dATOM Vault is Live on Inter Protocol

February 11 ,2025

We are thrilled to announce that after Prop #84 for the onboarding of dATOM as an IST collateral received an overwhelming support, the new vault type is officially live on Inter Protocol!

IST Vaults Continue to Evolve

Since its launch in May 2023, Inter Protocol’s Vaults have become an integral part of the protocol and have solidified IST’s status as the stable token of the Interchain. Unlike the Parity Stability Module (PSM) that allows for 1:1 swaps between IST and other stable tokens, Vaults invite various Cosmos assets to serve as collateral.

Initially collateralized by ATOM, Vaults quickly evolved to also include several Cosmos Liquid Staked Tokens (LSTs). The Inter Protocol community have consecutively voted to add Stride’s ATOM, OSMO, and TIA LSTs, or stATOM, stOSMO, and stTIA, respectively. Now, users are empowered to continue staking, receiving staking rewards and securing the Cosmos, Osmosis, and Celestia chains, while also unlocking new levels of capital efficiency and earning opportunities.

Introducing liquid staked derivatives as collateral for minting the Inter Stable Token have been proven so successful that at the time of writing, Cosmos LSTs back IST at almost 100%. The time couldn’t be better to bring in one more ATOM LTS, this time by Drop.

Drop Protocol: Auto-Compounding Staking Rewards

Backed by Lido and led by former Lido and P2P Validator contributors, Drop Protocol is a next-generation staking protocol, enjoying strategic access to distribution, liquidity, and technical insights. It was established with the mission to strengthen the economic viability of sovereign blockchain economies by transforming stagnant, frozen capital into flowing streams of opportunity. 

Drop’s design leverages the Neutron blockchain and the Inter-Blockchain Communication (IBC) protocol to provide trust-minimized liquid staking services. Its modular architecture allows for scalability with minimal additional risk and overhead, making it one of the most promising liquid staking platforms in the Cosmos ecosystem.

Since its launch in Q2 2024, Drop has attracted over 15,000 unique users, enabling $20 million worth of assets to be deployed across various dApps and DeFi opportunities. Its attractiveness stems from two facts:

  1. Unlike traditional staking, Drop allows users to stake without locking up their assets. That means that stakers can continue earning rewards while maintaining flexibility in using their capital for other DeFi strategies.

  2. Drop’s LSTs, called dAssets, automatically compound staking rewards, so there’s no need for users to claim them manually. Staking rewards accrue daily, increasing the value of their dAssets over time. 

dATOM Collateralizing IST

dATOM is the first dAsset in existence, and it represents the liquid staked ATOM, issued by Drop. Its onboarding as collateral in Inter Protocol's Vaults marks a significant milestone in the Cosmos ecosystem, as it bridges liquid staking with advanced DeFi strategies. 

The dATOM integration delivers several key benefits to the Inter Protocol and the wider Interchain community: 

  • Reinforced IST Stability: dATOM inherits the low volatility of ATOM, a top cryptocurrency with high market confidence. This makes dATOM a highly stable collateral option, suitable for collateralizing IST.

  • Enhanced IST Utility: With dATOM as collateral, IST can be used more effectively as a stablecoin across the Cosmos-based DeFi ecosystem, further cementing IST's role as a key component of the Interchain economy.

  • Increased IST Popularity: The onboarding of dATOM opens up new avenues of IST-powered DeFi opportunities for Drop’s 15,000 users.

  • Lower Liquidation Risk: dATOM enjoys high liquidity, especially in the dATOM/ATOM and dATOM/USDC pairs. That minimizes liquidation risks and ensures that in the event of a margin call, a liquidation can occur smoothly and with minimal slippage.

  • Increased Staking Participation and Interchain Security: By offering an auto-compounding liquid staking option for ATOM holders, Drop encourages more people to stake their assets, thereby benefiting the economic stability of the broader Interchain ecosystem.

By accepting dATOM as collateral, Inter Protocol not only increases the availability of collateral types for users, but also ensures that the protocol remains resilient and well-positioned for future growth in the Cosmos ecosystem.

dATOM Vaults Parameters

Striving to ensure enhanced security and stability of the Inter Stable Token, as well as optimal user experience, Inter Protocol’s Economic Committee (EC) has set specific parameters for the dATOM vaults. They are as follows:

  • Debt Limit: 500,000 IST

  • Stability Fee: 0.05%

  • Liquidation Margin: 160%

  • Liquidation Padding: 10%

  • Mint Fee: 0.01%

Drop’s Droplets Program: Multiplying Rewards

We saved the best for last: interacting with Drop’s dAssets come with another considerable advantage: earning Droplets. Droplets are a point system implemented by Drop and designed to serve as another incentive for stakers. However, liquid-staking on Drop is not the only way to earn Droplets. It is also set to reward people involving dAssets in their DeFi strategies, including using them on Inter Protocol. 

A Droplet is a unit of measurement for a user’s contribution to Drop's success, as every dollar of dAssets generates 1 Droplet per day. It is a mechanism to remunerate early adopters and engage them with the future Drop’s governance. At the end of the Droplet program, 100,000,000 DROP tokens, the Drop governance token that is yet to be released, will be distributed to Droplets holders. 

And here’s another amazing piece of news: the Inter Protocol users will be additionally rewarded for opening dATOM vaults. The Drop team has committed to multiplying Droplets delivered to dATOM providers on Inter Protocol by five times! 

Supercharged DeFi

You read that right! The new dATOM Vaults on Inter Protocol are unlocking a variety of advanced DeFi strategies. For example, if you are an ATOM holder, you can:

  1. Stake with Drop to receive staking rewards while remaining in control of your liquidity;

  2. Use your dAssets on Inter Protocol to mint IST with near zero fees;

  3. Deploy IST as liquidity for additional yield, OR swap IST for other stable token on Inter Protocol’s PSM;

  4. Collect Droplets both for staking on Drop and for putting your dAssets to work on Inter Protocol. 

The integration of dATOM as collateral for Inter Protocol's Vaults presents a tremendous opportunity for both DeFi users and the Cosmos ecosystem at large. By offering liquidity, staking rewards, and a stable collateral option, dATOM will enhance the usability of IST and further cement Inter Protocol as a cornerstone of the Interchain economy!

Head over to inter.trade now to open our dATOM vault!