In case you missed our latest overview article, Inter Protocol is a community-organized and decentralized application aimed to restore trust in decentralized stable tokens. We are also the issuers of the Inter Stable Token (IST), a fully-collateralized, crypto-backed stable token designed to maintain parity with the US dollar to serve the Cosmos interchain ecosystem.
In one of the most important steps for the protocol, the community elected our first Economic Committee (EC) in September 2022. This article will explain what the Economic Committee is, and why it was an essential step forward in the Inter Protocol vision.
To create a robust decentralized stable token, the protocol employs a hybrid approach to the governance of IST, combining our decentralized community with an independent committee of economic, crypto, and fintech experts. While community governance is well suited to creating long-term alignment and setting direction for a project, it can be problematic in cases where quick action is needed. By integrating the multiple layers of economic protection in the business logic of the Inter Protocol with a responsive group of human experts, IST is designed to reduce the chances of excessive volatility or losing parity with the USD. The approach embodies an attractive combination of the best of rapid algorithmic execution with the unique ability of humans to assess the nuances of complex events.
The EC contributes to IST’s price stability by carefully monitoring minting limits, stability fees, and collateralization ratios. You can see this in action with the proposal from a community member to include DAI as collateral to mint IST, and the Economic Committee working through the proposal until they reached agreement and created a governance proposal to put it into effect.
However, during more extreme market volatility, EC members have the ability to make rapidly changes to key parameters, thus ensuring that IST maintains parity with the U.S. dollar. Although the protocol has yet to take this action, we have already seen minting limits on a per-collateral basis require slight modifications since launch, illustrating the importance of having a responsive team on-hand. You can see the current minting limits and minted IST by visiting our analytics dashboard.
Any given committee requires the correct balance of expertise to be effective. Each member of the EC was carefully selected to bring a unique skill set to the table. Here’s a brief overview:
Jason Potts is on the Board of Directors of the Decentralized Cooperation Foundation (DCF), and provides a unique perspective on crypto-economics grounded in the work of academic economics.
Chloe White is an award-winning digital asset consultant, providing valuable expertise on crypto policy.
Thibault Schrepel is an Associate Professor of Law at VU Amsterdam, praised for his knowledge of antitrust regulations.
Chris Berg, founder of the Blockchain Innovation Hub, was selected for his cryptoeconomics and public policy background.
Youssef Amrani is a core Cosmos contributor who provides Inter Protocol unique Cosmos expertise and thought leadership.
Joe Clark is a mechanism designer at Opyn who brings his unique arbitrage expertise to assist in the stability design of IST.
The EC is still in its early stages, with an increasing set of economic reviews undergoing as we scale IST across the Cosmos interchain and our upcoming Vaults release nears its release date. You can follow the long-form discussion from our EC on the Community Forum, or, track governance proposals in real time on the Big Dipper Explorer.
If you want to fuel the economic growth of the interchain ecosystem, then join our Discord community and help us build the decentralized stable token that Cosmos users deserve.