Agoric is Launching a New Stable Token - IST
The Team at Agoric has meticulously crafted an economy for its blockchain and at the center is the Inter Protocol. The launch sequence is about to start its countdown and when Inter takes off, it will do so in a carefully orchestrated manner.
Once fully live, Inter Protocol will have a collection of components that seamlessly work together to drive the activity for the Agoric blockchain’s micro economy and the larger interchain economy of the Cosmos. This is a very intricate collection of moving parts and while impressive, how all this fits together is not immediately intuitive.
In order to deliver the clearest overview of what Inter Protocol is about to bring to the Cosmos, I have developed a series of graphical pictures. I will start with an overview of the components that make up this new economy and continue with graphical representations of each of the three primary processes for Inter’s brand new stable token: IST.
The Components of a New Economy
The components of Inter Protocol are depicted in the picture below.
Stability is the Paramount Goal
The first process that will kick-off with the launch of Inter Protocol is the Parity Stability Module.
With it, users can bring their bridged dollar backed stable tokens from Ethereum (USDC and DAI) and exchange them by minting the new Inter stable token, IST. I expect that other AMMs and dApps across the Cosmos will quickly create use cases for IST, which will allow it to spread across the Cosmos, by way of the Inter-Blockchain Communication protocol (IBC).
An Intricate System of Money
At the core, Inter is based on an over-collateralized model, in which digital assets are deposited into vaults and IST is minted. This process will start with ATOM and other Cosmos IBC assets will be added, via governance.
The amount of IST that can be minted is based on a predetermined collateral ratio or borrow limit. If the value of the collateral falls and the limit is breached, a liquidation process initiates, in which the assets are sold on the Automated Market Maker (AMM). Pricing information is obtained from established, trusted, external sources.
See the picture below for a graphical representation.
The Cherry on Top
Last to roll-out is an innovative mechanism to provide supplemental value to the governance token. It is called BLD Boost.
Delegators securing the Agoric blockchain by staking their BLD tokens with active validators will not only be able to earn staking rewards, but also mint some IST against the locked amount of BLD staked. This amount is understandably small, since the primary objective for BLD is governance and staking to secure the chain. There is also no liquidation process, since the amount of IST minted is just a loan against future staking rewards. It can be paid back from those staking rewards, before the staked BLD is available for release.
See the picture below for a graphical representation.
A Revenue Generating Model
I have repeatedly described what the Agoric Team has created as an economy. This is not just because of the financial nature of these processes. Inter represents a professional design to produce one of the most sought after products in the Cosmos: a stable token that is referenced to the most widely used currency in world trade today, the dollar.
With IST, all fees and prices can be denominated in a consistent manner, across all products, designed by dApp builders in the categories of decentralized finance, NFTs, on-chain services, and eventually off-chain goods and services. Initially, this will be the case for the developing micro-economy of the Agoric blockchain; however, I expect that IST will quickly spread across the internet of blockchains.
Above all, any economy can only be successful if it produces the revenues to sustain its ongoing growth. As I demonstrated in my diagrams, the Team at Agoric has ensured that fee revenue is generated at every step in the process. And, the fee revenue stream is designed to support the participants in its economy, with the BLD holders and stakers in a position to benefit first and foremost.
Tot ziens – Opa.
Sources, References, and Further Reading
Agoric – https://agoric.com/
Agoric Twitter – @agoric
Agoric Blog - https://agoric.com/blog/
Agoric Whitepaper - https://agoric.com/wp-content/uploads/2022/08/Agoric-White-Paper-v1.1.pdf
Inter Protocol - https://inter.trade/
Inter Protocol Twitter - @inter_protocol
Inter Protocol Whitepaper - https://inter.trade/static/whitepaper-6106f841c1ed6c564afd2fc3238240a9.pdf
My first article introducing Agoric: @kaaskop/the-future-is-built-on-javascript-with-agoric-systems
My second article highlighting Agoric’s economy:
@kaaskop/crafting-an-inter-chain-economy-with-agoric
