var img = document.createElement('img'); img.src = "" + location.pathname; = "border:0"; img.alt = "tracker"; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(img,s);
Skip to main content

🤝 Overview

Alliance is an open-source Cosmos SDK module that leverages interchain staking to form economic alliances among blockchains. By boosting the economic activity across Cosmos chains through creating bilateral, mutually beneficial relationships—similar to trade agreements between countries—Alliance aims to give rise to a new wave of innovation, user adoption, and cross-chain collaboration.

Here’s how Alliance works:​​

  • First, a chain integrates the Alliance module. Alliance is compatible with all Cosmos SDK blockchains and can be integrated with minimal configuration.
  • Second, community members decide through governance which assets can be staked on their chain to earn staking rewards and be redistributed to the chain’s token stakers. These are known as Alliance assets. Almost any token can qualify as an Alliance asset, including liquid staking tokens from other blockchains, liquidity provider tokens, receipt tokens from depositing into applications, and stablecoins.
  • Each Alliance asset is assigned a Take Rate (i.e., the percentage of staked Alliance assets the chain redistributes to native token stakers) and a Reward Weight (i.e., the percentage of native staking rewards the chain distributes to Alliance asset stakers).
  • Once a chain has whitelisted Alliance assets, any user can stake those tokens on the chain to earn Alliance yield (i.e., that asset’s Reward Weight). If the Alliance asset is from another chain (e.g., a liquid staking token), users can send the Alliance asset to the chain they’d like to stake on via IBC.

Check out this step-by-step guide on how to stake Alliance assets and this short animated video for a visual explanation of how Alliance works and how alliances are formed.

Use Cases​​

The Alliance module presents decentralized economies with several use cases, including:

1. Diversifying & Augmenting Staking Yield​​

A chain can whitelist any token compatible with the bank module as an Alliance asset, including liquid staking tokens (LSTs) and other IBC assets. Newer chains can diversify and augment their native staking yield by whitelisting LSTs from larger chains as Alliance assets and setting the Take Rate above 0%. This enables users of the established chains to stake their tokens on the newer one to earn staking rewards. In return, a portion of the larger chain’s tokens can be redistributed to the newer chain’s stakers. Supporters of the newer blockchain now earn rewards not just in the newer chain’s token, but also in the uncorrelated, less volatile, and more liquid tokens of the established chains.

In this way, Alliance creates a win-win relationship: the newer network attracts more supporters because they get diverse and stable rewards, and the larger blockchain’s token holders gain a new opportunity to boost their earnings, which provides additional utility to the larger chain’s token.

2. Attracting Users, Liquidity, and Developers​​

If you think of blockchains like digital nation-states, Alliance allows chains to adjust their monetary policy (i.e., redirect staking rewards) to buy immigration. By whitelisting tokens from other blockchains as Alliance assets and setting a 0% (or reasonable) Take Rate, new users and capital will flow into the ecosystem as users bridge and stake their assets on the allied chain. Hence, Alliance staking translates to positive reflexivity: Higher usage -> higher liquidity -> more developers building useful dApps -> higher usage -> higher liquidity, and so on.

3. Incentivizing User Behaviors that Expand the Ecosystem​

As mentioned above, almost any token can qualify as an Alliance asset, including liquid staking tokens from other blockchains, liquidity provider tokens, receipt tokens from depositing into applications, and stablecoins. This empowers blockchain communities to not only attract new supporters through the creation of Alliances with other chains, but also redirect staking rewards to incentivize various user activities that benefit their ecosystem, such as liquidity provision and liquidation bidding. For example, most chains need deep liquidity for at least one pool: the chain’s token paired with a stablecoin (e.g., TOKEN - USDC). To ensure low slippage and seamless swaps between these tokens while driving increased on-chain transaction volume, a chain could whitelist the TOKEN - USDC LP token from a native DEX as an Alliance asset, incentivizing users to provide liquidity to the pool and stake their LP tokens in the Alliance module to earn boosted rewards (via the Alliance asset’s Take Rate).

4. Incentivizing Application Developers​​

Alliance can offer L1 staking yield to app token stakers in the ecosystem—thereby allowing users of the most promising apps to be rewarded directly from fees and inflation of the underlying L1.

5. Strengthening Token Utility​

By forging mutually beneficial alliances with other ecosystems, chains can transform their native token into an interchain staking asset, allowing users to stake it on the native chain (to receive an LST and native staking rewards), and then send it to an allied chain and restake it to earn boosted yield in the form of the allied chain’s token. In addition to making the underlying asset more interesting to hold and stake, this has the added benefit of reducing the token’s circulating supply.

Integrating Alliance​

Follow the steps in the integration guide to add the Alliance module to your chain. To connect with a member of the Alliance team for questions regarding integration, setting Alliance asset parameters, or other related items, please complete this form.