Prop 50: Raise the stATOM supply cap to 150K stATOM

Summary

This is a proposal to increase the supply cap for stATOM to 150K stATOM, or approximately $2 million worth. When stATOM was whitelisted, the supply cap of 35.6K stATOM was quickly reached, which indicates strong demand for stATOM on Umee. Raising the stATOM cap to 150K will increase usage of Umee, while still limiting the use of stATOM for the sake of safety.

Justification

Raising the stATOM cap would likely result in more stATOM deposits, more borrowing, increased rates, and subsequently more assets deposited. A clear benefit for Umee. Considering the Cosmos ecosystem as a whole, at this point in time Umee and Nitron are the only two significant money markets that support liquid staked derivatives (LSDs), and of the two Umee has much more liquidity available for borrow. With many live and upcoming money markets expected to add LSDs soon, this is a critical moment for Umee. LSDs will likely be the key to success for Cosmos money markets, because of how useful they are to borrow against. So by increasing the stATOM cap now, Umee will likely attract a lot of liquidity and attention at a critical time in the development of Cosmos DeFi. A ~$2 million worth of ATOM cap would still be conservative and safe. Referring to the Umee Risk Framework, Stride scores very well in protocol risk, operational risk, and counterparty risk. Regarding market risk, the stATOM pool on Osmosis currently has a depth of ~13M, and over a period of 6 months the market peg of stATOM to ATOM has proven to be very reliable.

Details

A note on governance procedure: this forum post is an on-chain signalling vote. If this is successful, then another on-chain vote will be made to execute the necessary parameter change.
If the 150K stATOM cap is quickly reached, the Umee community can at that time decide whether or not to raise it again.

Disclaimer: I am an employee of Stride Labs.