Disclaimer, I am a Stride contributor.
This post is to explore the possibility of listing stATOM on Astroport. There is no guarantee Stride will be involved with any stATOM pool on Astroport. This is merely the beginning of an exploratory conversation with the Astroport community.
What is stATOM?
stATOM is a liquid staked derivative (LSD) of ATOM that has existed for one-and-a-half months. It is issued by the Stride blockchain.
stATOM works like LunaX, in that holders earn auto-compounding staking rewards through the appreciation of stATOM against ATOM.
stATOM can be considered the best collateral token native to the Cosmos, since it inherits the price stability of ATOM and it earns ATOM staking rewards.
Why bring stATOM to Terra?
Before the May crash, LUNA was widely used as collateral on Terra. Unfortunately, LUNA isn’t what it used to be. For Terra DeFi to recover, it may be desirable for a more reliable collateral token to be made available. To be clear, all leverage-based DeFi applications on Terra will likely approve an LSD of LUNA as collateral. But having stATOM also available as a collateral option would increase confidence.
Remember, before the crash Anchor had white-listed several bridged collateral tokens, including an LSD of ATOM. It was a good idea to increase collateral options before the crash, and it’s an even better idea now.
The only leverage-based Terra DeFi application currently known to be in development is Capapult. Capapult is an over-collateralized stablecoin issuer for the stablecoin $SOLID. SOLID will be backed by an LSD of LUNA, but it could also be backed by stATOM.
No other leverage-based DeFi applications are currently known to be in development for Terra, but it’s possible some are being developed in secret. Looking beyond leverage-based apps, stATOM might be a good candidate for mixing on Redacted Money.
stATOM on Astroport
stATOM and STRD could be added to the list of tokens available for IBC bridging on bridge.terra.money. Once that happens, stATOM would be available on Terra for anyone to IBC over and use.
It would be a good idea to make an stATOM-USDC liquidity pool on Astroport. USDC would be a good base pair, because this pool would be used by liquidators, and liquidators like to get to USDC as quickly and efficiently as possible. At this time, USDC is the most liquid and popular stablecoin on Astroport, being paired with LUNA and ASTRO.
Stride may wish to catalyze adoption of stATOM on Terra by incentivizing the stATOM-USDC liquidity pool. Stride would incentivize the pool with STRD, the Stride governance token. To avoid liquidity fragmentation, there likely would not be a deep STRD liquidity pool on Astroport, so users wishing to sell their STRD would want to use IBC to bridge it to Osmosis.
What’s in it for Astroport?
In general, having stATOM on Terra would help the recovery of Terra DeFi. As the premier DEX on Terra, if Terra DeFi recovers then Astroport volume will increase. Remember, prior to the May crash, LUNA liquidations provided lots of trading volume to Astroport.
Furthermore, having stATOM on Astroport will help Astroport compete with Osmosis. In late November, LUNA will start vesting to hundreds of thousands of airdrop recipients. Since ATOM is such a popular token, users may wish to sell their vested LUNA to buy ATOM. If they can do that on Astroport then Astroport clearly benefits.
For all these reasons, if this plan were to come to fruition it would make sense for the Astroport community to provide ASTRO incentives as well.
Conclusion
This is not a proposal, but merely a conversation. If this conversation goes well, a formal proposal may be forthcoming.
Should there be an stATOM pool on Astroport? If Stride provided incentives, would the Astroport community be willing to incentivize it, too?
All comments, suggestions, and questions are welcome (: