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In June 2023, Inter Protocol launched IST Vaults, a decentralized finance (DeFi) application designed to bring stability and liquidity to the Cosmos ecosystem. One year later, IST Vaults have experienced significant growth, cementing their position in the Cosmos ecosystem. To mark this milestone, the recent celebration of the one-year anniversary in a Twitter Space highlighted IST Vaults' journey, achievements, and community engagement. We explore IST Vaults' journey, analyzing their performance, growth, and future potential.
Launched on June 29, 2023, IST Vaults is a decentralized finance (DeFi) protocol developed by Inter Protocol on the Agoric chain. Initially introduced as a fee token for transactions on Agoric, its broader potential led to the creation of IST Vaults, which is now a cornerstone of the Cosmos DeFi ecosystem. Dean Tribble, founder of Agoric, noted, “We wanted to encourage the bridge of other systems to come into the cosmos, so we rolled out the parity model system first, then added vaults.”
IST Vaults enable users to mint IST, the stable token of Inter Protocol, using various collateral assets. Pegged to the US dollar, IST leverages the Inter-Blockchain Communication (IBC) protocol to integrate assets across the Cosmos ecosystem, ensuring stability and security. At launch, IST Vaults supported only ATOM as collateral. Over time, additional assets such as stATOM, stkATOM, stTIA, and stOSMO have been added based on community governance decisions.
At launch, IST Vaults carried significant expectations, such as:
Provide a stable store of value for users.
Enhance liquidity in the Cosmos ecosystem.
Promote DeFi adoption and innovation.
Offer a decentralized alternative to traditional stablecoins.
Facilitate cross-chain asset bridging via IBC.
IST Vaults have experienced steady growth and adoption since their launch. With over 200 active vaults and 99% of the total circulating IST supply (1.48 million) minted through vaults, they are the preferred minting option. The Total Value Locked (TVL) has also reached a new high of 7 million dollars, which reflects increased transaction volumes and user engagement. The ability to bridge assets across the Cosmos ecosystem via IBC has enhanced interoperability and the overall value proposition of the network.
IST Vaults have increased liquidity and stability within Agoric's DeFi ecosystem by allowing users to mint IST tokens against collateral assets. This has attracted additional capital and participation, while encouraging economic activities such as yield farming, liquidity provision, and decentralized exchange operations. IST Vaults have also contributed to maintaining the peg of IST to USD, ensuring reliability and trust among users and investors.
Overall, the performance of IST Vaults has been remarkable, which indicates their potential to drive DeFi adoption and innovation on Cosmos. John Galt, head of strategy at Stridezone, remarked, “I'm very satisfied with IST right now, vaults have helped IST to achieve decentralization, transparency and trustlessness.”
Feedback from IST Vaults users shows their satisfaction with the platform's reliability and ease of use. Users appreciate the straightforward process of minting IST tokens against collateral, which has enabled them to manage assets securely while participating in decentralized finance
One user, a DeFi enthusiast, noted, “IST Vaults have provided unparalleled stability and peace of mind, and allowed us to focus on our core operations without worrying about asset security.”
Over the past year, IST Vaults have undergone significant technological advancements and improvements.
Initially, IST Vaults launched with ATOM as the sole collateral asset. Over time, additional assets such as stATOM, stkATOM, stTIA, and stOSMO have been added based on community governance decisions. This allows users to leverage staked assets while continuing to earn staking rewards, opening new avenues for maximizing yields and participating in the Cosmos ecosystem's growth.
By adopting LSTs, IST Vaults have increased interoperability across different blockchain networks. This enhancement allows seamless bridging of staked assets to IST Vaults on Agoric via the Inter-Blockchain Communication (IBC) protocol. The ability to bridge assets across the Cosmos ecosystem has improved interoperability and the overall value proposition of the network.
Continuous upgrades in smart contract security and user interface enhancements have improved reliability and accessibility. Enhanced wallet integrations and intuitive dashboards now provide transparent insights into collateralization ratios and IST minting activities. These improvements ensure that users can manage their assets securely and efficiently.
Collaborations with leading DeFi protocols such as DCF, pSTAKE, and Persistence have expanded the reach and capabilities of IST Vaults. These partnerships have been instrumental in driving innovation and adoption within the Cosmos ecosystem.
Future plans involve leveraging Agoric's orchestration capabilities to make IST minting and onboarding seamless, potentially enabling single-click processes across various front-ends.
Community feedback has played a vital role in shaping the evolution of IST Vaults. The team has actively engaged with users and incorporated their suggestions and ideas into the development roadmap. This way, IST Vaults remain aligned with user needs and market trends. Additionally, community proposals have the power to add new collateral types, such as Bitcoin and Ethereum, based on user interest and votes. There is also a highlighted need for better mobile optimization based on community feedback.
Aaron, contributor at OsmosisZone, commented, “If you wonder how we got to where we are now, how we got this particular list of asset types, you know it all comes from the community. Whatever the community wants to see, they need to come forward, and put a proposal to make it happen.”
Like any project, the IST Vaults team encountered several challenges, typical of emerging DeFi platform, during the first year. These included initial scalability issues with transaction processing speed and liquidity constraints on certain blockchain networks. Moreover, ensuring robust security measures and maintaining a seamless user experience posed ongoing challenges.
To address these, the team behind IST Vaults implemented phased upgrades to optimize transaction speeds and enhance scalability. Collaborations with blockchain developers and continuous monitoring of network performance helped mitigate liquidity issues. Additionally, stringent security protocols were implemented and improved to safeguard user assets and increase trust in the platform.
The journey of IST Vaults has been marked by invaluable insights into user behavior and market dynamics within the DeFi space. One crucial learning has been the diverse use cases of IST Vaults, from individual investors seeking stable returns to institutional players leveraging collateralized assets for liquidity management.
Understanding these market needs, IST Vaults has adapted its technological infrastructure to accommodate varied user demands. This includes refining collateral management strategies, introducing flexible fee structures, and enhancing interoperability with other blockchain ecosystems through strategic partnerships.
Technologically, the team has embraced continuous innovation to stay ahead in a rapidly evolving industry. Key lessons include the importance of robust governance frameworks to ensure transparent decision-making and community-driven growth. User feedback has guided these developments and promoted greater usability and resilience against market fluctuations.
IST Vaults are positioned for continued growth and innovation, with planned features including enhanced user interfaces for better accessibility and user experience. Plans to integrate orchestration into various front-ends, allowing users to stake assets and mint IST in a single click, are also in development. “We are looking to add more collateral assets in high demand and leverage Agoric orchestration capabilities to make IST as intuitive as possible,” noted Brandon O’Toole, product manager at Agoric.
Ongoing developments aim to integrate more Cosmos ecosystem projects through IBC, expanding IST's utility. Security upgrades and collateral management optimizations are also priorities to enhance stability and user trust. Community involvement remains crucial, with proposals and votes driving the addition of new collateral types and other protocol developments.
IST Vaults aims to solidify its role as a cornerstone of stability and liquidity within the Cosmos ecosystem. One way is by strengthening integration and collaboration with other Cosmos projects, IST Vaults plans to contribute significantly to the growth and interoperability of decentralized finance (DeFi) across multiple blockchains. The long-term vision includes becoming a preferred platform for collateralized stablecoin issuance and management while supporting a wide range of assets and enhancing financial inclusivity through decentralized protocols.
IST Vaults have made significant strides in its first year, offering secure, over-collateralized minting of IST tokens and introducing innovations like LSTs such as stATOM. It has promoted liquidity, stability, and economic empowerment within Cosmos and Agoric ecosystems. Through its ups and downs, IST Vaults has demonstrated its resilience and adaptability, addressing challenges head-on and incorporating user feedback to improve the experience.
The continued upward trajectory of IST Vaults is highly anticipated as they drive progress in DeFi and shape the Cosmos ecosystem. As Brendan noted, “The future is multichain, and this year demonstrates that.”
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