# Inter Protocol > Inter Protocol is a decentralized finance protocol on the Agoric chain, minting the stable token IST, designed for the interchain ecosystem. - Canonical URL: https://iq.wiki/wiki/inter-protocol - Categories: Projects & Protocols - Tags: DeFi, Infrastructure - Created: 2024-09-30T16:01:18.452Z - Last updated: 2024-10-03T21:56:15.614Z - Source: IQ.wiki — the world's largest blockchain and crypto encyclopedia (https://iq.wiki) --- **Inter Protocol** is a [decentralized finance](https://iq.wiki/wiki/defi) (DeFi) system designed to create and manage IST (Inter Stable Token), a [cryptocurrency](https://iq.wiki/wiki/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. [\[1\]](#cite-id-qau3hs228o)[\[2\]](#cite-id-2jqdkvx30f) # Overview Inter Protocol consists of a set of [smart contracts](https://iq.wiki/wiki/smart-contract) deployed on the Agoric blockchain that manage the [minting](https://iq.wiki/wiki/minting), [burning](https://iq.wiki/wiki/token-burn), stability mechanisms, and [governance](https://iq.wiki/wiki/governance-tokens) of IST. The protocol is designed to maintain IST's parity with the US dollar through various mechanisms, including over-collateralization and [liquidation]() processes. [\[2\]](#cite-id-2jqdkvx30f) 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.[\[2\]](#cite-id-2jqdkvx30f)[\[14\]](#cite-id-brmngt07lst) # 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](https://iq.wiki/wiki/defi) applications. [\[3\]](#cite-id-vaikagbopaa) ## 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. [\[13\]](#cite-id-jnapke6hbff) * Liquidation mechanism to maintain system solvency[\[4\]](#cite-id-lqawt3hp69e) ## Parity Stability Module (PSM) The Parity Stability Module has two primary functions: 1. wantMinted - user gives PSM the accepted external stable token; PSM mints IST and gives it to the user 2. 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. [\[14\]](#cite-id-brmngt07lst)[\[15\]](#cite-id-7c95s8jrftk)[\[16\]](#cite-id-36gi2vbfevl) ## 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[\[5\]](#cite-id-7c88nl18wcn) ## 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](https://iq.wiki/wiki/chainlink) 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. [\[6\]](#cite-id-icky82k9q2) ## 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. [\[7\]](#cite-id-dkojapoeqm9) ## 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[\[7\]](#cite-id-dkojapoeqm9) # Tokenomics ## BLD Token BLD is the [governance token]() for the Agoric ecosystem, including Inter Protocol. Its primary functions are: * Voting on governance proposals * [Staking](https://iq.wiki/wiki/staking) to secure the network * Potential for other utility within the Agoric ecosystem[\[8\]](#cite-id-ts67v48v2r)[\[9\]](#cite-id-p2e7zyb435) ## 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[\[10\]](#cite-id-uw3gp78sg9p)[\[11\]](#cite-id-cc6ants54fn) # 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](https://iq.wiki/wiki/decentralized-application) * Collateral for other DeFi protocols * Fee payment for transactions on the Agoric chain * [Liquidity provision](https://iq.wiki/wiki/liquidity-providers) in [decentralized exchanges](https://iq.wiki/wiki/decentralized-exchange) # Partners * [Osmosis](https://iq.wiki/wiki/osmosis-osmo) * Crescent * Shade * Omniflix * Kado * Squid * Umee[\[12\]](#cite-id-nc4wu9l25hd)