How Does Stride Work?
Stride is the leading liquid staking protocol for the Cosmos ecosystem, supporting stATOM, stOSMO, stDYDX and other IBC-compatible tokens. Users stake their tokens and receive LSTs that automatically earn staking rewards while remaining usable in DeFi. Secured by Cosmos Hub validators through Interchain Security and audited by three firms, Stride has a strong security foundation despite declining TVL from its peak.
TVL
$8M
Sector
Liquid Staking
Risk Grade
B
Value Grade
C+
Core Mechanisms
3.4.2
stATOM, stOSMO, stDYDX and other non-rebasing reward-bearing LSTs that appreciate in value against underlying tokens
Standard reward-bearing LST pattern; value accrues through exchange rate appreciation every epoch (6 hours)
3.3.2
Pooled delegation via Interchain Accounts (ICA); Stride acts as controller chain, delegating to validators on host chains
Uses IBC Interchain Accounts for cross-chain delegation; innovative use of IBC infrastructure but follows standard pooled delegation pattern
3.1.1
Pro-rata distribution of staking rewards from host chains to LST holders through exchange rate appreciation
Rewards credited to interchain account balance each epoch, reflected in LST exchange rate
2.2.4
10% fee on staking rewards: 8.5% to STRD stakers, 1.5% to Cosmos Hub stakers
Split revenue model directing fees to both protocol governance token and Cosmos Hub as part of ICS agreement
8.3.2
NovelInterchain Security (ICS) from Cosmos Hub providing ~$3B economic security; Stride block production handled by Cosmos Hub validators
One of the first major consumer chains on Cosmos Hub ICS; delegates its own security to the Hub
5.1.1
STRD token governance for protocol parameters; on-chain proposals through standard Cosmos SDK governance module
Standard token-weighted governance with STRD serving as governance token post-ICS transition
How the Pieces Interact
IBC relayer downtime or ICA bugs could prevent delegation or reward collection on host chains, causing LST exchange rate to stall or diverge from expected value
Cosmos Hub validators secure Stride but may not prioritize Stride-specific issues; governance decisions affecting Stride are split between STRD holders and ATOM governance
1.5% fee directed to Cosmos Hub may be insufficient to maintain Hub validator interest in securing Stride if TVL declines further
Multi-chain delegation across ICA introduces accounting complexity; reward timing differences across chains could cause temporary exchange rate inaccuracies
Governance can modify fee parameters or validator sets, potentially impacting LST yield; token-weighted voting means large STRD holders control protocol direction
What Could Go Wrong
- Stride relies on Interchain Accounts (ICA) across IBC to delegate tokens on host chains — IBC relayer failures or ICA bugs could freeze staked assets or disrupt reward distribution
- TVL has declined significantly from peak levels, reducing protocol revenue and raising questions about long-term sustainability of the fee model
- Dependence on Cosmos Hub Interchain Security means Stride's liveness is tied to Cosmos Hub validator set performance and governance decisions
IBC/ICA Infrastructure Failure Freezing Cross-Chain Delegation
TailTrigger: Critical bug in IBC relayer infrastructure or ICA module causes Stride to lose ability to manage delegations on host chains
- 1.IBC relayer failure or ICA module bug prevents Stride from communicating with host chains — New delegations, undelegations, and reward claims halt across all supported chains
- 2.LST exchange rates freeze as rewards cannot be collected — Users see stale yields and lose confidence in LST accuracy
- 3.Redemption requests cannot be processed as undelegation messages fail — Users unable to exit positions; secondary market LST prices drop below fair value
- 4.Extended outage erodes confidence in ICA-based liquid staking model — Users migrate to competing liquid staking solutions; TVL drops permanently
Risk Profile at a Glance
Overall: B (23/100)
Lower score = safer