Stride, the Cosmos-based liquid staking protocol, is set to transition to Cosmos’ interchain security (ICS) system, powered by ATOM tokens, from its existing STRD token model. According to Stride contributor Ian Unsworth, the transition is expected to take place on Wednesday between 17:00 UTC and 21:30 UTC at block height 4616678. Unsworth stated, While Stride has $35 million plus in total value locked, it only has $19 million of economic security via bonded network tokens. Following the ICS transition, block production/security will be passed to the ATOM validator set, providing roughly a 11,935.2% increase on the economic security of the network.
The shift to ICS will increase Stride’s economic security from roughly $25 million to $2.3 billion, making the liquid staking protocol more resilient to hacks. Through ICS, Stride will be secured by staked ATOM instead of STRD tokens and Cosmos’ validator set will take over block production from the existing Stride validator set. STRD will still have utility, generating staking rewards. At the time of writing, the market capitalization of STRD tokens was $86.7 million, while ATOM boasted a market value of $2.73 billion.
The transition will also affect STRD’s tokenomics, as stakers have decided to reduce STRD distributed as staking rewards by 50%. Additionally, 15% of the STRD staking rewards will be shared with Cosmos Hub. According to the original tokenomics, in the first year, 2,608,200 STRD is emitted as staking rewards. However, as part of Stride’s transition to ICS, that figure will be reduced by half, to 1,304,100 STRD annualized.