So You Have IST. Now What?

August 17 ,2023

IST has emerged as the leading Inter-Blockchain Communication (IBC) native stable token, expanding use cases on Cosmos and helping to realize the potential of cutting-edge cross-chain technology. IST’s multiple minting mechanisms, Maker-style collateralized debt position (CDP) model, and extensible smart contract framework from Agoric have made it remarkably composable, enhancing utility and deepening participation across the evolving Cosmos IBC ecosystem.

Below is a look at IST's core use cases, exploring how IST shapes user experiences and drives innovation across interconnected blockchain applications as the go-to stable token for lending, borrowing, payments, and trading across the interchain.

Getting Started 

You can get IST either by minting it or swapping for it. To mint, you can deposit ATOM into an over collateralized vault. To swap 1:1 with another stable token, use the Parity Stability Module (PSM). It is also possible to swap and trade on popular decentralized exchanges such as Osmosis and Crescent.

Pay With It

The ability to use IST to pay for gas fee transactions across the Interchain is an extremely attractive value proposition for Inter Protocol as well as for developers and users across the entire ecosystem.

As a stable token, IST offers simplified gas transactions thanks in part to its 1:1 USD parity, a function essential to the future development of blockchain commerce by bringing predictability to the fee model. The underlying stability that IST provides is an important counterbalance to the inherent volatility of a native chain token, helping to build the user confidence required for widespread adoption and scalability of the interconnected blockchain network.

IST was initially designed to function as a gas fee token on the Agoric platform, but with the recent approval of proposal #560 it has now also been integrated as an alternative means to pay transaction fees on Osmosis, the leading decentralized exchange on Cosmos.

Additional protocols are in the process of integrating with IST, which will enable flexible, seamless payment experiences across the Cosmos ecosystem.

Swap It (with Zero Slippage!)

The launch of the PSM enabled users to easily swap IST with a variety of other stable tokens at a fixed ratio, ensuring zero slippage and low risk conversions. Acting as a bridge for risk-adjusted exposure to various stablecoin assets, the PSM mints IST in exchange for approved stablecoins (USDC, USDT and DAI at this time) at a 1:1 ratio, thereby guaranteeing price stability. The PSM can also be used as an arbitrage mechanism for protecting against individual stable token volatility. 

IST can also be swapped on a number of other protocols, such as Osmosis, Crescent DEX and Shade Protocol.

Farm With It

IST is available across an array of liquidity pools on Cosmos, including the aforementioned Osmosis, Crescent DEX and Shade Protocol. Stable tokens are the foundation of a vibrant DeFi ecosystem and their ready availability is key. Pools offer a simplified alternative to traditional order books and incentivize liquidity providers with swap fees.

Users can earn swap fees by contributing to these IST liquidity pools. Osmosis Proposals #430 and #431 introduced OSMO incentives and Superfluid staking rewards to the IST/OSMO and DAI/CMST/IST pools, listing IST as an incentivized stablecoin asset. Whether converting tokens short-term or bonding for a longer lock up period, users can currently earn between 0% and 42% APR on Osmosis with the introduction of superfluid staking.

The liquid staking pools on Crescent Finance enable users to earn between 5% and 60% APR. The SILK/IST stablepool on ShadeSwap provides 12.77% rewards in SHD for depositors, along with an instant unbonding feature.

DCA With It

Dollar-cost averaging is a well established strategy for incremental market exposure. IST can be used to create algorithmic and weighted strategies to DCA in and out of tokens via, enabling traders to enter and exit positions seamlessly and systematically. 

Borrow & Lend With It 

Decentralized lending markets are another financial primitive integral to a well-functioning DeFi ecosystem. Through Umee’s native Cosmos lending markets, users can lend IST at rates of ~8% APY, then borrow against their collateral through customizable and secure automated strategies, gaining exposure to assets such as stATOM and stOSMO.  

What’s next for IST?

IST will continue to forge new pathways across interconnected decentralized systems, looking to accelerate the pace of adoption within the Cosmos ecosystem and pushing innovation forward at the boundaries of interchain interactions.

A phased introduction of new IST minting mechanisms, thanks to the built in extensibility of Inter Protocol, will foster greater capital deployment across the interchain and spur abundant new possibilities in application development. 

This will include the introduction of new vault collateral types beyond ATOM, such as LST derivatives, that are being proposed and discussed in the community.  Additional collateral types bring opportunity to further expand use cases and liquidity across the Cosmos ecosystem.

IST’s DeFi value proposition has an enabling role to play in on-chain commerce so keep an eye out for new upcoming partnership announcements involving native stable payments across a number of Cosmos zones later this year.

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