One Year of Vaults Anniversary: Recap of June Community Call

July 01 ,2024

Inter Protocol’s Vaults turned one and to mark the occasion we organized a week-long celebration including a community call with a stellar line-up. Guests from Agoric, Stride, Persistence One, and Osmosis joined us to share their thoughts on the past and future of Inter Stable Token (IST) and the ways to make it even better. Here’s the recap.

As you all know, Inter Protocol launched with the limited functionality of swapping stable tokens, using the Parity Stability Module (PSM). However, the feature that actually made IST what it is today, namely the stable token that that has the ability to power the entire Interchain ecosystem, was Vaults. They  enable users to use Cosmos-native collateral assets to mint IST, and thus make the Inter Stable Token (IST) more secure and efficient. One year in, Vaults are the preferred minting tool and we are thrilled to continue working toward adding more collateral types, features, and use cases. 

To discuss one year of Vaults and their impact on IST and its community, DCF’s Ric Shreves and Fred Radford were joined by Agoric’s Dean Tribble and Brendan O’Toole, Stride’s John Galt, Persistence One’s Jeroen Develter, and OsmosisAaron Kong

Of course, the first question was addressed to Dean Tribble to inquire about his intent in setting up Inter Protocol as Agoric’s first-ever application, and use it to launch a Cosmos-native stable token. Dean confirmed that ever since conceiving Agoric’s system for building extensible and interoperable applications, he was thinking about a stable currency mechanism as the only way to power a modern decentralized economy. The initial idea for IST was simply to act as the fee token for Agoric, but then it morphed into a much larger purpose. 

Instead of creating just another MakerDAO-style lending solution, Agoric wanted to enable people to leverage the plethora of Cosmos capital assets to mint a stable token. A stable token for the Interchain.

The Agoric team presented the idea at one of the first Cosmoverse conferences and immediately got the support of Zaki Manian and Osmosis’ Sunny Aggarwal. They and other Cosmos builders recognized that a stable token based on ATOM would introduce unprecedented interoperability, predictability, and collaboration into the Interchain economy.

It was then that Agoric’s focus and priorities changed and the team ventured into creating IST. They adopted the best practices in existence to make it as decentralized, useful, and stable as possible, and to take advantage of all the chains and the connectivity within IBC. Initially, they wanted to encourage the bridging of stable tokens from other systems into Cosmos, and that’s why PSM was rolled out first as a way to trade from other stable tokens to IST. However, with the launch of Vaults, the biggest capital assets in the Interchain like ATOM, OSMO, and TIA were introduced as IST collateral.

“Being able to leverage the value we’ve produced in all these chains we’ve created to enable a stable token to be built on top to grease the gears of Interchain commerce.”

Ric Shreves reminded that as soon as the initial development work on IST was finalized, Agoric handed Inter Protocol over to the community to govern. So, we can pride ourselves on IST being: 

“A truly decentralized stable token that is using Cosmos native assets and whose activity is truly organic.”

Stride’s John Galt joined the conversation to express his appreciation of Agoric’s unfailing professionalism and slow, but steady progress. 

“It was a slow process over many months to get Vaults launched, but when the ATOM and the LST (Liquid Staking Tokens) Vaults were created, I was thrilled because that’s when IST became decentralized.”

Before the introduction of Vaults, IST was backed by other stable tokens, which meant that its value was ultimately derived from fiat and banks. Now, with Vaults, the value of IST is predominantly derived from decentralized assets.

“Cosmos endogenous assets backing a stable token that maintains parity with USD but does not derive its value from USD.”

Moreover, the stats show that 99% of all IST in circulation is backed by Cosmos-native assets, so there is absolutely no bridge risk related to outside assets. 

“I think it's a unique situation in crypto where a CDP (collateralized debt position) stable token on one chain is backed by assets on another chain (Stride), whose assets are actually also native to other chains! You can have as many as 4 chains all working together thanks to things like IBC where it doesn't feel like 4 chains.” 

John Galt went on to say:

“Both USDC and USDT have been unpegged from USD. With IST you can see the collateral, it’s on-chain. IST holds parity with the USD, but without relying on USD in traditional bank accounts, and that's a really special thing.”

Osmosis’ Aaron Kong tuned in to ask whether a BTC collateral has been considered, but Ric Shreves assured him that every collateral type so far has been chosen by the community. It is no wonder that the community has selected LSTs as a collateral as a way for them to do something else with these assets. So, if the community puts up a proposal for BTC collateral, it may easily be adopted. 

Agoric’s Brendan O’Toole commented that it is inevitable to have some version of BTC and ETH added as collateral types, and even something more exotic down the line. In terms of the probability of adding stBLD as a collateral type, he argued that the only obstacle is the lack of BLD liquidity on Osmosis. 

“You can go ahead with it, but the parameters will be very conservative. So, BTC or ETH would make more sense.”

Brendan O’Tool outlined another major question, namely how to leverage Agoric’s orchestration to make IST’s onboarding as seamless and intuitive as possible. 

“Our goal is for IST to be ubiquitous across the ecosystem. It should be easy to get and easy to open a Vault. What we want to do is integrate orchestration capabilities on any app’s front-end, for example Stride, and allow users to liquid stake their assets and mint IST in a single click on a single interface. Our objective is to enable that across the board.”

The CEO of Persistence One, Jeroen Develter then highlighted the role of Inter Protocol’s Vaults in generating leveraged liquid staking. Dean Tribble shared that the uptick of usage of liquid staking tokens to mint IST was a happy surprise for him too:

“The ability to build on an asset that’s built on another asset and so on. It’s starting to look like what a new economy should look like.”

All guests took the stage to praise the spirit and attitude of deep collaboration and working together that’s already a tradition within the Cosmos ecosystem. 

“Through orchestration and deep collaboration within all teams within the Interchain, these kinds of applications can proliferate.”

When asked about the steps forward for IST, Brendan O’Toole focused on UI/UX improvements: 

“The simpler and more intuitive experience people have when interacting with different chains, the better. All we are doing in terms of chain and account abstraction will facilitate that. The future is multichain and this year will demonstrate that.”

Osmosis’ Aaron Kong added:

“Vaults in general have a big presence on Osmosis. Ultimately the goal is to abstract everything away to the point where it doesn't matter if the vault is here or cross-chain, or even in the future extending to other ecosystems like ETH or SOL.”

As a conclusion, John Galt called for more scale, more liquidity, and use cases, and especially for more IST pairs on DEXs. 

It’s been only a year, but Inter Protocol’s Vaults have achieved so much already. They empowered the community to put Interchain assets like ATOM, stATOM, stkATOM, stTIA, and stOSMO to work and use them to mint IST. What’s more, they empowered users to deepen their liquidity to unparalleled levels and unlock numerous new use cases and revenue sources. Here’s to many more years ahead of supercharging the Cosmos collaboration and interoperability and fueling a truly decentralized Interchain economy. 

Listen to the full conversation here. Make sure to follow us on X and join the discussions on Discord.