strange. Small-amount transactions using stATOM will also show this problem. In theory, there should be no lack of liquidity for small amounts.
Maybe it reaches a maximum liquidity imbalance, triggering this condition
Such an experience is very poor for newcomers

For ease I am going to do this maths with 1000statom

At this time I can swap 1000statom for 1353.9 atom.

Unstaking would get 1370.04atom

So I miss out on 16.14 to get my atom instantly rather than waiting for 21-24 days.

Staking yield is 13% Apr. On 1370atom this just under 0.5atom a day. So we should price in just under 12atom in rewards. The true cost is around 4.2 atom.

This doesn’t seem super slippy to me. Perhaps the dollar values make it look worse than it is.

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My observation is

Whenever there is a large decline, there will be insufficient liquidity and excessive price differences.
It will take a few hours and a few days to recover.

Liquidity chips need to be enhanced 10 times