Hydra Ecosystem Update — January 2023
Welcome to the latest ecosystem development update for Hydra! In this article, we will provide an overview of the key developments that have taken place in the Hydra ecosystem over the past quarter, including new product launches, strategic milestones, project developments and more. So without further ado, let’s dive in and see what’s new in the world of Hydra!
Hard-Fork — October 27 (Completed)
The hard fork activated on October 27th was a significant milestone for the development team. Prior to the fork, the community was informed and given the opportunity to update their nodes in preparation.
With the fork, several new features were introduced to the Hydra blockchain. Some of these are:
- Block time reduction from 128 seconds to 32 seconds
- New EVM version for smart contracts
- Improved processing efficiency for nodes, taking advantage of all processing cores
- Introduction of the delegating staking and superstaking features
- Increased peak processing power of up to 2,000 TPS
Thanks to the preparations starting one month prior the fork activation date, the transition went through smoothly and without interruptions.
Hard-Fork — January 2 (Completed)
Shortly after the fork went into effect, we noticed that there was a small calculation issue regarding the pace at which block rewards grew. Although the deviation started at 0 and incremented slowly, it needed to be taken care of, as otherwise the deviation would have grown exponentially as time passes.
We quickly identified the error that caused the miscalculation and fixed it. After an internal testing round on the devnet, we shipped the new wallet version to production, along with an announcement to node operators.
The hard fork that activated the fix went live on January 2nd, and there were no interruptions to the operation of the chain.
Launch of 3 new Stablecoins! (Recently Completed)
In December we announced the introduction of three new stablecoins to the Hydra ecosystem: USDC, USDT and BUSD.
When combined with the previously available DAI token, Hydra chain now covers more than 95% of the total stablecoin market cap!
The introduction was composed of two components:
- Made available on the Hydra cross-chain bridge as a swappable asset
- Listed on the Hydra DEX with $80,000 worth of seeding liquidity, thus becoming available for trading
Why stablecoins?
Over the past few years, stablecoins have become an integral part of the crypto space and are now dominating not only trading volumes, but also make up 3 out of the top 10 cryptocurrencies by market cap.
This is a clear indicator for their utility value and the central role they play in building diverse and healthy ecosystems. Introducing more stablecoins is therefore a strategic step that we are undertaking to better capture the many opportunities in the space of DeFi.
Strategic Positioning of USDC (Recently Completed)
Accompanying the above milestone, we have understaken a strategic step that will replace the prioritization of the DAI stablecoin with the newly introduced USDC stablecoin.
To accomplish this, the DAI/HYDRA liquidity mining campaign was replaced by the USDC/HYDRA liquidity mining campaign, keeping the same budget.
What does this mean?
To put simply, USDC will be the connecting liquidity pool between stablecoins and any other tokens traded on the DEX. The benefit of having one main connecting stablecoin over multiple ones is that the liquidity can be consolidated and thus the slippage is reduced for all trades.
To reduce the frequency of multi-hop swaps (which tend to be more expensive than single-hop swaps), it is strategic to go for the stablecoin with highest proven usage/popularity.
You may think that considering this criteria, USDT would be the obvious choice. After all, it has the highest market capitalization of all, so why go for USDC?
Looking more closely, it becomes clear that the market cap dominance is mainly a legacy effect. USDT was the first-mover and thus earned the benefit of being treated as the primary trading pair on centralized exchanges.
This creates a network effect, where users on exchanges are incentivized to hold and trade with USDT, thus new pairs are again launched with USDT and so on. It creates an unfair advantage, overwriting the actual popularity of competing stablecoins.
Looking at the space of decentralized finance, we get a different picture. Here, the biggest volumes and liquidity pools are USDC-based. We will share two data points below.
In the above screenshot you see the amount of USDC and USDT supplied to the AAVE lending protocol on Ethereum.
In the below screenshot you see the liquidity and volumes for USDC and USDT on Uniswap.
In both examples you will notice that in a decentralized environment where people are free to trade with their preferred stablecoin, USDC generally dominates. Given that the Hydra DEX is such an environment, we followed the data and made the strategic move to focus on it.
Launch of new LM Campaigns (Recently Completed)
On January 3rd, we reached another important milestone by launching a set of stablecoin-specific liquidity mining campaigns.
A total of 3 new campaigns were launched for the following pools:
- USDC/USDT
- USDC/BUSD
- USDC/DAI
In the first few days after launch, these managed to attract more than $600,000 worth of liquidity into the Hydra DEX.
All campaigns can be accessed through the link below:
Rewards accrue on a per-second basis and can be tracked in real-time.
Hydra DEX Staking Improvements (Completed)
Over the past weeks, the team has worked on several improvements to the DEX user interface. These include:
- Correct Display of Discontinued Campaigns (Recently Launched)
The front-end will now check directly with the on-chain staking smart contracts whether an actively running liquidity mining campaign for the pool is available. If no active campaign is found, the displayed APY will become 0% immediately.
The first pool where this new feature is used with is HYDRA/DAI.
Going forward, this real-time check will make the campaigns more transparent and user-friendly.
- Introducing non-Hydra Liquidity Pools (Recently Launched)
So far all liquidity pools had HYDRA as one of the paired assets. With this architecture, HYDRA could be used as a central connecting point — not only financially, but also in terms of calculation logic (acting as a denominator).
In preparation for the stablecoin and other strategic pools, we adjusted the Hydra DEX logic to work with several core assets in parallel.
- Removal of LP Tokens from the List of Swappable Assets (In Development)
Right now the list of swappable assets includes several LP tokens, even though they actually have no liquidity available. This is due to a backend mechanism that treats swappable and stakable assets the same. So these LP tokens showing up is essentially a by-product of them being listed on the staking section (as part of the LM campaigns).
We are working on updating the backend and frontend logics to separate the two sections. The result will be a much cleaner list, showing only the actually swappable assets. The new version should be shipped in the next 1–2 weeks.
Next Generation DEX Smart Contracts (Surprise!)
This is a bonus-feature we have secretly been working on, and are happy to reveal today!
The Hydra team has spent several months of development work to advance this feature sufficiently, so that we are finally ready to reveal it! It is one of the biggest upgrades we plan for the Hydra DEX this year.
What new features will this upgrade unlock?
- Range-Focused Liquidity Pools
Liquidity providers will be able to concentrate their liquidity within certain price ranges, thus making it possible to optimize for different pool types and risk tolerances. Liquidity providers could select a range they are personally comfortable with, thus controlling for price and impermanent loss risk.
- Improved Capital Efficiency
One of the main benefits will be the capability to concentrate liquidity for stablecoin pools within a close range around $1 (given that they are expected to always stay pegged to the USD).
Depending on the range tightness, the liquidity depth could improve by a factor of 20–50 times. This not only makes the DEX significantly more useful to traders, but also unlocks higher returns from trading fees — thanks to a much higher utilization rate.
The feature can also be used for the benefit of certain derivative-type assets that can only move in certain price ranges. You can think of the LYDRA/HYDRA pool as an example, which can only move between 0 and 1 as a relative price.
- Flexible Fee Settings
Another advantage will be the flexibility to define pool-specific fees. Right now the default fee is set to 0.3% and it can not be changed. The new smart contracts will have the capability to adjust the fee rate for each pool invidiually, which comes handy for optimization.
For example, stablecoin pools operate better under low fee settings while low-liquidity tokens generate the best yields with high swap fees. While the 0.3% is a sweet spot to balance the multiple pool type requirements, it fails to optimize for any of them.
As a result of the upgrade, we expect more efficient operations with the combination of higher liquidity, more trading income and lower swap costs to traders (depending on the pool).
Next Generation Staking Smart Contracts (In Development)
Accompanying the new DEX smart contracts, we are also developing a new set of staking smart contracts that will be capable of working with the new architecture.
The combination will allow us to attract new capital, use it with very high efficiency and boost the volumes and income generated by the DEX.
The development of this item has already started and we plan to launch both parts together, in order to enable a smooth and uninterrupted transition together with the LM campaigns.
Hydra Analytics Data Fixes (In Development)
The introduction of the stablecoin pools resulted in some parts of the analytics page to not process all data correctly. We are aware of this and a series of fixes are on their way, restoring data accuracy.
We are also aware of corner case scenarios where the volume is reported as negative. This will be addressed as well.
Hydra Bridge Major Upgrade (Completed)
Last month we launched a massive upgrade to the Hydra cross-chain bridge, adding several features and architecture components.
- Introduced Industry-First Defender Nodes (Recently Launched)
Following a series of very significant cross-chain bridge exploits over the past year (roughly one per month, resulting in a combined damage of $2 Billion), we decided to invest time and resources on strengthening the security architecture of our own bridge.
We carefully analyzed past exploits and drew important learnings from them. The defender nodes that we introduced in December are the result of this. They enable an additional and independent layer of security on top of the existing architecture.
Defenders are nodes that have isolated authority for only one task: independently monitoring the lockup activity on each chain and double-checking if the observers have done a proper job. To put it in simpler terms: Defenders have the job of making sure the observers don’t lie.
The chart below outlines the newly introduced components, marked in red:
As a result, we now have one of the most secure cross-chain bridges in existence, giving us the confidence to push forward to attract significant amounts of capital to the chain.
- Compatibility with a Multi-Chain Architecture (Recently Launched)
Additionally, the deployment introduced a series of architectural changes that make it possible to expand the bridge towards more EVM-based blockchains. In other words, the bridge can now be considered “cross-multi-chain”.
Although we don’t have immediate needs to expand with additional chains, it is important to have the capability for when opportunities present themselves. One strategic advantage of not being limited to Ethereum is that during bull markets, the transaction fees spike to levels that make it very expensive to bridge over funds.
Connections with low-fee chains could aid in such situations.
Multi-Chain Router Application (NEW!)
In preparation for a multi-chain bridge expansion, we are currently in the process of developing a custom router application that would help with the balancing and navigation of locked up funds across the various chains.
The job of this router will be to gather and provide information about the individual balances of the bridgable assets inside the lockup vaults on different chains. This is important because without it, users may try to bridge funds to a chain that has no or insufficient locked up funds for a specific asset and therefore isn’t available for a bridging operation.
The router would then redirect the request by offering alternative chains that are currently available.
Our team has recently initiated the work on this router application, completing the architecture work and proceeding with active coding.
Hydra Mobile Delegation (In Development)
Following the hard-fork on October 27th, which introduced delegated staking as a procotol-level feature, we started working on ways to make this important functionality more accessible.
As a result, two main user applications were defined for this new feature:
- Integrating delegation to the Hydra mobile application
- Integrating delegation to the Hydra DEX interface
Work on these objectives has started as of mid November and today we are happy to share that the backend part of the development is complete.
The front-end team is working on the integration into the user interface, along with several data points that will help aid users with the selection of their preferred superstaker. We estimate that overall, 80% of the work is complete.
Superstaker Overview Sheet
Following the launch of the delegation and superstaker features, we put together an online sheet where all the data about superstakers is gathered and tracked in real time (updating regularly).
If you are looking for a superstaker to delegate to, feel free to check out this sheet, which includes all important information and tracks various health metrics for the node automatically.
Multi-Sig Application (In Testing & QA!)
We have completed the development of a multi-sig application for the Hydra blockchain, based on the technology spearheaded by Gnosis.
The application is equipped with a suitable user interface and several supporting services. Setting up community-owned wallets with a collective permission system is now possible and live in our developer environment.
After further testing and polishing, we will be making it available as a tool for public usage.
Hydra-based Project Highlights (Growth Edition!)
In this section we will be looking into some of the more notable developments within the individual projects building on the Hydra chain.
🔹 ChangeX (Celebrating $1,000,000)
On December 6th, ChangeX announced the launch of a marketing campaign for their newly introduced staking pool product. For the duration of three months, delegators who choose ChangeX will not be charged any commission.
As a result of this campaign and their previous growth trajectory, the total TVL inside their pool surpassed $1 Million for the first time — an important achievement for one of the pioneer projects building on Hydra.
🔹 GoMeat (Record Burns)
GoMeat completed the year with a major marketing push, generating more than 700 orders, just in December alone.
As a result 6,700 GOMT were burnt, bringing the total to nearly 40,000 GOMT! Get ready for even more burns in 2023, as the burn rate for orders was raised from 4% to 5% as of January 1st!
🔹 LockTrip (Record Booking Volume)
LockTrip reported their best-ever quarter to date, surpassing $250,000 worth of bookings for the first time in Q3 2022. You can read the full report below:
As the marketing campaigns scale and the number of users grows, the team expects new records to be set throughout 2023!
🔹 STRAY Project
Stray continued to make donations to animal rescue and shelter organizations. The two latest donations are shared below:
Donation to Dogshelter Palomino Colombia (100 EUR):
Donation to Lucky Dog — Djerba Dog Rescue in Tunisia (100 EUR):
The project finances these donations through their superstaker activities and staking rewards.
Hydra Core Feature Research (NEW!)
We have started a research and development initiative that will explore several paths to improve existing core features of the chain, along with potentially introducing completely new ones.
The goal of the initiative is to analyse existing and emerging technologies in the crypto space, research potential benefits and pathways for Hydra, explore opportunities with an attractive risk/reward and experiment with possible implementations.
While there are no clear objectives to this task, we find it important to push the boundaries of our understanding/assumptions and to embrace the future with an open mind.
Explorer Redesign and Improved Interface (In Development)
After a temporary deprioritization, the new explorer interface has returned to the actively worked items and we expect to launch it in early February!
We are really excited about this one. In addition to visual improvements and data rearrangements, the update also introduces a number of new features that will enhance the user experience.
A small sneak-peek can be viewed in the above screenshot, with the dynamic node-map positioned at the homepage of the explorer.
Hydra Projects Page and Website Update (Completed)
We recently updated the hydrachain.org website with the latest data.
This includes:
- Updated maximum TPS capability from 500 to 2,000 TPS
- Introduced ChangeX, Hydra Bridge and LYDRA in the “Projects” section:
- Updated a number of data points regarding the individual projects
In the coming days we will add several product links to the website, making it easier for newcomers to navigate and explore the network. This will include products like the bridge, mobile wallet and others.
Team Restructuring
With the start of the new year, we have undertaken an internal restructuring process of the team, along with a number of processes.
This will enable a closer collaboration between the different product teams, further strengthened by faster-paced communication channels and procedures.
Additionally, both the front-end and blockchain teams were strengthened in terms of head-count and expertise, positioning us well for a strong year of 2023.
With this, we conclude this month’s ecosystem update and want to thank the Hydra community for their continuous support and feedback. It looks like 2023 will be a very exciting year!
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HYDRA is a proof-of-stake blockchain optimized for real-world businesses. It tackles some of the most profound and challenging issues with existing blockchain economies and introduces a truly shared economy with fair treatment to all network participants.
