Inter Protocol
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. [1][2]
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. [2]
Key features of Inter Protocol include over 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, and the the Economic Committee (EC) which plays a significant role in managing the protocol.[2][14]
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 including a stable medium of exchange, fee token for transactions on the Agoric chain, and collateral for DeFi applications. [3]
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, stATOM, stkATOM, stOSMO, and stTIA. [13]
- Liquidation mechanism to maintain system solvency[4]
Parity Stability Module (PSM)
The Parity Stability Module has two primary functions:
- wantMinted - user gives PSM the accepted external stable token; PSM mints IST and gives it to the user
- giveMinted - user gives IST back to the PSM, which is burned; PSM returns the external stable token
Once the user has received IST, they will transfer it to an external chain over the Inter Blockchain Communication (IBC) protocol. [14][15][16]
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[5]
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 that holds additional over-collateralizing assets, manages to account for the protocol, and provides an emergency fund to cover shortfalls in major liquidations or extreme market volatility. [6]
Economic Committee
The Economic Committee (EC) plays a crucial role in managing the protocol. It consists of crypto, TradFi, economic, and FinTech experts, it is delegated by BLD token holders, and it manages the technical-economic parameters of IST. [7]
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[7]
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[8][9]
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[10][11]
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
