Making great Stride's.
Stride is a Liquid Staking Derivative (LSD) platform for the Cosmos eco-system. Run on it's own chain, with a staking and governance token $STRD. The STRD token has a max supply of 100 Million tokens, and a current market cap of around $70 million. With a portion of tokens being progressively airdropped to chains they onboard for liquid staking, the aim is to have a very widely distributed token.
Stride steps it up a notch.
$STRD has become a revenue sharing token. A recent chain upgrade adjusted the staking rewards, as the token was not paying out the targeted APR for stakers. This has boosted the $STRD APR from around 4% previously, to roughly 16% now. This will decrease as more tokens are issued through the airdrop program, and once the 12 month anniversary roles around for the chain and emissions drop.
However, in my view the real benefit of owning and staking $STRD is the other feature unlocked in this recent upgrade.
Revenue Sharing
Stride takes peoples deposits of liquid tokens, such as ATOM, OSMO or EVMOS (as examples) and stakes them on the respective chain. The original owner receives an LSD token in its place (lets use ATOM as the example). In this case, deposit ATOM to stride, receive $stATOM in return. The $stATOM will slowly grow over time in value compared to liquid ATOM's, as the staking rewards accrue and compound.
Here is a great ELI5 the Stride team put out a while ago in a tweet:
ELI5: How does stATOM yield work?
$ATOM is a coat, and $stATOM is the coat check ticket. Every day, someone puts a little money in the coat pocket - that's the staking rewards.
Since there's more money in the coat pocket every day, the ticket constantly gains value.
If you buy the coat check ticket one day and sell it the next, you make a profit, since each day the coat becomes more valuable.
Whoever holds the ticket can get the coat back at any time. When you reclaim the coat, you also get all the money in its pockets.
The thing is, that 90% of the staking rewards get put in "the jacket", the other 10% will now be going to $STRD stakers. So, if you hold and stake the Stride token, you will earn some inflationary staking return in $STRD, but also a share of the staking revenue from very token that gets deposited and liquid staked on Strides platform.
How much is it?
At the moment, the returns are not big. I claimed my first 24 hours of staking rewards, and worked it out to be roughly 3.3% APR (on top of the STRD return of 16%). Not nothing, but not much really. But it gets payed into your wallet when you claim staking rewards as the liquid staked tokens.
But the thing to keep in mind is that these are the LSD tokens, so they will grow in value over time, and each day I will claim a little more. As Stride tokens gain more use cases (like the recent addition of $stATOM as a collateral on Mars Protocol which I mentioned in this post last week), the 10% revenue share will grow. Adoption will drive up these returns. The onboarding of new chains will also enhance these returns.
One stop cosmos portfolio?
Could owning and staking $STRD be the best way to accumulate a diverse portfolio of Cosmos eco-system assets? Time will tell, but I personally think that it could very well be. This takes a large amount of hassle out of buying multiple tokens, managing multiple stakes and compounding. Over time, more and more tokens will be added to the platform, and more and more use cases for the LSD tokens will appear around the Cosmos.
Stride could be the single best way to build a Cosmos portfolio in the long run.
Are their risks?
Of course, like any crypto, there are a range of risks.
Exploit - Stride has been audited multiple times, and will continue to be on an ongoing basis. However, any exploit could still occur, we have seen audited projects exploited many times.
Rug - Ever present risk, however minimal it may seem. I guess the easiest way Stride could be a rug would be if the LSD tokens could be minted and flooded into LP's on external platforms like Osmosis.
Competition - a number of other LSD projects are live or building in the Cosmos - Stride has first mover advantages but this could be overcome by a better offering in time.
Lack of adoption - Stride could remain a niche and never gain traction in the Cosmos community.
Self custody risk - individual risk is always present in crypto, key management and security is up to individuals.
Regulatory - I'd imagine the SEC would consider Stride a security, so their is clear risk here, most likely for US users. With crypto obviously being systematically targeted in the US at the moment, who knows what the US regime could do to attack the project. This is more of a general risk to crypto as a whole, or mainly US investors.
So, weighing the risks and benefits, I am personally bullish on Stride, hold and stake $STRD and aim to accumulate more. I believe $STRD could be the single best investment in the Cosmos eco-system currently, with a mid to long term horizon.
This is not financial advic3e, just my personal thoughts. Do your own research please.
Thanks for reading,
JK.