Inter Protocol is a decentralized finance (DeFi) system designed to create and manage IST (Inter Stable Token), a cryptocurrency-backed stable token pegged to the US dollar. Developed on the Agoric blockchain, Inter Protocol aims to provide a stable asset for the interchain ecosystem while serving as the native fee token for the Agoric platform.

Overview

Inter Protocol consists of a set of smart contracts deployed on the Agoric blockchain that manage the minting, burning, stability mechanisms, and governance of IST. The protocol is designed to maintain IST's parity with the US dollar through various mechanisms, including over-collateralization and liquidation processes.

Key features of Inter Protocol include:

• Fully collateralized stable token (IST)
• Native fee token for the Agoric chain
• Interoperability with the IBC (Inter-Blockchain Communication) ecosystem
• Multiple minting mechanisms, including Vaults and Parity Stability Module (PSM)
• Decentralized governance through BLD token holders

Key Components

IST (Inter Stable Token)

IST is the primary product of Inter Protocol, designed to maintain a 1:1 peg with the US dollar. It serves several purposes within the Agoric ecosystem:

• Stable medium of exchange
• Fee token for transactions on the Agoric chain
• Collateral for DeFi applications

Vaults

Vaults are a core feature of Inter Protocol, allowing users to mint IST by locking up collateral assets. Key aspects of Vaults include:

• Over-collateralization: Users must provide more collateral value than the amount of IST minted
• Support for multiple collateral types, including ATOM and stATOM
• Liquidation mechanism to maintain system solvency

Liquidation Auctions

To manage risk and maintain the protocol's stability, Inter Protocol implements a liquidation system:

• Dutch auction model for collateral liquidation
• Allows users to bid directly for assets in multiple ways
• Helps maintain the overall health of the protocol

Oracle Network

Inter Protocol relies on a decentralized oracle network to provide accurate price feeds:

• Led by Simply Staking and other experienced oracle node operators
• Uses Chainlink's model and software, adapted for Agoric's framework

Reserve

The Reserve acts as a central component of Inter Protocol:

• Holds additional over-collateralizing assets
• Manages accounting for the protocol
• Provides an emergency fund to cover shortfalls in major liquidations or extreme market volatility

Economic Committee

The Economic Committee (EC) plays a crucial role in managing the protocol:

• Consists of crypto, TradFi, economic, and FinTech experts
• Delegated by BLD token holders
• Manages technical-economic parameters of IST

Governance

Inter Protocol is governed by Agoric BLD token stakers. Key aspects of governance include:

• BLD token holders can vote on key governance proposals
• Staking BLD tokens grants voting rights
• Decisions can impact protocol parameters, upgrades, and other critical aspects

Tokenomics

BLD Token

BLD is the governance token for the Agoric ecosystem, including Inter Protocol. Its primary functions are:

• Voting on governance proposals
• Staking to secure the network
• Potential for other utility within the Agoric ecosystem

IST Token

IST serves as:

• A stable asset within the Agoric and broader IBC ecosystem
• The native fee token for transactions on the Agoric chain
• A potential building block for other DeFi applications

Technology

Inter Protocol leverages several technological components:

• Smart contracts deployed on the Agoric blockchain
• Integration with the Inter-Blockchain Communication (IBC) protocol for cross-chain functionality
• Decentralized oracle network for price feeds
• Liquidation mechanisms to maintain system stability

Use Cases

IST and Inter Protocol have several potential use cases within the Agoric and broader IBC ecosystem:

• Stable medium of exchange for decentralized applications
• Collateral for other DeFi protocols
• Fee payment for transactions on the Agoric chain
• Liquidity provision in decentralized exchanges

Partnerships and Integrations

Inter Protocol has established partnerships and integrations within the Cosmos ecosystem:

• Integration with Osmosis DEX for liquidity provision
• Collaboration with Crescent for additional liquidity pools
• Partnership with Simply Staking for oracle services

Roadmap

As of 2023, Inter Protocol's roadmap includes:

• Release of Whitepaper v1
• Launch of Vaults for minting IST
• Implementation of Liquidation Auctions
• Deployment of the Oracle Network
• Establishment of the Reserve
• Funding of bounties for community developers
• Expansion of IST accessibility across the Cosmos ecosystem

Challenges and Risks

While Inter Protocol aims to provide a stable and robust DeFi solution, potential challenges and risks include:

• Maintaining the USD peg during extreme market conditions
• Ensuring sufficient collateralization across all minting mechanisms
• Managing liquidations effectively to prevent system insolvency
• Potential smart contract vulnerabilities or exploits
• Regulatory challenges surrounding stablecoins and DeFi protocols