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Why is everyone talking about Hydration?!
Recorded: March 28, 2025 Duration: 0:26:43Space Recording
Short Summary
In a recent Polkadot livestream, key figures from the Hydration ecosystem discussed exciting developments including the launch of new DeFi features, the introduction of Holla, an over-collateralized stablecoin, and the integration of one-click cross-chain swaps with Nova Wallet. The conversation highlighted significant growth in stablecoin adoption on Polkadot, alongside innovative strategies for liquidity management and governance.
Full Transcription
Hello, everyone, and welcome back to another Polkadot livestream.
Today, I'm super excited to have Limo,
who is the Chief NICE Officer at Nova Sama Technologies
and also a Council Member at Hydration.
And we have Ben, a.k.a. Lowell McShizz,
who is the Ecosystem Lead at Hydration.
And, yeah, I mean, we've been seeing Hyd hydration all over the place. It's, you know,
a lot of people are talking about it on Twitter, HDX, the increase in users at hydration. So I
just thought it'd be a good time to get some of the folks from the ecosystem into a live stream,
answer any questions that people have. And yeah, we'll just talk about all things hydration and some of the new
features that are coming up or some of the new projects such as uh holler the native stablecoin
and if you viewers have any questions there is a chat you can leave a chat whether you're watching
on youtube or on x and we'll be able to answer it here but um to just kick things off why don't we go to ben
and just tell us i mean i think everyone poker.eco knows that hydration is but you can just kind of
like level set for people and if you want to share a screen and just walk us through the platform
uh go ahead but tell us about hydration ben absolutely um so hello everyone, I'm Ben, ecosystem lead at Hydration. So just to give you a real quick tour on Hydration, it is an all-in-one DeFi stack built on top of Polkadot, which unites the holy trinity soon of swaps, borrowing and lending, and stablecoin. So we have two of those pieces live now and the third piece stablecoin should be going live fairly soon.
So as you can see here, this is your standard swap page
where you can swap between any two assets.
We have multiple ways of swapping.
So rather than just a single straight swap one asset for another,
you can do it, schedule it over time, breaking down.
If you've got massive size, you can break that down into smaller pieces.
You can also create OTC orders if you just have a specific price
of something in mind that you would like to swap at,
and you can just set that and forget that in the background.
We obviously, one of the main things you can do on any DEX is provide liquidity.
So you guys probably already heard of the Polkadot hydration campaign that's ongoing,
which is Polkadot treasury funded incentives for various ecosystem assets,
primarily DOT and native stable coins.
So we've seen huge rise in native USDT and USDC in the last nine months or so off the back of that.
And more recently in November time, we launched our borrowing and lending.
So this is where you can provide assets as collateral, and then you can borrow assets off the back of that.
You get paid by people who are borrowing your assets
and you pay interest to people whose assets you are borrowing.
And there are all sorts of strategies that you can build off the back of that.
A bunch of other bits and bolts, but those are probably the nuts and bolts of the product.
Okay, cool.
And you guys had a feature that was released quite recently where you can actually
you can deposit stables from centralized exchanges like just a couple of clicks.
Can you just show that? Because I think that's pretty interesting to some people.
Absolutely. Yeah. So this is one of our UX improvements. So historically,
there was a lot of FUD around it being difficult to get into the ecosystem.
So we decided we would try and make it simple and hold the hands of users.
So you press the deposit button once you've connected your wallet, etc.
And then you can choose whether you want to deposit that from a centralized exchange from another chain.
So another parachain from Polkadot Relay Chain or Ethereum, whatever.
If you choose another chain, you'll be taken to our historic cross-chain window where you
can choose which network you're sending what assets from.
If you choose centralized exchange, then we've gone through what are the sort of viable options,
and this is for getting DOT, stable coins etc from these specific exchanges
direct to your account on hydration so historically you would have had to sort of you do your deposit
to asset hub and then you're like well what is asset hub i don't know what that is i just have
polka dot stable coins where how do i get them to hydration um so uh yeah that obviously simplified
it uh significantly so you just can just then go like that and then they have to follow each of how do I get them to hydration? So yeah, that obviously simplified it significantly.
So users can just then go like that,
and then they have to follow each of these steps.
The UI will hold their hand throughout that.
It will listen out for them to land on Asset Hub
and then get the user to sign a transaction to move it on.
So it's just making sure anybody doesn't know what they're doing.
It just sort of guides you through it.
And that's a huge, huge feature.
I mean, that could be one of the reasons why we've seen such an increase in accounts and so on recently,
is because of that feature like that. It makes it very easy for people who are maybe new to DeFi or
new to Polkadot. Lima, you also mentioned that you are part of the Nova team, Nova Wallet,
which is a mobile wallet in the Polkadot Eco. Can you also do something like this in Nova Wallet, which is a mobile wallet in the Polkadot Eco.
Can you also do something like this in Nova Wallet?
Any sort of one-click swaps or anything?
Yes, so we've been working pretty close with the hydration team at the end of last year to implement something that we call one-click cross-chain swaps.
So this was quite a big milestone in Polkadot.
Polkadot, as we probably all
know, has quite a lot of good interoperability things that you can do. And this was one of
the kind of first major showcases of what's possible. So basically the user can just select
any asset on like any chain. So this could be like dot on the main Polkadot relay chain.
And then using Nova's swap function, you can select any other asset on any other chain.
And basically Nova in one transaction
does all the cross chain transfers for you.
And it does the swap mainly rooted through hydration.
And it just makes it so that in one transaction,
the swap just happens all for you.
There's no need to worry about,
oh, I need to cross chain this to here before I swap it.
It just all gets carried out in one press, basically, all through Polkadot's XCM trustless bridging.
Amazing.
Yeah, it's super easy.
I mean, I use NovaWallet personally, and it's so easy to do everything from delegating to staking to voting to everything.
Ben mentioned stablecoins, and I kind of want to take the conversation in that direction.
So I think first, maybe I can just kind of paint the picture of the state of stablecoins
at Polkadot.
So we've seen month after month, all-time high TVL and USDC and USDT on Polkadot.
You know, month after month, all-time high TVL and USDC and USDT on Polkadot.
The fees to send stable coins are incredibly low on Polkadot compared to some other networks.
Maybe, Limo, you can just kind of paint the picture of how the competitors look.
Yes, so on Polkadot, one of the main things is the fees do not get exponentially more expensive
if the network gets used a lot in certain
conditions. The fees for like sending stable coins are something like half a cent or just lower than
one cent. On other networks like Ethereum, you can sometimes see a transfer can be upwards of $10
even if you just send in five USDT. So Polkadot's pretty competitive in that nature.
You know, you can say comparable to Layer 2s,
but then in certain market conditions,
Layer 2s get really expensive as well,
as you might see on crypto Twitter.
So yeah, Polkadot is pretty good.
And you can also pay for all the transaction fees
using the stablecoin as well.
You don't need to faff about and get DOT, for example.
You can just hold stables and use them to to transfer to other people yeah that's incredible um that you can pay
in the uh in pay in usct and i mean yeah imagine like you're i think i posted about this today but
imagine you're a worker in some place like you know argentina buenos aires you're getting paid
in stables and then you have to pay three to five dollars to just make a single transfer it's just doesn't make any sense at all um so ben maybe you can tell us about what's going
on with holler and the idea behind it why it's needed what the roadmap looks like just bring
everyone up to speed on that yep sure so um i mentioned the third third sort of bedrock of DeFi that we're shortly launching.
So that will be Holla. So you guys may or may not be aware, the money market, the borrow and lending that we've got on hydration is a fork of RVV3, which is the highest TVL DeFi protocol that exists.
It's super battle tested. We've got an EVM environment on hydration,
which means we could just deploy it there.
Why reinvent the wheel when there's something
that works so well, right?
And a part of this RVV3 package is their stablecoin Go,
which is great, great growth on that
and cute little ghost thing.
So really bullish.
But we, so we've got that as the sort of like nuts and bolts
base of it um but really uh because we have our own app specific blockchain there's a lot that we
can do beyond that to make sure that uh it's uh more stable and therefore you can uh eventually
have lower fees and better better guarantees of liquidation and therefore a stronger a stronger
peg so hola will be our over collateralized stablecoin.
You can see the collateral options currently in the borrow window on hydration.
So you've got TBTC in there, DOT, VDOT, shortly GigaDOT, as well as USDT and USDC.
So during certain market conditions, maybe not so much now,
everyone's always looking for stablecoins in order to buy other assets that they're bullish on or they're looking to go forward on.
that upwards of 20-30% in some cases. Because supply is just so short because nobody has them
because everyone's obviously long on Bitcoin or whatever, right? So supply can be a real constraint.
When you can mint a stablecoin supply based on demand, so whenever somebody has, say for example,
they're really bullish on Bitcoin, but there's something else that they want to have expenses for, then they can collateralize with Bitcoin and then they can just borrow HOLA at a fixed stable rate rather than worrying about, oh, not only can you be flexible with the availability of it,
and obviously users can pay lower fees for it,
but also as a protocol, you can capture,
rather than it being 26%, say for example,
to borrow USDT, and then 23% of that goes
to the person who's supplying it,
the protocol will capture 5% or whatever it is that is just the interest.
So users are paying less, the protocol is capturing it all.
And because it's a fully vertically integrated DeFi stack where you're capturing all of these
streams, you can make lower fees all around for users.
Right.
Okay. So yeah, I was going to ask
what are the benefits of using
hauler over USDT, but you kind of
nailed it there. So
it's just better integrated, it allows the platform
to capture fees, there's more of it
so the borrowing rates are generally lower
You mentioned in there for a second
GigaDot
and that is another thing that I think a lot of people have been seeing all over Twitter.
What is Gigadot?
So Gigadot, some users of Hydration already will be aware of stable pools.
And people who are early in DeFi and familiar with it will be aware of curve pools and things like that.
So there's always, you have these stable pools where liquidity is concentrated around a certain peg
and then they have this really ugly long CRV3, USDC, USDT,
whatever long name, right?
We've got two pool stables on hydration, right?
These are ugly names,
but the product themselves are actually really cool.
So Gigadot itself is a branded
stable coin uh sorry stable pool share so it is uh v dot in a stable pool with a dot so v dot is a
liquid state stop from bifrost and a dot is what you receive when you lend DOT on hydration.
You get a DOT as a sort of like receipt to say,
this is, you know, I am owed this much DOT from borrow.
So those two assets are in our new drifting peg stable pool.
So essentially stable pools,
typically you have concentrated liquidity around one.
So one to one.
And when you don't have them balanced outside of a range, things get a bit leery, right?
But with things like VDOT, which is a yield accruing token, they aren't one-to-one anymore.
So at the moment, it's 1.48 dot in every VDOT.
So the drifting peg basically receives
Oracle updates directly from Bifrost as to what the actual ratio between those two is,
and it concentrates liquidity around that point. So it will allow by users supplying these, it meets
a lot of liquidity needs in one package. So it means that anyone LPing it, they're providing DOTs into the
money market and they are providing deep liquidity for VDOT in the concentrated liquidity pool.
So it means we can have really, really low slippage swaps for VDOT, which is essential
to be able to increase the amount of VDOT we allow in the money market or in the borrow feature okay uh and you can obviously uh lend the
that token gigadot um in in the money market as well and we can provide incentives on that as well
so you can borrow against it you can loop it you can do whatever all in one one token so nice and
easy for the user got it so there's a lot to unpack there.
I guess generally the best way to just learn about these things is to try it out when it comes.
So not financial advice of course any of this conversation but when is this plan to roll out both GigaDot and Holler? So GigaDot will be first. We've achieved the first deployment of GigaDot on one of our internal
testnets. We had the fancy stable swap palette audited. We had it undergo an economic attack
review as with anything. That that's all gone through.
We've deployed it to our test net where obviously we're testing it ourselves
and making sure that it launches correctly, making any tweaks that we need to
because you have various stages of development, right?
You research it, you spec it out, you implement it, and then you get it.
And then you need to make sure it actually does what the original guy said it needed to do, right? So ironing out all those bits, doing the integration into the SDK,
because it's really critical that users can just go,
okay, I've got dot, and I want giga dot swap, right?
In our UI, just that one step.
Users don't want to go, right, okay, so I've got dot.
I need to put half of it into the borrowing and lending.
I need to put half of it into liquid state and lending, I need to put half of it into liquid state dot,
then I need to supply that as liquidity,
then I need to put it like this, it's just too much, right?
So that integration is ongoing, but I would say it should be within,
you can expect to see the runtime upgrade to put it on mainnet
within probably the next week.
Oh, wow.
And then, yeah, very shortly after that, you can expect the ref to, the gigaref for GigaDot
to go live.
Hola, we've again also deployed the first version internally on one of the testnets.
S-nets, a bit more we want to add on to that.
A bit more we want to add on to that.
With a stable coin, obviously, there's a lot of other things you need to make sure you factor in
to make sure liquidity is right and the conditions are right.
As with any new feature, we'll roll out hollow with training wheels on
and just make sure that everything's as expected before going crazy.
All right.
Okay, so those things are coming pretty soon.
Another thing people might see is like HDX buybacks.
I don't know if we want to maybe like come to Limo because I know Limo, you're big into
governance on everything, but including hydration.
Do you want to maybe talk about how hydration's governance works or the staking or whatever
you want to talk about, Limo?
Floor is yours. Yeah, I mean, I can talk about OpenGov for like the nextaking or whatever you want to talk about limo floor is yours yeah uh
i mean i can talk about open gov for like the next three hours if we want um basically open gov is
this uh permissionless and self-executing governance model that's unique to the polka
ecosystem um so hydration swapped to it a few months ago um and what it allows people to do is you can submit any idea so it can be
treasury spends we see them for like rpc requests and subscan block explorers and stuff
but it's also protocol upgrades so for example the the team that ben works for when they want
to submit a protocol upgrade they submit it via governance just like anybody else should do if they want to
do that um and then the hdx token holders um ultimately have say in everything um it gets
voted on by them um if it passes uh 50 so it's like more than 50 percent i uh it gets enacted
um it doesn't require any fed party to to enact like the protocols, it's all been in a self-executing way.
So it's pretty powerful,
probably the best governance system there is
in the whole of Web3.
Absolutely.
And just not directed at HDX,
how do you keep up with everything, Limo?
How do you keep up with what's going on
in Polkadots, OpenGov, and HDX, Kusama even?
How do you do it?
There's a few things.
There's tools, like Web3 Alliance, which Hydration has.
So it prompts you on Telegram when there's a new referendum,
which is really powerful to keep up to there.
And then it's just community, right?
Like all protocols like Hydration have a really active community.
They stay on top of stuff.
So if you're in, like, the Discord or the telegram um when there's something new it never gets missed
people always bring it up and discuss everything um so it's pretty pretty awesome yeah okay and
what about these buybacks that i've been seeing or hearing about is there anything to discuss there or
i mean ben maybe can go? Yeah, sure.
So our main AMM is called the Omnipool, right?
I didn't touch on it because there's so many bits to touch on, right?
So the Omnipool is an AMM that allows all assets in one pool, right?
And there's a hub token called H2O, which is sort of what all
trades route through. So this is sort of like the central, the social token or what everything is
kind of paired with if you think about conventional Uniswap pools. So when you provide, what this
allows is that users can provide liquidity for a single asset. So if I have DOT and I want to
supply liquidity for DOT and farm it, then I only supply DOT. I don't have to sell half of it for ETH and then put it as
a pair and then farm it from there. So under certain market conditions, when you provide
liquidity, you can sometimes suffer from what's known as impermanent loss, and I won't go
into that too heavily. But sometimes on hydrationration you can receive this token H2O as
sort of a partial compensation for how the market has moved against you, right? So the protocol
Hydration is sort of like its biggest LP, has been since the beginning. There was over 20 million
dies worth of liquidity owned by the protocol itself and hydration had accumulated a lot of Bitcoin,
ETH and things like that quite a while back and essentially that the positions the protocol owned
suffered from some impermanent loss and we received a lot of this H2O token back, right? So
We received a lot of this H2O token back, right?
So it was agreed through governance
that this would be set up as a long-term DCA
to sort of buy back HDX,
some of which is being returned to HDX stakeholders as it goes.
So this happens every few blocks.
There's a swap between H2O and HDX, and that just on goes.
The most recent one, actually, I think it's got about 12 hours left until it finishes
confirming.
It was actually submitted by a community member, not even the builders behind the project.
So that was quite cool to see that.
That's the OpenGov in action there.
So yeah, I mean, we're getting towards the end here,
but I think we have time to go into like one more subject.
I'm just gonna put up the Hydration's Twitter account
on the screen for everyone that's watching,
give it a follow, stay up to date
with everything that's happening,
all of the latest updates with GigaDot and Holler, et cetera.
There is a discussion around a proposal for dcaing some dot into stables
uh is that something you wanted to touch on limo or is it something else yeah yeah we can we can
talk about that um so basically um like myself and chaos now um hydration and just ventures
uh we were discussing the kind of the the amount of stablecoins in the main Polkadot treasury
and how we can top it up, basically.
So historically, we've been doing a DCA, a dollar cost average, of DOT into stables.
And it seemed to be the correct time to propose to do that again.
So this, basically, the Polkadot treasury, in a trustless way, there's no middleman,
sends DOT to the hydration rollup
and then automatically sells small amounts of DOT
every so often into stable coins.
And then when it accumulates,
I think it's 5,000 of each one,
it sends that to the main treasury account
on Polkadot Asset Hub.
There is a bit of a unique change this time with ADOT to get a bit more bang for our buck, I guess.
I don't know if Ben wants to explain that step.
Just before we go over to Ben, why should the treasury diversify out of DOT into stables?
Can you talk about how it's less volatile for paying out treasury
uh yeah proposals yeah yeah so basically um previously people were requesting dot um but
obviously uh businesses uh have expenses uh that they need to pay in in fiat currency mainly um so
what would happen is you would say i need ten thousand dollars it's this amount of dot right
now and um obviously uh prices can vary so
it ended up being the the treasury either was paying too much or the the um recipient got too
little and that led to like multiple referendums to top people up or the treasury not getting um
the best side of the deal let's say so it made a lot of sense to slowly DCA out of DOT into stablecoins just to pay these
people for business expenses.
Right.
Yeah.
Okay.
So, okay.
It's yeah.
Less volatile is basically the answer for paying out proposals.
Ben, did you want to just touch up on the proposal, what Limbo had mentioned before
we wrap things up here?
Yeah.
So I already mentioned uh when
talking about giga dot what a dot is um so it's essentially you provide dot to our borrow and
lending and and you receive a a dot token so because we have this fully vertically integrated
stack we can incorporate the um the borrowing and lending as an additional AMM. So users can swap between any assets,
which includes these A tokens,
so their borrowing and lending positions,
just through the same UI.
So essentially what the extrinsic will do
is it will supply all of that dot
to the hydration borrowing and lending,
and then it will DCA out from that position.
So it means it does a few things.
It means that that DCA will earn a little bit of fees
from anyone borrowing DOT,
and it significantly increases the amount of DOT
that's available for borrowing,
which helps with looped VDOT strategies,
GigaDot, and all sorts of things.
So it again, once again,
shows how the Polkadot treasury is supporting DeFi on Polkadot.
Got it.
All right, so we're coming up on time.
We covered a lot today, actually.
And if you're curious to go even deeper
into what Hydration's doing, like I said,
don't forget to follow them on Twitter.
I'm gonna put up their account here.
But you guys are also doing a live,
or sorry, you're doing a Twitter space
in like 30 minutes or something?
In an hour, yeah.
In an hour, okay.
So approximately one hour at, what would that be then?
That would be 3.30 UTC, I think.
Yeah.
There will be a Twitter space
with the hydration guys some of the other team members will be there you'll
have a chance to ask questions directly to the team so I encourage everyone to
go check that out and don't forget to follow Nova wallet on Twitter if you
want it limo give us Nova wallets handle is it it's Nova wallet app right
never will I happy and that's it Wallet app, right? Nova Wallet app, yeah, that's it.
Nova Wallet app, okay.
All right.
Well, thanks, guys, so much for joining.
We covered a lot.
And follow Hydration, join their Twitter live stream, Xspace,
and we'll talk soon.
Thanks, guys.
Cheers, guys.
Have a good one.
See ya.
