The Way Ahead: Building a Secure Home for Onchain Capital

Hydration has always aimed to make capital more productive. Today, that vision extends far beyond being a decentralized exchange.

In The Way Ahead post, we shared our long-term strategy for transforming Hydration into a secure home for onchain capital - one where users can seamlessly put their assets to work through sustainable yield opportunities, while benefiting from an uncompromising approach to security.

Our roadmap is built around three core pillars:

• Capital Strategies that make sophisticated yield opportunities simple and accessible.

• Industry-leading security, embracing an “Assume Breach” philosophy with multiple layers of protection across governance, infrastructure and protocol design.

• Sustainable protocol revenue, generated through productive onchain capital rather than short-lived incentive programs.

As these pillars come together, Hydration is evolving into a platform where capital doesn’t simply sit idle - it works efficiently, securely and sustainably.

Looking ahead, our focus is on expanding access to Hydration’s products and strategies, bringing secure and productive onchain capital to more users and ecosystems.

GIGAHDX: Staking v2

This period saw the launch of GIGAHDX, a major evolution of Hydration’s staking model designed to better align the interests of long-term HDX holders with the long-term success of the protocol.

Rather than simply rewarding users for locking tokens, GIGAHDX introduces a more capital-efficient staking experience. When users stake HDX, they receive GIGAHDX - a token representing their share of the staking pool. As protocol rewards flow into the pool, the value backing each GIGAHDX increases automatically, allowing passive rewards to compound over time.

GIGAHDX also encourages active participation in governance. In addition to passive protocol rewards, holders can earn extra voting rewards by participating in eligible referenda, with higher-conviction votes receiving a greater share of rewards while committing capital for longer. This creates stronger alignment between long-term governance participants and the protocol itself.

Importantly, staking no longer means sacrificing capital efficiency. GIGAHDX can be used as collateral to borrow HOLLAR, allowing users to unlock liquidity while keeping their HDX staked and productive. Voting rewards are automatically compounded back into the staking position, further increasing the value of long-term participation.

GIGAHDX lays the foundation for the next generation of Hydration’s capital strategies, transforming staking from a passive source of yield into an integral part of a broader ecosystem where governance, protocol revenue and DeFi utility reinforce one another.

Hydrated Strategy pt.3: Scaling Sustainable Protocol Revenue

The proposed Hydrated Strategy pt.3 continues Hydration’s work to transform the treasury into a productive, revenue-generating asset.

The proposal introduces a new strategy built around borrowing PRIME against existing treasury collateral before converting that liquidity into stablecoins for deployment into a yield-generating BRL strategy managed by Crown. The resulting yield is paid out in USDT/C, creating a recurring source of revenue that can be used to steadily accumulate strategic reserve assets such as tBTC, GETH, GSOL, PAXG and HDX through dollar-cost averaging.

Beyond generating sustainable treasury revenue, the proposal also lays the groundwork for bringing this position onchain within Hydration, allowing it to become composable with the broader protocol and opening the door to future capital-efficient strategies such as looping.

Like previous Hydrated Strategies, the proposal reflects Hydration’s broader vision of putting capital to work in a disciplined and sustainable way. Rather than relying on inflation alone, the protocol continues to build diversified sources of revenue that strengthen the treasury while creating long-term value for the ecosystem, reinforcing the long-term vision outlined in The Way Ahead.

Stay hydrated,

not liquidated.

Today, the direction of the market is increasingly validating our thesis from the past year. Real-world assets are no longer a niche corner of DeFi. Stablecoins are becoming an increasingly important settlement infrastructure. Cross-chain liquidity fragmentation is forcing protocols to rethink interoperability. And after years of exploits and bridge failures, security is finally being treated as core infrastructure rather than an afterthought.

Hydration is continuing to position itself around those shifts.

Expanding on the Hydrated Strategy

The Hydrated Strategy came from a simple assumption: long-term growth in DeFi would require sources of yield beyond token emissions and speculation. Productive assets such as RWAs are expanding across DeFi, institutional stablecoin adoption is accelerating, and productive collateral is becoming a much larger part of onchain finance.

For Hydration, the opportunity is not just bringing productive assets onchain, but integrating them into a broader DeFi ecosystem. Productive assets provide the underlying yield, while borrowing, liquidity provisioning, leverage, routing, and automated strategies help make that capital more efficient.

As more productive collateral enters the ecosystem, it strengthens borrowing demand, liquidity utilization, routing activity, and protocol revenue generation. Those flows naturally reinforce HOLLAR, which increasingly acts as a settlement and liquidity layer across the protocol.

What matters is not just growing liquidity, but improving the quality of that liquidity. The long-term opportunity is building infrastructure where productive assets and DeFi reinforce one another, generating sustainable onchain revenue from actual usage rather than temporary emissions.

HOLLAR

HOLLAR sits at the center of a lot of where Hydration is heading. Not just as another stablecoin, but as a liquidity primitive that becomes increasingly useful as more assets, chains, and liquidity systems connect into the ecosystem.

A large part of the work ahead revolves around expanding the environments where HOLLAR can operate efficiently. That means broader collateral support, deeper liquidity integrations, stronger routing infrastructure, significantly smoother cross-chain access, and positioning HOLLAR as a settlement asset that can operate across multiple ecosystems, including Ethereum. As productive collateral grows, HOLLAR grows alongside it.

More borrowing activity creates more settlement demand. More liquidity movement creates more routing volume. More integrations create more opportunities for protocol-level revenue. Over time, usage itself becomes the primary source of growth and protocol revenue.

That shift matters. DeFi has spent years optimizing around emissions and short-term liquidity incentives. Hydration is increasingly focused on building infrastructure that can generate durable onchain cash flow from actual economic activity.

Security

One of the biggest challenges DeFi still faces is confidence and predictability. The industry was built around the idea of trustless systems, yet user trust remains one of the biggest barriers to adoption.

Hydration approaches security differently from many protocols. Rather than assuming critical systems will always behave as expected, the protocol is designed around an “assume breach” mentality. The objective is not simply to prevent failures, but to limit their impact when they occur.

That philosophy influences decisions across the entire stack. It can be seen in runtime-level safeguards, invariant enforcement, circuit breakers, rate limiters, constrained permissions, continuous fuzzing, multiple independent audits, and a governance structure designed to minimize trusted control. In some cases, it has even meant walking away from integrations that did not meet Hydration’s security standards.

Security is where Hydration’s appchain architecture provides a meaningful advantage. Because the execution environment itself is part of the protocol, protections can be built directly into the system rather than layered on afterwards. As capital, liquidity, and protocol complexity continue to grow, Hydration intends to continue investing heavily in security as a core differentiator.

Interoperability

Liquidity is increasingly fragmented across chains and execution environments. Hydration’s direction is centered around becoming deeply embedded into the broader crypto ecosystem rather than existing as an isolated destination.

Projects like Basejump - our inhouse instant bridging protocol - are an important step in that direction, enabling near-instant movement of liquidity, smoother onboarding, and stronger cross-chain liquidity aggregation. Hydration intends to continue expanding that infrastructure across more assets, more ecosystems, and more execution environments, making capital movement feel increasingly seamless regardless of where liquidity originates or where users want to deploy it.

Another important development is the ongoing integration with NEAR Intents. Rather than manually bridging assets and navigating multiple applications, users could access assets and liquidity across ecosystems through a single interaction. For example, capital held on Hydration could be routed into NEAR, BTC, ZEC, and other supported assets, and delivered directly to the destination ecosystem, with execution handled automatically.

Alongside this, Hydration is exploring stronger Ethereum compatibility, zk-powered infrastructure, and technologies such as ZisK to improve composability with deeper liquidity environments. The long-term direction is simple: Hydration liquidity should be usable across crypto, not confined to a single ecosystem.

Expanding HDX

One of the directions being explored is bringing HDX to Ethereum mainnet as a standardized ERC-20 asset. ERC-20 has become the industry’s default asset standard, with broad support across wallets, custodians, exchanges, market makers, DeFi protocols, and other infrastructure providers. Making HDX available in that format would significantly reduce integration complexity and friction across the wider crypto ecosystem.

This accessibility also has important implications for exchange adoption. Integrating a Substrate-native asset often requires additional infrastructure, custom development, and ongoing maintenance, whereas ERC-20 support is already built into most platforms. As a result, Ethereum-native accessibility could materially lower the cost and effort required for future exchange integrations while making HDX available to a much broader audience.

More broadly, Ethereum mainnet accessibility creates a stronger foundation for ecosystem expansion over time — whether through Base, other L2s, bridges, DeFi integrations, or entirely new execution environments. The goal is simple: make HDX easy to access, easy to integrate, and available wherever users and liquidity already exist.

A Lean Team

Hydration’s team has become leaner over time, with a strong focus on improving efficiency and reducing operational overhead. Over the past year, the team significantly reduced headcount, optimized internal processes, and lowered overall burn rate by approximately 30%. A large part of that improvement has come from tighter execution, better tooling, and the targeted application of AI across development and operational workflows.

The focus remains on core infrastructure, security, interoperability, and long-term sustainability rather than organizational size. In crypto, focus matters — especially during periods where markets become heavily narrative-driven and attention fragments quickly.

Stay hydrated.

Welcome to the March / April edition of Hydration Newsletter, our bi-monthly update. The Hydrated Strategy entered its execution phase, with the Hydration Treasury completing its first real-yield loop on PRIME. The new Hydration app launched, completing a ground-up rebuild focused on speed and clarity. Protocol-owned liquidity began diversifying into hard assets through a structured DCA program. And the foundation for HEURC, Hydration’s first non-USD stable rail, was put in place.

Read on for the highlights.

The New Hydration App Is Live

After months of development, the new Hydration app launched and is now available at app.hydration.net. The rebuild was driven by a single goal: make the protocol’s growing product surface easier to use without compromising depth for advanced users.

Load times are faster across the board, with code splitting ensuring users only download what’s needed for the page they’re on. The interface has been redesigned around cleaner flows, reducing the number of clicks needed to swap, supply, borrow, or manage positions. Dark mode and light mode are both available, with the choice persisting across sessions.

The new app is also the foundation for upcoming features that depend on a more responsive front-end architecture, including protocol-executed strategies and tighter integration with cross-chain swaps.

The Hydrated Strategy: From Approval to Execution

The thesis was laid out in detail in the Hydrated Strategy blogpost: protocols that rely on crypto-native revenue cannot survive sustained downturns. The answer is yield generated from real economic activity, independent of where crypto prices sit. January and February got the strategies approved. March and April put them to work.

In early March, the Hydration Treasury completed its first PRIME loop. The mechanism is straightforward. Deposit PRIME, currently earning 7.36% APY from homeowners repaying US home equity loans issued by Figure Technologies, the largest non-banking HELOC provider with $21 billion in loans originated. Borrow HOLLAR against it at 4.5% (governance-set). Convert the HOLLAR back into more PRIME. Resupply as collateral. Repeat.

By the end of the period, the Treasury was four loops deep, with the position now earning 13.68% net APR. This is what real yield looks like when the underlying asset produces actual cash flow rather than relying on emissions or price appreciation, with no token incentives and collateral backed by US real estate.

The same composability is available to any user. PRIME can be minted on Solana with USDC, bridged to Hydration via Wormhole, and looped through the money market the same way. The Treasury’s execution serves as proof of mechanism, not a moat.

HEURC and the Launch of the Euro

By late March, the Hydration Treasury completed the accumulation of 252,000 EURC across three tranches, building the protocol-owned liquidity needed to launch HEURC, the Hydrated EURC.

HEURC mirrors the existing HUSDT and HUSDC integrations, paired with HOLLAR in a dedicated stablepool. It allows users to swap directly between euro-denominated stables and HOLLAR with minimal slippage, supply EURC to earn rewards, and use it as collateral in the money market.

The strategic value goes beyond a single asset listing. Until now, Hydration’s stable rails have been almost entirely USD-denominated. HEURC reduces dependence on dollar-native capital flows, opens access to European users who prefer to hold and transact in euros, and lays groundwork for further FX expansion. The BRL and CHF markets on the roadmap point to a broader thesis: forex volume is significantly larger than crypto trading volume, and Hydration’s app-chain architecture is well-suited to capturing it.

This is the first move in what will likely be a multi-asset push beyond the USD perimeter.

Treasury Diversification Into Hard Assets

Following a governance vote with 94.1% community approval (Referendum 284), the Hydration Treasury began a structured diversification of its protocol-owned liquidity into hard assets. The program rebalanced 350,000 DOT into a basket of atBTC, GETH, GSOL, and aPAXG (tokenised gold), executed through four automated DCA schedules that ran over three weeks with a trade every five minutes.

The structure was chosen deliberately. Running multiple small executions across weeks rather than a single large rebalance minimises market impact and removes timing risk. The asset selection favours hard assets that hold value through cycles: Bitcoin, Ethereum, Solana, and gold. None of the targets are speculative bets. All of them are protocol-owned positions designed to underwrite Hydration’s long-term resilience.

This continues the broader strategy of converting protocol revenue and accumulated reserves into durable balance sheet positions rather than letting POL concentrate in any single asset.

Stay hydrated (not liquidated).

We want to use this moment to reflect on how Hydration is surviving in this adversarial environment - something we don’t take for granted. This is not an opportunistic marketing post claiming “this couldn’t happen to us”. It could. And thinking in any other way would be foolishly irresponsible.

It is this level of paranoia driving Hydration’s mindset which motivated us to implement a multi-layered approach to security, with every layer designed with the assumption that a breach in some of the previous layers will eventually occur.

This approach spans the full stack - from security culture and review practices, through audits and adversarial testing, all the way to on-chain protections like rate limiters and circuit breakers. Together, these layers form what we think of as Hydration’s security “onion”.

Let’s cut it open.

Assume Breach (Culture & Design)

Everything starts with one assumption: at some point, something will break. Not because people are careless, but because complex systems fail in ways that are hard to predict - especially in an environment as adversarial and fast-moving as DeFi.

This has implications both for how systems are designed - their checks, safeguards, and failure modes - and for the processes around them. Integrations are a good example: Is the project you’re integrating as paranoid as you are?

An unfortunate recent example is Hyperbridge. We had it integrated in the runtime and it was part of the pipeline for the EURC rollout. However, after reviewing its overall security posture, we were forced to pull the plug at the last minute, pending improvements in process maturity and bug bounty coverage. We were saddened to see our concerns materialize, and we wish the Hyperbridge team and their users a quick recovery.

Testing, Audits, Bounties (Adversarial Mindset)

Security starts with how software is built and tested. Hydration follows a development culture that assumes code will be pushed to its limits. That means strict review standards, but also heavy emphasis on testing beyond the happy path - property-based testing, invariant checks, and continuous fuzzing. Every release is fuzzed using an in-house harness designed to surface edge cases and unexpected behavior before they reach production.

External audits are an important layer, but they are not enough on their own - they are snapshots in time. To scale this process, we are investing in AI-assisted auditing. Our AI model for Substrate security audits is trained on real audit data and ecosystem-specific vulnerabilities to expand coverage and reliability, as well as DeFi attack vectors and Hydration-specific data.

Beyond Hydration itself, members of our security team are actively involved in the PAL initiative, which has funded 30+ audits across the ecosystem (including Hydration). The findings from these audits are aggregated and fed back into the AI auditor, strengthening it over time.

What matters, ultimately, is continuous adversarial pressure.

This is where bug bounties play a critical role. Hydration runs one of the most active Immunefi programs, consistently ranking among the top 10 in crypto, with over $1M paid out to researchers so far. High payouts for critical issues are painful, but they are preferable to the alternative - getting exploited.

Since bug bounty payouts are capped (at 10% of economic damage), this also shapes protocol design. It has directly motivated mechanisms that limit how much damage can be done in the first place and how much value can be extracted from the chain - such as rate limiters and circuit breakers (covered below).

Governance & Access Control

Once you accept that something can break - and you actively pressure the system to find those weaknesses - the next question is: who can act, and how much damage can they do?

Hydration minimizes both. There are no admin keys or multisigs. Privileged actions flow through OpenGov, removing single points of failure and ensuring transparency. Where fast response is required - such as emergency stops - responsibilities are scoped to the Technical Committee.

Permissions across the runtime are tightly controlled. Sensitive operations are restricted to specific origins, with fine-grained access per pallet and function.

This extends to the EVM: Contract deployment is permissioned, and only approved contracts can interact with critical components. Proxy permissions and unsigned transactions are similarly constrained.

Execution Safety (Every Action Is Constrained)

Every action must prove it’s valid - and safe - before it executes. Transactions go through standard validity checks (nonce, weight, fees, versioning) and strict signature verification. Beyond that, execution is constrained at every step.

All operations enforce slippage bounds, ensuring users cannot be filled outside expected ranges - even across multi-hop routes. Execution is atomic: either everything succeeds, or nothing does.

At the protocol level, core invariants are enforced on every interaction. Trades, liquidity changes, and routing decisions must satisfy strict mathematical constraints, and routes must be objectively better unless explicitly overridden.

Parameters are also bounded by design - whether it’s pool composition, amplification, or trade sizing - limiting how far any single operation can deviate.

Rate Limiters & Circuit Breakers (Containing the Damage)

Even with all safeguards in place, something can still go wrong. What matters then is how fast damage can spread.

Hydration introduces multiple layers of rate limiting and circuit breakers designed to slow attacks down and cap their impact in real time.

Trading and liquidity operations are constrained on a per-block basis, limiting how much value can move in or out of the system at once. On top of that, a global withdrawal limiter tracks aggregate outflows over time, applying decay and enforcing caps across assets.

Issuance and deposits are also bounded. If growth exceeds configured thresholds, assets can be automatically restricted or locked. Individual assets can be frozen entirely if needed—either manually or through predefined triggers.

These mechanisms operate continuously and do not rely on immediate governance intervention.

The underpinning idea is that exploits are not instant - they are processes. By slowing them down, Hydration ensures that even if an attacker finds a path, they cannot extract value arbitrarily fast. Damage is rate-limited, giving the system time to react and contain the situation.

Market & Oracle Defenses (Making Attacks Unprofitable)

Not all exploits are bugs - many are economic. Hydration defends against manipulation at the market layer.

Trades are checked against oracle prices, with deviation limits enforced using both spot and EMA data. If prices move outside acceptable bounds, execution is blocked.

Fees are dynamic and adapt to market conditions, increasing during periods of high volatility or imbalance. This makes large, aggressive trades progressively more expensive.

Assets can also be partially or fully restricted. Buying, selling, or providing liquidity can be independently enabled or disabled, allowing fine-grained control under stress.

Additional mechanisms like slip fees and asset weight caps further limit how much any single asset or trade can distort the system.

The goal is to make manipulation difficult, expensive, and ultimately not worth it.

External Boundaries (Where Risk Enters)

A lot of exploits don’t originate inside the system - they come from the edges. Hydration treats external interactions as high-risk by default.

Cross-chain execution (XCM) is tightly controlled. Only specific origins and message types are allowed, with strict validation before any state changes occur.

The EVM environment is sandboxed. Contract deployment is permissioned, and only approved contracts can interact with critical components. This prevents arbitrary code from gaining access to core protocol logic.

Flash loan usage is restricted to predefined actors and flows, avoiding open-ended execution paths that are difficult to reason about under stress.

Composability expands the attack surface. Constraining these boundaries reduces the risk of external issues propagating into the core system.

Emergency Response & Recovery

Even with all layers in place, the possibility of failure remains. What matters then is maintaining control.

Hydration includes mechanisms to respond quickly and precisely when something goes wrong. Transactions can be paused at a granular level - down to specific pallets or functions - allowing targeted intervention without shutting down the entire system.

Where necessary, operations can be restricted or disabled, containing the issue while avoiding unnecessary disruption elsewhere.

These actions are governed through established processes, ensuring that responses remain controlled and transparent. At the same time, critical functions are intentionally left unpausable to avoid scenarios where the system becomes unrecoverable.

The goal is not just to stop the bleeding, but to do so in a way that preserves the integrity of the system and allows for orderly recovery.

Security is not something you achieve - it’s something you continuously defend. In an adversarial system, survival belongs to those who assume failure, constrain it, and outlast it.

Stay safu.

The Hydrated Strategy: Real Yield from RWA & Looping

The case was made in detail in the Hydrated Strategy Substack: DeFi protocols that rely solely on crypto-native revenue face an existential problem. When prices drop, on-chain activity collapses. Fees dry up. Runways shorten. Most projects respond by waiting for the next cycle to save them. Hydration’s answer is different.

Over January and February, Hydration’s governance approved the deployment of $2.7M from stablecoins previously allocated for the HOLLAR Stability Module across three real-world yield products, each generating returns independent of whether crypto prices are rising or falling.

$1.1M USDC is allocated to the Sigil Stable Fund, operated by early Hydration backer Fiskantes. Sigil has been running since 2021 with a spotless track record, generating approximately 1% monthly through delta-neutral strategies with only 0.3% drawdown during October’s market shock. This allocation is protocol-owned liquidity only; individual users do not access Sigil directly.

Another $1.1M is earmarked for PRIME, a yield-bearing token representing tokenised US home equity loans issued by Figure Technologies, the largest non-banking HELOC provider with $21 billion in loans originated. PRIME pays 7.5% APY (governance-set, subject to change) from homeowners repaying home equity loans, backed by US real estate. Unlike Sigil, PRIME is open to everyone. Anyone can mint PRIME on Solana with USDC and bridge to Hydration via Wormhole.

What makes PRIME particularly significant for the protocol is composability. Users can deposit PRIME as collateral on Hydration’s money market, borrow HOLLAR at 4.5% fixed rate (governance-set), convert HOLLAR into more PRIME, and repeat. Each loop captures the spread between PRIME’s yield and HOLLAR’s borrow rate. With modest leverage, real yields can reach 15-20%+ with no token incentives, fixed rates, and collateral backed by US real estate. This is the HOLLAR demand engine Hydration envisioned: permissionless, scalable, and grounded in real assets.

Finally, $200K is allocated to Decentral, a Brazilian invoice financing platform backed by DUX Group, a Brazilian financial group specialising in receivables financing. Creators and agencies in Brazil often wait weeks or months for corporate payments while facing a 15% base interest rate. Decentral connects cheap DeFi liquidity to businesses with reliable receivables, handles USD to Brazilian Real currency hedging, and passes 18% fixed APY back to liquidity providers across 60-day cycles. The platform is already operating at scale: $8M TVL, $3.5M in annual recurring revenue, $20M+ in total volume processed, a 0.19% default rate, and $80M in immediate demand that is currently liquidity-constrained. Decentral is open to all Hydration users, with principal redeemable after the 60-day minimum period on 48 hours notice. The initial $200K allocation carries the option to scale to $500K following a successful first redemption.

Combined, the three approved strategies mark a genuine shift in how Hydration generates revenue beyond the crypto bull by tapping into the realm of RWA.

GIGASOL Launches on Hydration

Following the success of GIGADOT and GIGAETH, Hydration expanded its GIGA ecosystem with the launch of GIGASOL. Like its predecessors, GIGASOL is a capital-efficient token that combines SOL exposure with yields stacked from staking, lending, trading fees, and liquidity incentives.

The GIGA model has proven itself as one of Hydration’s most effective tools for attracting productive liquidity. Rather than offering simple token exposure, GIGA assets turn held positions into yield-generating strategies by layering multiple sources of return on top of the underlying asset. GIGASOL extends this to one of the most actively traded assets in crypto.

Protocol-owned liquidity was deployed into GIGASOL pools at launch to seed depth and support stable trading conditions. As with other GIGA assets, GIGASOL is available in Hydration’s Omnipool.

Looking Ahead

January and February built the foundation. The Hydrated Strategy is live and generating real yield. GIGASOL broadens the GIGA ecosystem into another major asset class. The next phase continues to expand what’s possible on Hydration.

EURC is in the pipeline, bringing euro-denominated liquidity to the protocol and reducing dependence on USD-native capital flows. Protocol-executed strategies will automate what users currently have to manage manually, making the yield opportunities unlocked by PRIME and Decentral accessible with significantly less friction. Also our new UI is being shipped, designed to make Hydration’s growing product surface simpler to navigate without sacrificing depth for more advanced users.

The priority remains the same: revenue that holds up in any market, and products that deliver genuine utility.

Stay hydrated! 🚰

When prices rise, everything explodes. Swaps increase, leverage piles on, lending markets boom. Protocols generate fees. Everyone celebrates.

When prices fall, everything stops. The on-chain economy collapses into deep recession. Protocols that were swimming in revenue six months ago now scramble to cut costs and extend runways.

This cycle repeats endlessly. And after October 10th’s market shock, the entire industry knows it can’t continue.

Most projects are responding by waiting. Hoping. Praying for the next bull run to save them. Capital is leaving crypto. Talent is moving to other industries. Projects are imploding.

Hydration is taking a different path.

The Commoditization Crisis

Let’s be honest about where we are. Every piece of crypto infrastructure is becoming commoditized. AMMs, bridges, oracles, L2s - all of them increasingly generic and cheap. Profit margins are compressing across the board.

Well-funded Silicon Valley startups are aggressively subsidizing use cases to crush competition. The era of building cool tech for years without real utility is over. Now everyone suddenly cares about revenue, sustainability, and traditional business metrics.

The survivors will be protocols that can generate meaningful revenue regardless of market conditions. Not revenue from trading fees that evaporate when prices drop. Real revenue from real economic activity.

But there’s a catch: mistakes in crypto can be fatal. Users demand safety above all else. That’s why new DeFi protocols struggle to take market share from incumbents, even when they’re more innovative. Trust and security are the ultimate moats.

Hydration has spent years building that moat. Rate limiters for suspicious deposits. Transaction blocking for potential exploits. Chain-level optimization for fund security. When pitching institutional players in Buenos Aires recently, the security-first approach generated more interest than any other feature.

Now it’s time to put that foundation to work.

Three Products, One Strategy: Real Yield from Real Economy

Hydration’s strategy centers on becoming a credit provider - the highest profit margin use case in all of crypto. Not just minting stablecoins (which requires demand to be useful), but providing actual liquidity and credit where people desperately need it.

The plan deploys capital across three distinct yield-generating products, each solving real problems in the real economy:

1. Sigil Stable Fund: Institutional-Grade Delta Neutral Yield

Sigil Stable fund, operated by early Hydration backer Fiskantes, has been running since 2021 with zero drama, no significant drawdowns, and a spotless track record. The fund aggregates stablecoins and provides risk-adjusted yield through delta-neutral strategies.

The numbers: roughly 1% monthly yield (12% APY), with only 0.3% drawdown during October 10th’s chaos - a day that destroyed many funds. Hydration’s R&D provider Intergalactic Limited is already using Sigil for treasury management.

The mechanism: The Hydration Treasury creates synthetic collateral representing its positions at Sigil, manually priced to avoid liquidation risks from oracle malfunctions. The Treasury can borrow USDT, USDC, and HOLLAR against these positions. The interest earned continuously strengthens HOLLAR’s peg through rebasement effects.

2. Decentral: Brazilian Invoice Financing

Here’s a problem most people don’t think about: Brazilian creators and agencies wait weeks or months to get paid by corporate clients. Meanwhile, Brazil’s base interest rate sits at 15%, and traditional financing options often hit usurious levels.

Decentral spotted the arbitrage opportunity. They connect cheap DeFi liquidity to businesses with reliable receivables who need immediate payment. Companies sell their invoices at a discount. Decentral provides instant liquidity, handles currency hedging (USD stablecoins to Brazilian Real), and generates 18% fixed APY for liquidity providers.

The operation isn’t theoretical. Decentral is already running at scale across Ethereum, Polygon, Base, and other chains with $8M in TVL, $3.5M in annual recurring revenue, and over $20M in total volume processed. They’re currently liquidity-constrained with $80M in immediate demand.

Every receivable goes through rigorous validation: contract authenticity verification, payment history assessment, counterparty risk filtering. Only performing receivables with clear settlement schedules qualify for financing. The DUX Group, a Brazilian financial group specializing in receivables financing, handles origination, underwriting, and operational governance.

For Hydration users, the structure is straightforward: 60-day cycles with accumulated interest available every 60 days. Principal can be redeemed after the minimum 60-day period with 48 hours notice.

This is real yield from solving real problems. Not dependent on leverage plays or hoping crypto prices go up. Just tapping massively underutilized DeFi capital for productive economic activity with proven demand.

3. PRIME: The Game Changer

PRIME is a yield-bearing token representing tokenized US HELOCs (Home Equity Lines of Credit) - loans against debt-free real estate in the United States.

Figure Technologies, the largest non-banking HELOC provider, has originated $21 billion in loans. They went through deep due diligence before listing on NASDAQ (ticker: FIGR) last year. Nobody wants to repeat 2008, so the scrutiny was intense. They passed - and PRIME is backed by only the highest quality prime mortgages.

PRIME pays 8% APY from homeowners repaying their loans, backed by real estate collateral - one of the highest quality assets available.

But here’s what makes PRIME special for Hydration: composability.

Anyone can mint PRIME on Solana with USDC and bridge it to Hydration via Wormhole in minutes. No permissions. No gatekeeping. Just capital flowing to where it produces returns.

More importantly, PRIME is usable as collateral.

The Looping Strategy: 15-20%+ Fixed Yield

Here’s the breakdown of the looping process:

1. Deposit PRIME as collateral (earning 8% base yield)

2. Borrow HOLLAR against it at 5% fixed rate

3. Convert HOLLAR to more PRIME

4. Repeat

Each loop captures the 3% spread between PRIME’s yield and HOLLAR’s borrow rate. With modest leverage, users can push real yields into 15-20%+ territory without any token incentives. Fixed rates, not floating. Certainty, not volatility.

Similar strategies on Kamino fluctuate wildly because borrow rates change constantly. Hydration’s fixed rates provide something rare in DeFi: predictability.

This solves Hydration’s biggest missing piece: HOLLAR demand.

Borrowing HOLLAR generates the highest revenue margin in the protocol. 100% of interest paid goes to Hydration, versus 10% for typical lending. Same model that makes Aave’s GHO profitable.

PRIME creates a permissionless, scalable, low-effort savings product for everyone. High yield, quality collateral, reasonable risk, minimal monitoring. No exclusive access required. No complex strategies to babysit.

And unlike Sigil or Decentral, PRIME can absorb multiples more capital. This scales.

The Execution Plan

Hydration currently holds roughly $14M in non-HDX treasury assets. The immediate plan would be to deploy $2.7M from existing stablecoins previously allocated for the HSM:

• $1.1M to Sigil Stable Fund (proven institutional strategy)

• $1.1M to PRIME (the HOLLAR demand engine)

• $200K to Decentral (real-world Brazilian commerce, with potential to scale to $500K after successful redemption)

Timeline: Allocated over two weeks.

But here’s the aggressive part: front-loading the yield.

Rather than waiting months for yield to accumulate, the strategy takes 3% of principal upfront (assuming it will be generated anyway) and uses it for immediate DCA into Protocol Owned Liquidity:

• (t)BTC - the obvious choice

• (G)ETH - long-term looping strategy potential

• (G)SOL - another major with looping possibilities

• PAXG (tokenized gold) - experiencing massive comeback as a reserve asset with serious demand from retail, institutions, and central banks globally

This builds Hydration’s balance sheet immediately while crypto prices are struggling. Most projects would kill for this opportunity - growing high-quality assets without external funding.

Beyond Treasury: A Product for Everyone

This strategy goes beyond treasury management. Beyond a one-time deployment capped at $2.7M.

This is Step 1 of building infrastructure for anyone to access these strategies.

Individual users, organizations, DAOs, projects - all can use these yield products for:

• Covering operational costs (development, marketing, audits, insurance)

• Growing reserves while keeping principal intact (DCA into majors, fiat stables, tokenized stocks/commodities)

• Funding buybacks or building insurance funds

• All of the above

These are the exact products demanded by high-net-worth individuals and corporations looking for stable, predictable returns backed by real assets.

The goal is reaching escape velocity where protocol R&D and operations are fully covered by yield as early as possible. Where buybacks have material impact. Where volumes grow regardless of whether BTC is at $40K or $100K.

The Urgency

Let’s be clear about the stakes.

Competition is fiercer than ever. Incumbent protocols face serious challenges. Neither situation will improve soon.

Projects are dying. Capital is leaving. The window of opportunity won’t stay open forever.

Hydration has the foundation - battle-tested security, direct value capture, a strong community. But foundations don’t matter if you don’t build on them.

This is the mobilization moment. Prove that Hydration can generate sustainable revenue. Prove that DeFi doesn’t need to wait for bull runs. Prove that real utility (solving real problems for real people) is the path forward.

The on-chain future is bright for those who survive and get there.

The question: what’s the alternative?

Waiting for prices to recover? Hoping for the next cycle? Watching the runway shrink month by month?

Or building a survival protocol - one that thrives in any market by connecting DeFi liquidity to genuine economic demand.

Three years ago, we launched the Omnipool. Two years ago, we added borrowing and lending. This year, we completed the third pillar: HOLLAR, Hydration’s native stablecoin.

Trading, lending, and stablecoin infrastructure — all under one roof. Here’s how 2025 unfolded.

What We Accomplished

GIGADOT and GIGAETH launched in April and July respectively — composite yield tokens that combine staking rewards, lending interest, trading fees, and liquidity incentives into single assets. No manual compounding, no hopping between protocols. GIGADOT now holds over 1% of the entire DOT supply. GIGAETH grew to $13M TVL within months of launch. Users can hold these assets, supply them as collateral, or loop them for leveraged yield positions. Alongside these, HOLLAR’s ecosystem tokens — HUSDC, HUSDe, HUSDT, HUSDS — give users yield-bearing stablecoin exposure through dedicated liquidity pools.

HOLLAR launched in September, completing Hydration’s three-pillar vision. It’s a decentralized, overcollateralized stablecoin with two innovations: the HOLLAR Stability Module (HSM) provides direct, algorithmic price support rather than relying on slow arbitrage through secondary markets, generating revenue rather than burning reserves. Protocol-executed partial liquidations calculate the minimum collateral needed to restore a position’s health and liquidate only that amount — users keep more of their position, and the system stays efficient. Demand exceeded expectations. The borrow cap started at 2M and has been raised multiple times. Current status: 3.9M HOLLAR borrowed against a 7M cap, at a 5% borrow rate. The peg held through the October crash. In December, Polkadot’s OpenGov approved a $3M DCA into HOLLAR as part of Project Individuality — the Treasury’s push to diversify its on-chain holdings. When the network’s own treasury adopts your stablecoin, that’s validation.

Asset diversification expanded significantly. At the start of 2025, Hydration supported primarily Polkadot-native assets. Now, users can access Ethereum assets via Snowbridge’s trustless bridging — no intermediaries, no custodians. Solana assets are accessible via Wormhole integration. More ecosystems means more liquidity sources, more assets, and more users who can access Hydration without friction.

Strategies made DeFi accessible. Complex yield opportunities that would normally require multiple transactions and protocol-hopping are now available in one click. Users can enter GDOT, GETH, or HOLLAR strategies and start earning immediately — no expertise required. This is DeFi that works for everyone, not just power users. The adoption of GDOT shows the demand: over $23M TVL in a single strategy.

UX improvements continued throughout the year. Block time was halved from 12 to 6 seconds, leading to faster execution and paving the way towards 2-second blocks. Unified deposit flows simplified onboarding, letting users deposit assets from multiple chains through streamlined interfaces rather than navigating complex bridging steps manually.

Security held. 2025 tested every protocol’s resilience. Hydration’s infrastructure held through market stress — the result of conservative parameter settings, multiple security audits, an active bug bounty program on Immunefi, timely responses to issues found, and infrastructure designed with security as a first principle.

Financial services for DAOs. Hydration has become infrastructure for on-chain treasury management. The Polkadot Treasury has DCA’d over 14.7 million DOT through Hydration into stablecoins across four governance proposals. The $3M HOLLAR accumulation from Project Individuality adds another layer. But this isn’t just about Polkadot — any DAO can use Hydration for capital-efficient, transparent, on-chain treasury operations.

The Numbers

Our TVL journey started 2025 at $56.8M. By June, after the GIGAHydration campaign launched with 2M DOT in incentives, TVL surged 41% in five days, crossing $350M. On October 6th, we hit $500M — an all-time high. Four days later, crypto experienced its largest single-day liquidation event in history. Hydration processed a record $39.5M in daily volume that day. By year end, TVL settled at $171.5M — a 202% increase year-over-year despite the October correction.

• Accounts nearly doubled: 50,272 → 98,658 (+96%)

• HDX holders grew to 55,786 (+66%)

• 160K cross-chain messages processed

Looking Ahead

2025 was about completing the stack. 2026 is about making it faster, simpler, and more powerful. The new Hydration web app is coming - it brings us sleeker visuals, faster performance, light-client integration, and improved UX across the board. The light-client architecture allows users to interact directly with the blockchain without relying on a third-party RPC provider. Combined with 2-second block times (with 0.5 seconds on the roadmap), the experience will feel significantly faster and smoother.

On the product side: we’re expanding stablecoin support beyond USD. EURC brings euro stablecoin access, opening Hydration to forex flows and non-USD users — and we’re exploring other non-USD stablecoins as well. ICE (Intent Composing Engine) introduces intent-based trading with MEV minimization and limit orders native to the protocol. Cross-chain intents will extend this execution model across chains. Real-world asset opportunities are on the roadmap — more details to come.

On the strategy side: we’re building for resilience regardless of market conditions. That means deploying protocol-owned liquidity more capital-efficiently — including opportunities that reach beyond on-chain activity into real-world yield. More on this soon.

Thank You

To everyone who provided liquidity, staked, voted, traded, borrowed, minted, and built on Hydration this year — thank you. The vision was always to make DeFi efficient, simple, and unstoppable. The infrastructure is live. The roadmap is clear. Now we keep building.

Stay hydrated! 🚰

ICYMI: Key Reads from 2025

BREAKING NEWS: GIGADOT and HOLLAR The March announcement that previewed the year’s biggest launches.

HOLLAR is here! The full breakdown of Hydration’s native stablecoin and what makes it different.

Newsletter: Jul / Aug 2025 Breaking $400M TVL, boost wars, and the HDX staking rewards boost.

Newsletter: Sep / Oct 2025 HOLLAR scaling, $500M TVL peak, surviving October 10th, and GIGAHydration Phase 2.

HOLLAR’s rapid adoption, demonstrated through multiple borrow cap increases within weeks of launch, validates the demand for Polkadot’s native overcollateralized stablecoin. Meanwhile, GIGAHydration Phase 2 brought strategic asset additions including gold exposure through PAXG and ENA, expanding the protocol’s market reach. Read on for the highlights of a period that completed Hydration’s three-pillar vision while navigating market turbulence.

HOLLAR Launches and Scales with Demand

Hydration’s native decentralized stablecoin went live on September 22, completing the protocol’s vision of uniting trading, lending, and stablecoin functionality under one roof. HOLLAR represents a fundamental advancement in stablecoin design, leveraging Hydration’s app-chain control to implement innovations impossible in traditional smart contract environments.

The market response demonstrated immediate and sustained demand. HOLLAR launched with a 2 million borrow cap that required increases to 3 million by September 30, 4 million by October 17, and then to 5 million. At the end of October, the protocol held $9.1 million in HOLLAR-related TVL with 115 holders, over 4 million HOLLAR borrowed, and more than 61,000 transfers executed.

The stablecoin launched with four dedicated yield-bearing pools (HUSDT, HUSDC, HUSDe, HUSDS) that enable capital-efficient strategies while maintaining tight integration with Hydration’s broader ecosystem. Subsequent governance improvements made HOLLAR LP positions eligible as collateral in the money market, unlocking additional capital efficiency and enabling sophisticated looping strategies for users seeking optimized yields.

GIGAHydration Phase 2 and Premium Asset Expansion

The protocol launched GIGAHydration Phase 2, rebalancing incentive allocations to reflect evolving ecosystem priorities and market conditions. This transition optimizes reward distribution across assets while maintaining the boost war mechanism that allows HDX holders to direct additional incentives every three weeks.

Two significant asset additions expanded Hydration’s market positioning. PAXG integration brings tokenized gold exposure to the Polkadot ecosystem, providing users access to precious metal exposure within DeFi infrastructure. Both PAXG and ENA launched with 69% APR incentives, with PAXG currently offering 25% APR as the market stabilizes. ENA, representing Ethena with its $3 billion market cap, adds exposure to one of DeFi’s rapidly growing protocols, strengthening Hydration’s connections to broader crypto markets.

These additions align with the community-approved POL strategy for Q3 2025, which outlines systematic accumulation of strategic assets including preparations for GIGASOL launch using jitoSOL, EURC integration via Hyperbridge, and expanded cross-chain connectivity. The plan demonstrates sophisticated treasury management that positions protocol-owned liquidity to support ecosystem growth while generating sustainable revenue streams.

Governance also approved enhanced supply and borrow parameters that provide users more borrowing power for tBTC and GIGAETH than available elsewhere, higher APY for stablecoin suppliers, and the aforementioned HOLLAR LP collateral eligibility. These improvements systematically increase capital efficiency while maintaining the risk management standards that have kept the protocol secure through multiple market cycles.

Reaching $500M TVL and Market Resilience

Hydration reached $500 million TVL on October 6, marking another milestone in the protocol’s sustained growth trajectory. This achievement represented continued momentum from the $400 million milestone reached in the previous period, demonstrating consistent capital inflows and expanding user adoption across all protocol areas.

Four days later, crypto markets experienced a flash crash event involving approximately $20 billion in liquidations across the ecosystem. Bitcoin dropped $10,000 in roughly five minutes, triggered by broader market dynamics including escalating trade tensions between the US and China. This represented one of the most severe volatility events ever, testing DeFi protocols’ resilience under extreme stress.

Hydration’s infrastructure handled the volatility without significant issues. The protocol’s design elements—including enshrined oracle updates at block start, prioritized on-chain liquidations, and sophisticated risk parameters—functioned as intended during the stress period.

The incident underscores the importance of robust infrastructure design. Hydration’s app-chain advantages, including the ability to prioritize critical transactions and execute automated responses without relying on external actors, proved their value precisely when market conditions demanded them most.

Looking Ahead

September and October delivered on promises while proving resilience under pressure. HOLLAR’s rapid adoption and GIGAHydration’s strategic expansion demonstrate that Hydration’s comprehensive DeFi platform continues attracting genuine usage and capital across multiple market segments. The foundation is set for continued growth. With all three DeFi pillars now operational and tested under stress, the protocol enters the final quarter of 2025 positioned for the next phase of ecosystem expansion and deeper market integration.

Stay hydrated! 🚰

The numbers demonstrate continued momentum across all protocol areas, while community governance remains highly active with over 1.5 billion HDX participating in recent boost war votes. Read on for the highlights of a period that combined explosive growth with thoughtful platform expansion.

Breaking $400M TVL Through Strategic Growth

Hydration has crossed the $400 million Total Value Locked milestone, reflecting sustained growth driven by strategic campaign expansions and innovative product adoption. Lending markets lead with $187 million supplied, demonstrating strong demand for both yield-seeking suppliers and borrowers accessing liquidity. The protocol has become the #4 market for tBTC across all of DeFi, demonstrating Hydration’s growing role in Bitcoin-adjacent markets.

The expansion of the Polkadot GIGAHydration campaign has been a key growth driver. The campaign welcomed SOL, TRAC, and LDO, with SOL integration proving particularly successful as liquidity reached $2 million shortly after launch. The introduction of boost wars created additional momentum, with community governance selecting tBTC and SOL as the first winners, each receiving 222% maximum APR distributed over 3-week periods. These boost war votes demonstrated remarkable community engagement, with over 1.5 billion HDX participating in each referendum, creating ongoing governance participation every three weeks as HDX holders direct incentives toward assets they believe will drive the most protocol value.

Complementing the campaign expansion, the success of composite yield strategies has required multiple capacity expansions due to sustained demand. GIGADOT supply caps increased from 22 million to 30 million tokens, while GIGAETH expanded from 3,333 to 4,444 tokens. Current TVL stands at approximately $89 million for GIGADOT and $13 million for GIGAETH, with GIGADOT continuing to represent over 1% of the entire DOT supply just months after launch. Both strategies successfully abstract complex DeFi operations into single tokens that combine staking, lending, trading fees, and incentive rewards. The consistent capacity constraints and immediate adoption following each expansion demonstrate that users value simplified access to sophisticated yield optimization without operational complexity.

Community Staking Rewards Boost

Following extensive community discussion, HDX holders approved a six-month staking rewards boost for the second half of 2025. The program will distribute 51,131,191 HDX over six months, representing 50% of the HDX the Treasury has accumulated from protocol buybacks since the start of 2025.

This distribution is expected to add 5-6% APR to current HDX staking rewards, providing continued incentives for governance participation while maintaining fiscal responsibility. The amount represents a measured approach following the generous 25-week celebration boost that began the year, balancing community rewards with long-term sustainability as organic protocol revenues continue growing.

The community discussion revealed strong support for continuing staking incentives while scaling them appropriately as the protocol matures. This approach ensures HDX holders benefit from protocol success while maintaining responsible treasury management that supports continued development and innovation.

ICYMI:

Stay hydrated! 🚰

When we began building Hydration years ago, we set out with a clear vision: unite the three fundamental pillars of DeFi under the roof of a scalable app-chain. Trading came first with our revolutionary Omnipool and suite of AMMs. Borrowing followed with our capital-efficient money market. Today, we complete this vision with HOLLAR – a stablecoin designed not just to maintain price stability, but to redefine what's possible in decentralized finance.

Buy HOLLAR today:

https://app.hydration.net/trade/swap?assetIn=5&assetOut=222

The Stablecoin Dilemma

The current stablecoin landscape presents a fundamental choice between compromise and inadequacy. Centralized stablecoins like USDC offer stability but require trust in traditional financial institutions – a dependence that undermines DeFi's core promise of financial sovereignty. Algorithmic experiments have repeatedly demonstrated the fragility of market-mechanism-only approaches, often spectacularly failing when stability is needed most.

Even the most sophisticated collateral-backed stablecoins face systemic limitations. Their price stability mechanisms rely on slow, indirect arbitrage through secondary markets. When deviations occur, users must hope that arbitrageurs will eventually notice and trade to restore the peg – a process that can take hours or days and often fails under stress. Liquidation systems remain crude, typically liquidating entire positions when partial intervention would suffice, creating unnecessary losses for users and system inefficiencies.

Perhaps most critically, existing solutions are constrained by the smart contract environments in which they operate. They cannot execute automated responses, cannot prioritize critical transactions, and cannot implement the sophisticated real-time interventions that true stability requires. They are, fundamentally, passive systems hoping that external actors will maintain their intended behavior.

The DeFi space deserves better. Mass adoption demands a stablecoin that combines the stability of centralized solutions with the sovereignty of decentralization, the efficiency of traditional finance with the innovation of DeFi, and the security of battle-tested protocols with the possibilities that only app-specific blockchain control can unlock.

Behold HOLLAR

HOLLAR represents a fundamental reimagining of what's possible when you control the entire execution environment rather than being constrained by generalised smart contract environments. Built on the proven architecture of Aave's GHO protocol, HOLLAR inherits battle-tested mechanisms for collateral management, interest accrual, and liquidations while introducing innovations that are simply impossible in traditional smart contract environments.

At its core, HOLLAR operates as a decentralized, over-collateralized stablecoin targeting a price of $1. Users can mint HOLLAR by depositing crypto collateral including DOT, ETH, vDOT, USDT, USDC, tBTC, GIGADOT, GIGAETH, and WBTC. This creates a direct backing relationship where each HOLLAR token represents a claim against real crypto assets held in the system. The approach mirrors successful models like DAI, but with crucial innovations that leverage Hydration's app-specific blockchain capabilities.

The centerpiece of HOLLAR's innovation is the HOLLAR Stability Module (HSM) – a sophisticated price stability mechanism that provides asymmetric price support impossible in traditional DeFi protocols. While most stablecoins rely on slow, indirect arbitrage through secondary markets, the HSM provides direct, immediate price intervention.

The HSM operates with elegant asymmetry. Users can always purchase HOLLAR from the module at predictable rates close to $1.00, creating a reliable price ceiling. This ensures HOLLAR cannot trade significantly above its peg because cheaper alternatives are always available. The sophisticated innovation lies in the buyback mechanism: rather than blindly purchasing any amount of HOLLAR at fixed prices – which would be exploitable – the HSM monitors stableswap pools in real-time and intelligently decides when and how much HOLLAR to purchase based on genuine market conditions.

This intelligent buyback prevents manipulation while providing genuine price support when HOLLAR is actually undervalued. The system can distinguish between temporary price deviations and attempts at exploitation, responding appropriately to each scenario. Most importantly, the HSM generates revenue by deploying received stablecoins into yield-earning strategies, meaning it provides price stability while actually making money rather than burning through reserves like traditional currency pegs.

Key Advantages Through App-Chain Control

HOLLAR's innovations extend beyond traditional stablecoin mechanisms, leveraging Hydration's complete control over the blockchain runtime to implement features impossible for smart contract-based protocols.

Partial Liquidations: Protocol-executed partial liquidations may occur at the beginning of every block, calculating the precise amount needed to restore a position's health factor and liquidating only that amount. Users retain more of their collateral, positions remain active longer, and the system achieves better capital efficiency compared to traditional all-or-nothing liquidation systems.

Integrated DeFi Ecosystem: HOLLAR benefits from seamless integration with Hydration's existing AMMs, money market, and liquid staking solutions, enabling sophisticated strategies and capital efficiency impossible when protocols operate in isolation across different platforms.

Launch Parameters

HOLLAR launches with carefully designed parameters to ensure stability and controlled growth. The initial supply is capped at 3,000,000 HOLLAR, enabling gradual ecosystem adoption while maintaining security. Users can mint HOLLAR against collateral at a competitive 5% annual borrow rate.

The HOLLAR Stability Module demonstrates its asymmetric pricing design from day one. Users can purchase HOLLAR from the HSM with no fees, while selling HOLLAR back to the module incurs just 0.01% (1 basis point) - among the lowest fees in DeFi. The HSM will buy HOLLAR up to $0.995, providing strong downside price protection while preventing exploitation.

To maximize capital efficiency and ecosystem integration, HOLLAR launches with four dedicated stablecoin pools operating outside the Omnipool:

• HUSDT (Hydrated Tether): HOLLAR/aUSDT pairing

• HUSDC (Hydrated USDC): HOLLAR/aUSDC pairing

• HUSDe (Hydrated USDe): HOLLAR/sUSDe pairing

• HUSDS (Hydrated USDS): HOLLAR/sUSDS pairing

These branded pools create distinct trading venues while maintaining tight integration with Hydration's broader DeFi ecosystem. The protocol provides initial liquidity across all pools to ensure robust price discovery and trading depth from launch.

This thoughtful parameter selection balances accessibility, security, and growth potential, creating the foundation for HOLLAR's role as Polkadot's premier decentralized stablecoin.

Getting Started

HOLLAR is now live on Hydration. Ready to experience the future of decentralized stablecoins?

Learn about HOLLAR: Complete documentation covering mechanisms, usage, and integration patterns is available at docs.hydration.net/products/hollar

Start using HOLLAR: Mint against your crypto collateral or interact with the Stability Module at app.hydration.net/hollar

Join the community: Connect with other Hydrators in our Discord and follow development updates on Twitter

The future of DeFi is being built today, and it's more ambitious than simply recreating traditional finance on blockchains. It's about unlocking possibilities that only truly decentralized, purpose-built infrastructure can enable.

Stay hydrated!

The numbers tell the story: TVL surged 41% in just five days, daily trading volume jumped 5x, and our GIGA strategy tokens hit capacity limits within hours. This represents more than metrics, it demonstrates strategic incentives and innovative products working together.

Read on for the highlights of a period that ended with Hydration reaching new levels of adoption.

Polkadot GIGAHydration

The launch of GIGAHydration in late June triggered immediate growth across all metrics. This 2 million DOT campaign represents the largest liquidity incentives program in Polkadot's history, and the market response was immediate.

In five days following launch, TVL surged from $192.9 million to $271.9 million—a 41% increase (at the time of publication it reached towards $350 million). Daily trading volume jumped from $5.0 million to $27.3 million—a 5x increase reflecting both increased activity and new capital inflows.

The campaign deploys strategic incentives across multiple areas: major rewards for stablecoins (USDC, USDT, and upcoming HOLLAR), concentrated incentives for Snowbridge assets like ETH and tBTC, additional GIGADOT rewards, and innovative APR Boosts where HDX holders vote every three weeks on which assets receive temporary higher rewards. All incentives are distributed in GIGADOT, creating unified value flow.

This validates our approach of combining strategic incentives with proven infrastructure. The immediate response shows Polkadot DeFi participants were ready for deeper liquidity and better yields, they just needed the right catalyst.

GIGA Strategy Dominance

Our composite yield strategies have achieved remarkable adoption metrics. Just 79 days after launch, GIGADOT now represents over 1% of the entire DOT supply, demonstrating strong demand for capital-efficient DOT yield strategies. From the initial April 16th launch with 458,000 GDOT capacity, the strategy has consistently hit caps and required expansions.

GIGAETH repeated this success pattern immediately. Despite launching with 2,222 capacity, it filled completely within hours. A governance proposal has already been submitted to increase capacity to 3,333 tokens, reflecting overwhelming demand from ETH holders.

Both strategies abstract complex DeFi operations into simple experiences. GIGADOT combines vDOT staking, aDOT lending, trading fees, and incentives into a single token, while GIGAETH unifies wstETH staking, aETH lending, pool fees, and campaign rewards. Users access sophisticated yield optimization without managing multiple positions or understanding technical complexity.

The rapid adoption validates that users want sophisticated yield optimization without operational complexity. By handling technical infrastructure while providing transparent, high yields, these products have found immediate market acceptance.

Infrastructure Adoption

Hydration's infrastructure is being adopted by external teams for applications beyond DeFi. Novashots, a new esports prediction app developed by Nova Wallet, runs on Hydration's backend infrastructure. The app creates prediction markets for major esports tournaments, bringing new trading volume and fees to the protocol.

This adoption demonstrates Hydration's infrastructure maturing into a platform that supports diverse applications. As prediction markets continue growing across crypto, having proven infrastructure positions Hydration to capture additional activity from this expanding sector.

Sustainable Foundation Building

Alongside explosive growth, Hydration continues strengthening its foundation for long-term sustainability. The development team submitted a funding request for $2.5 million to support 12 months of continued development, enabling sustained innovation while protocol revenues grow toward full self-sustainability.

Community commitment remains strong, with HDX staking reaching an all-time high of 32.54% of total supply staked across 3,540 stakers. Despite full token unlock, this sustained participation demonstrates long-term confidence in the protocol's direction. The team's delivery track record supports this confidence, having successfully shipped Dynamic Fees, On-chain DCA, Money Market, On-chain Liquidations, HDX Staking, Memepad, and innovations like GIGADOT and GIGAETH.

Protocol revenues continue increasing across multiple streams including trading fees, lending interest, and liquidation profits. This diversified growth builds toward operational sustainability while funding current initiatives. The combination of strong community support, proven development capabilities, and growing revenue creates a foundation that supports continued expansion without sacrificing security or user experience.

Looking Ahead

The recent explosive growth represents more than a successful campaign launch, it demonstrates Hydration's evolution into a growth engine for the Polkadot ecosystem. The immediate success of GIGAETH, continued expansion of GIGADOT, and strong market response to GIGAHydration validate our approach of combining innovative products with strategic incentives.

As we move into the second half of 2025, this momentum provides a strong foundation for upcoming developments including HOLLAR's launch, continued GIGA strategy expansion, and deeper Polkadot integration. The numbers show we're building something that resonates with both existing Polkadot users and external capital seeking efficient, high-yield DeFi opportunities.

Stay hydrated! 🚰

Governance Square

A selection of recent governance proposals

Live

• Ref 118: Withdraw 1x WETH LP

• Ref 119: Immunefi report - Exploiting aToken liquidity addition in stableswap

• Ref 120: Upgrade runtime to 39.1

Passed

• Ref 62: Raise DOT Supply & Borrow caps faster

• Ref 65: Add SKY to Omnipool

• Ref 66: Add LINK to Omnipool

• Ref 84: Prepare USDT & USDC borrowing pools for HOLLAR:

• Ref 89: Final top-up for Polkadot Hydration farms

• Ref 92: Hydrating the Funding Gap - Maingaining

• Ref 95: HDX buyback with Treasury H2O - Tranche 6

• Ref 112: Transfer iBTC for exchanging to tBTC

GIGAETH follows the price of ETH while accumulating yield from four different sources in a single token:

1. Staking rewards through wstETH exposure (~3.1% APR from Ethereum validators);

2. Lending interest from aETH positions on Hydration (variable based on borrowing demand);

3. Trading fees from the wstETH-aETH liquidity pool;

4. Additional incentives from Polkadot GIGAHydration campaign (2M DOT liquidity incentives for 6 months).

The rewards are paid out in GIGADOT - a yield-bearing token based on DOT.

How It Works

GIGAETH uses Hydration's Stablepool technology to manage the relationship between wstETH and aETH. Since wstETH appreciates in value over time while aETH increases in quantity through rebasing, the pool employs a drifting peg mechanism with price feeds from DIA oracles.

This allows the strategy to maintain proper ratios between the two yield-bearing assets while providing liquidity for trading. Users interact with a single GIGAETH token rather than managing the underlying complexity.

This technical foundation delivers several key advantages for users. GIGAETH provides simplified management by replacing multiple positions across staking and lending protocols with a single token. The strategy automatically optimizes between yield sources without user intervention, while preserving liquidity so tokens can be traded, used as collateral, or redeemed at any time. Most importantly, it offers combined exposure to earn from multiple yield sources that would otherwise require separate capital allocation.

Using GIGAETH

The flexibility of GIGAETH makes it suitable for various strategies. GIGAETH tokens can be:

• Held for automatic yield accumulation;

• LPed into the Omnipool for incentives farming;

• Used as collateral in Hydration's borrowing markets;

• Traded for other assets when needed;

• Leveraged through borrowing additional ETH to purchase more GIGAETH.

The strategy suits ETH holders seeking yield optimization without active management of multiple DeFi positions.

How To Join

1. Deposit ETH or wstETH on Hydration (optional - you can join the strategy with any asset on Hydration);

2. Join the GIGAETH Stretagy on Hydration;

3. Track your rewards on My Liquidity page.

Building the Hydrated Future

GIGAETH represents the natural evolution of our automated strategy offerings, building on the foundation established with GIGADOT to bring sophisticated yield optimization to more corners of the DeFi ecosystem. Just as GIGADOT unlocked new possibilities for DOT holders, GIGAETH opens the door for ETH users to participate in the multi-layered yield opportunities that define modern DeFi.

This launch reinforces our commitment to making DeFi more efficient, and simple. By abstracting complexity into user-friendly, powerful tools, we're building toward a future where yield optimization, liquidity provision, and capital efficiency become as straightforward as holding a token.

Stay hydrated! 🚰

This new campaign builds on the success of our previous incentive program that began 1 year ago while introducing new focus areas including stablecoin liquidity, Snowbridge assets, and GIGADOT incentives. Polkadot GIGAHydration also introduces BOOSTS - every 3 weeks, the governance of Hydration will decide which asset will get an additional APR boost.

Building upon Exceptional Results

The numbers speak for themselves. Our previous Polkadot Hydration Campaign set out to achieve $62.25 million in TVL using 1 million DOT over 12 months. Today, Hydration has reached $180.5 million in TVL—nearly tripling our original target and demonstrating the incredible potential when the Polkadot ecosystem unites behind a shared vision.

But the impact extends far beyond TVL metrics:

• Trading volumes increased from $0.5-2M daily to $2-10M daily

• Active accounts nearly doubled from under 1,000 to almost 2,000

• XCM transfers surged from ~400 to ~1,000 daily messages

• Ecosystem growth: GIGADOT's launch doubled Bifrost's TVL and unlocked critical integrations on AssetHub

• External capital: Significant liquidity from EVM wallets bringing fresh capital into Polkadot

These results proved that strategic liquidity incentives can drive exponential growth across the entire ecosystem, not just individual protocols.

GIGA Incentives

GIGAHydration will distribute rewards to attract more liquidity across a wider basket of assets. Among the incentivised major caps are stablecoins, tBTC, ETH, and DOT (including GIGADOT). The expected APRs for these assets are in the range 10-20%+ - although they will start as high as 69% (nice). The focus for stablecoins is upon USDC (native and Snowbridge), USDT (native and Snowbridge), and HOLLAR (Hydration’s upcoming native stablecoin). There are also plans to incentivise a EUR stablecoin. ETH holders can receive rewards for supplying GIGAETH - a representation of ETH on Hydration which accrues additional yield by simply holding it, derived from the combined yield of wstETH and aETH (ETH on Hydration’s money market).

Besides that, Hydration will provide LP incentives towards a wide variety of mid caps including KSM, AAVE, SKY, LINK, LDO, ASTR, GLMR, TRAC, MYTH, PHA, BNC, and EWT. The expected APRs for these assets are 20-30%+.

All rewards will be distributed in GIGADOT which is a composite token that tracks the price of DOT while accruing yield from 4 sources: vDOT (Polkadot’s LSD), aDOT (DOT supplied to Hydration’s money market), trading fees, and additional incentives.

APR BOOSTS

In addition to the above, Polkadot GIGAHydration will feature APR BOOSTS for some of the tokens. Every 3 weeks, Hydration will launch governance votes that let the community decide which token should receive the additional boost, resulting in a temporary higher APR for that asset. Letting the liquidity flow to where it is most needed.

What This Means for You

The new GiGAHydration farms are now live. If you are already LPing on Hydration, make sure that you join these newly created farms: https://app.hydration.net/liquidity/all-pools

Happy farming, and don’t forget to follow Hydration OpenGov in the upcoming weeks and help decide which assets should get an additional APR BOOST! (Curve wars but hydrated?)

Today marks the second time we turn to our community with an ask to bridge the funding gap. This time, a lot has changed. Having shipped a variety of financial primitives wrapped in user-friendly packages, we have proved our ability to deliver products that people use and love. With surging TVL and volumes, our right to existence is no longer questioned. What has not changed, however, is the lack of better options for funding the upcoming months of development.

This post consists of two parts. In the first part, we look back at the past two years and at some of the key developments that have shaped our position today. In the second part, we reflect on our funding request for the upcoming 12 months of research and development.

Looking Back

Back in 2023, we published a post on the HydraDX newsletter with the prophetic title The Future is Hydrated. In parallel to that blog post, we launched a referendum with all HDX holders to allocate 5M DAI from the funds raised during the 2021 LBP for the development of the Protocol during the following 2 years.

In exchange to that ask, we provided an ambitious list of features to be delivered in these 2 years which, in our eyes, would propel us to become the leading DeFi platform, first on Polkadot, and then beyond. Let’s take a brief moment to reflect on that feature roadmap:

• Dynamic Fees ✅
  Allows the Protocol and LPs to accrue higher profits from trades in times of volatility. A large part of the generated Protocol revenue is redistributed to HDX stakers and referrers.

• On-chain DCA ✅
  A revolutionary feature also by today’s standards which allows users to accumulate a given asset over time. This feature has helped drive traction and it is being used by the Polkadot Treasury to diversify DOT into Stablecoins ($37M and counting).

• Bonds ✅
  After launching Bonds, the Protocol ran a Bonds campaign which managed to raise some funds towards its POL. There has not been a proposal to launch another Bonds sale, which perhaps can be explained by the still relatively low price of HDX.

• Money Market (Lend and Borrow) ✅
  With a TVL of $90M achieved in less than 6 months, the Hydration Money Market has become a huge success that continues to grow. It is also at the heart of the GIGADOT strategy.

• On-chain Liquidations ✅
  One of our goals has been to make liquidations in the Hydration Money Market as reliable as possible while boosting their cost-efficiency by minimizing the MEV extracted by third-party liquidators. On-chain liquidations is our latest innovation that allows any user to liquidate eligible positions on-chain with funds borrowed from the Protocol. Collators can perform such a liquidation with priority, at the very beginning of any block.

• HDX Staking ✅
  The feature that all HDX holders love – high yet sustainable, non-inflationary staking APR funded by Protocol revenue streams. Used to incentivize voting in the Protocol governance, resulting in some of the highest participation rates crypto has seen.

Two interconnected features which we did not manage to deliver (yet) are Order Batching and Payment-for-order-flow auctions. As a result of evolved insights, these are still in the waiting line and will be picked up once the Intent Composition Engine (ICE) has been shipped.

Besides what was promised, we went above and beyond and delivered a bunch of additional features, most notably:

• Split trades
  A user-friendly, intuitive way to use the on-chain DCA feature directly from the trading screen. Users are presented with the option to split their trades over a short time period in order to achieve a more efficient execution.

• GIGADOT
  Having launched just recently, the GIGADOT strategy has become a great success, with its initial cap quickly being hit. GIGADOT unites revenue from four different streams, allowing users to achieve the highest DOT APR in the ecosystem (which can be further multiplied with leveraged looping). Under the hood, it uses the Money Market and Stablepools with Drifting Peg, another innovation that recently launched on Hydration.

• HOLLAR
  We are about to launch the Protocol’s own native stablecoin which will be the cornerstone for many DeFi use cases. After its painful experience from the yearly years, Polkadot deserves a strong, decentralized stablecoin native to its ecosystem.

• Memepad
  With memecoins becoming a central narrative during the early leg of this cycle, we quickly got the needs of the ecosystem covered with the memepad which allows anyone to easily mint their own meme.

• Consistent, incremental UX improvements
  All features were designed with a user-centric approach, resulting in products that users love to use.

All of the above has helped us come to the point where we are today – becoming one of the most beloved and widely used applications on Polkadot. With TVL now exceeding $180M and daily volumes often well above $3M, we are in the position to become an ecosystem-agnostic DeFi player punching well above the weight of Polkadot.

On the financial side, it is worth mentioning that we have managed to achieve these results without expanding the size of the team and without any additional expenditures – which is not an easy feat in an inflationary environment. Furthermore, it is worth noting that the Hydration POL has also been managed exceptionally well, having increased in USD-value terms thanks to a consistent diversification strategy.

Looking Forward

Despite the excellent product-market-fit and growing traction, the cooldown in the markets has prevented us from finding alternative methods to fund the upcoming months of development. So far, the first leg of the bull market has behaved differently from what most people would have expected, with funding of projects dropping to the lows of 2017/18. External (OTC) deals are very hard to strike without making a huge sacrifice in the shape of 40-50% discounts from the already low spot price, making them hardly acceptable.

The Hydration Protocol revenues are on the rise, with several products generating consistent capital flows. However, to support the further growth of the Protocol, these revenue streams are currently redirected back to the users in the form of rewards for HDX stakers, referrers, and LPs.

We would like to bridge the funding gap by requesting $2.5M from the POL for the development of the Hydration Protocol during the next 12 months. The funds would be provided using Protocol-owned stablecoins which are currently held by the Treasury: USDC/T 2-pool, aUSDT, aUSDC, sUSDe, sUSDS and DAI.

We have opened a governance discussion post and would like to hear your opinion. In 1 week, this request will be posted as a referendum on Hydration OpenGov.

Going forward, we will try to strike a balance between growth and sustainability by engaging in a discussion with all HDX holders about the establishment of an R&D fund. This fund would be funded by protocol revenues and help fund the research and development costs of the Hydration Protocol, limiting the need to resort to POL in the future.

Thank you for your support - as always - stay hydrated, not liquidated.

The IGL team

Our recent momentum has caught the attention of the broader Polkadot community, with Hydration featured in a Polkadot Twitter Space titled "Why is Everyone Talking about Hydration?" This recognition underscores the growing role Hydration is playing in advancing DeFi on Polkadot.

Read on for the highlights of an exciting start to 2025.

Hydration Breaks $0.2B TVL

In a significant milestone for Hydration and Polkadot DeFi, our Total Value Locked (TVL) has surpassed $200M. This rapid growth reflects increasing confidence in Hydration's infrastructure and the expanding utility of our platform.

The growth in TVL has been driven by several factors:

• Successful launch of GIGADOT, attracting significant capital

• Introduction of new assets to the Omnipool

• Expansion of our borrowing capabilities

• Strategic incentives through the Polkadot Hydration Farms

This achievement positions Hydration as the leading DeFi protocol in the Polkadot ecosystem and demonstrates the growing adoption of capital-efficient DeFi solutions.

GIGADOT: DOT Evolution Unleashed

On April 16th, we successfully launched GIGADOT, a capital-efficient token that combines DOT exposure with yields from staking, lending, trading fees, and incentives in one place.

GIGADOT represents a significant evolution in how DOT can be utilized in DeFi, solving the fundamental dilemma DOT holders have long faced: whether to stake tokens for network security rewards or deploy them in DeFi to participate in the ecosystem's growth.

Under the hood, GIGADOT utilizes Hydration's Stablepool technology with a drifting peg mechanism to account for the inherent value drift between vDOT and aDOT. From a user perspective, the technical complexity is completely abstracted away – users simply interact with GIGADOT as a single token that combines multiple yield sources:

1. Staking Rewards (~11.85% APR) through the vDOT component

2. Lending Interest via the aDOT component

3. Trading Fees from the vDOT-aDOT pool

4. DeFi Incentives from Hydration and Polkadot treasuries

GIGADOT is now available on Hydration and can be accessed at app.hydration.net/strategies/gigadot.

Polkadot GIGAHydration Proposal

We recently published a proposal on Polkadot OpenGov to allocate 5M DOT from the Polkadot Treasury towards liquidity incentives on Hydration. The proposed incentives buckets are stablecoins, AMM LPs, and GIGADOT. If approved, this will extend the original Polkadot Hydration Campaign which has been running for almost 1 year now.

Find out more and vote on our proposal here.

New Assets and Integrations

The Hydration ecosystem continues to grow with the addition of several high-profile assets and new integrations:

New Bluechip Assets:

• SKY (SkyEcosystem, formerly Maker) is now available for trading on the Hydration Omnipool

• LINK (Chainlink) has been added to the Omnipool, bringing another major blockchain project to Polkadot DeFi

• tBTC is now available to supply as collateral or to borrow on Hydration

Turtle v3 Integration: Turtle has launched v3 with swap functionality powered by Hydration. Users can now swap and transfer from Hydration to any parachain in one seamless flow. This integration, powered by Paraspell's SDK, represents a significant step toward frictionless cross-chain interactions. Check out Turtle here.

Catch-up: January/February Updates

We missed sharing our January/February newsletter, so here's a recap of important developments from earlier this year:

HDX Buybacks and Staker Rewards

Our commitment to returning value to HDX stakers continues with the ongoing distribution of 197,084,881 HDX to stakers over a 25-week period. This distribution, approved through Referendum 7, has boosted the HDX staking APR by approximately 27.9%, resulting in a combined staking APR exceeding 30% for the distribution period.

Additionally, the community has approved a series of HDX buybacks for 2025, with an initial budget of 10,000 H2O (worth approximately $325,000 at current prices). Following the success of the first two tranches, we have now completed two additional buyback tranches, continuing our methodical approach to sustainable value creation throughout the year.

HOLLAR Development

Following our announcement in March, development of HOLLAR—our upcoming decentralized, overcollateralized stablecoin—continues to progress.

Having successfully completed the security audit, we are currently finalizing preparations for the launch on our public testnet.

HOLLAR will complete our vision of uniting trading, lending, and stablecoin infrastructure under one roof. Stay tuned for announcements about the testnet launch and opportunities to provide feedback.

KSM and SOL Integration

Following the approval and execution of Referendum 31, KSM was added to the Omnipool, making Kusama's native token available for trading on Polkadot. SOL has also been added to Hydration, furthering our cross-chain capabilities.

New Deposit Flow

We've launched a new deposit flow to streamline onboarding to Hydration. Users are now guided through a process whether they're depositing from centralized exchanges, another chain, or via credit card through our integrations with Banxa and Harbour.

Check it out here.

Polkadot Hydration Farms

We've made adjustments to our Polkadot Hydration Farms to optimize incentives and liquidity through a series of three coordinated referenda (#28, #29, and #30). We've also launched two new farms:

• tBTC - with up to 200% APR, targeting 30% APR on $2,222,222 liquidity

• AAVE - with up to 250% APR, targeting 25% APR on approximately $1M liquidity

Looking Ahead

Our momentum continues to build. The successful launch of GIGADOT and our growing TVL provide a strong foundation for continued development throughout 2025. We're particularly excited about the upcoming HOLLAR launch and continued expansion of our ecosystem. Stay tuned for more updates, and as always—stay hydrated! 🚰

Today, we're excited to announce the solution: GIGADOT – a capital-efficient token that combines DOT exposure with yields from staking, lending, and incentives all in one place.

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The Evolution of DOT

The Polkadot ecosystem has made significant strides in creating more efficient ways to use DOT. First came vDOT, allowing DOT holders to contribute to network security while maintaining liquidity. Then came aDOT through our Borrowing platform, enabling DOT holders to earn interest from lending markets.

Each of these innovations represented important steps forward, but they still required users to fragment their holdings or manage multiple positions. The true potential of DOT remained locked behind unnecessary complexity and inefficiency.

GIGADOT is the next evolutionary step – combining the best aspects of both vDOT and aDOT in a single, capital-efficient token.

How GIGADOT Works

Under the hood, GIGADOT utilizes Hydration's Stablepool technology with a drifting peg mechanism. This innovation accounts for the inherent value drift between vDOT and aDOT:

• vDOT gradually appreciates against DOT as it accrues staking rewards (currently around 11.85% APR)

• aDOT is a rebasing token that increases in amount over time as it accumulates interest from borrowers

Our technology automatically adjusts to these changing relationships while maintaining optimal liquidity. From a user perspective, the technical complexity is completely abstracted away – you simply interact with GIGADOT as a single token that combines multiple yield sources.

GIGADOT derives its yield from four distinct sources:

1. Staking Rewards: Through the vDOT component, capturing the current ~11.85% APR from securing the network

2. Lending Interest: Via the aDOT component, earning interest paid by borrowers of DOT

3. Trading Fees: Accruing fees from activity in the vDOT-aDOT pool

4. DeFi Incentives: Additional rewards allocated by Hydration and Polkadot treasuries when available

The result is a comprehensive yield that effectively puts your DOT to work across multiple DeFi mechanisms simultaneously – something previously impossible without significant complexity.

Untapped Potential

The timing for GIGADOT couldn't be better. While approximately 33.9% of staked ETH and 9% of staked SOL are in liquid staking tokens, only 1.66% of staked DOT has been converted to LSTs. With Polkadot being one of the largest PoS networks, this represents an enormous growth opportunity.

GIGADOT addresses this untapped potential by making liquid staking significantly more attractive. Rather than simply offering staking rewards with liquidity, it combines multiple yield sources into a capital-efficient token that can be further deployed within DeFi.

Putting GIGADOT to Work

GIGADOT can be utilized in several ways:

• Hold for composite yield: Simply holding GIGADOT provides exposure to multiple yield sources

• Use as collateral: Borrow against your GIGADOT position to access liquidity without selling

• Create leverage: For advanced users, borrow DOT against your GIGADOT, convert to more GIGADOT, and continue the cycle for a leveraged position

• Maximize APR: Deploy your capital efficiently across the Hydration ecosystem

Each of these strategies was previously possible only with significant complexity, requiring management of multiple positions and careful balancing of risk factors. GIGADOT simplifies this process dramatically, making sophisticated DeFi strategies accessible to a wider audience.

Getting Started

GIGADOT is now available on Hydration. To get started:

1. Visit app.hydration.net/strategies/gigadot

2. Acquire and hold GIGADOT using any token trading on Hydration

3. Start earning combined yield immediately

The Future is Efficient

GIGADOT represents more than just a new product – it's a fundamentally new approach to capital efficiency in DeFi. By eliminating unnecessary trade-offs and combining multiple yield sources, GIGADOT allows DOT holders to maximize their returns while contributing to the health and growth of the Polkadot ecosystem.

As we continue building towards our vision of making DeFi simple, efficient, and unstoppable, GIGADOT stands as a testament to what's possible when innovation meets purpose-driven design.

Stay hydrated! 🚰

This special edition newsletter is about two game-changers that are about to drop. We are thrilled to announce two new tokens which are launching soon on Hydration: gigaDOT and HOLLAR. Here is what they are and what you can expect.

gigaDOT: DOT on steroids

DOT on steroids? That’s gigaDOT by Hydration. Holders of gigaDOT have exposure to the price action of DOT while accumulating composite yield from three different sources: vDOT staking APR, aDOT lending APR, and targeted incentives by the Hydration and Polkadot treasuries.

The first component of gigaDOT is vDOT - an LST by Bifrost that earns yield from DOT staking rewards. This yield is reflected in a steady price appreciation of vDOT in relation to DOT. The second component is aDOT - a representation of DOT that has been supplied on Hydration’s lending platform. aDOT is a rebasing token, meaning that the amount of tokens held automatically increases to reflect the yield from the DOT lending APR. Finally, targeted incentives will give the resulting APR an additional push. The Hydration Protocol is planning to redirect vDOT incentives from the Polkadot Liquidity Campaign towards gigaDOT.

Under the hood, gigaDOT is powered by a Stablepool between vDOT and aDOT, with gigaDOT being the 2-token of that pool. After obtaining gigaDOT, users can supply it to the Hydration lending platform to earn the additional incentives on top of the vDOT and aDOT APR. From there, some users may decide to use it as collateral to borrow another asset such as stablecoins, effectively placing a long on gigaDOT. Others may decide to borrow more DOT, convert it to gigaDOT, and then loop it as collateral again to achieve a leveraged gigaDOT position with higher APR.

To make gigaDOT possible, Hydration implemented a new type of Stablepools which support a drifting peg to reflect the diverging APRs of the tokens inside. The development of this feature has already been completed, and it just underwent an extensive security audit. After giving it a short round on our public testnet, we will be ready for this exciting launch on mainnet.

Our ambitions for gigaDOT are big, and we expect that it will become a cornerstone of Polkadot DeFi. It will allow us to streamline the incentives for several tokens into one product, which can be further deployed in the DeFi lego. The efficiency gains continue, as gigaDOT unfolds its flywheel affect that attracts much needed liquidity for vDOT, which in turn allows for mission-critical functions such as liquidations to continue operating efficiently.

HOLLAR: Completing the DeFi Trinity

HOLLAR is our upcoming decentralised, overcollateralised stablecoin that is native to Hydration and Polkadot. Based on the smart contracts that power AAVE’s GHO, it allows anyone to mint HOLLAR after providing collateral. With this upcoming launch, we are finally uniting the three pillars of DeFi under the roof of our scalable appchain: trading, lending and a native stablecoin.

Here is a brief overview of the interplay between HOLLAR and the existing DeFi products on Hydration:

• Direct integration with our capital-efficient AMMs for superior liquidity, with our on-chain router finding the most efficient trading path;

• Generating interest payments that flow to the Hydration treasury, creating sustainable revenue;

• Full governance control by the Hydration community through web3’s most advanced democracy - OpenGov;

• Prioritised on-chain liquidations that enhance stability and reduce risk;

• Liquidity incentives for minting HOLLAR (more info soon).

We are currently finalizing the preparations for launching HOLLAR on our testnet.

This is it for now - stay hydrated for more info.

Bullish update over and out.

The Birth of a Revolution

Our journey began with a vision and a moment of extraordinary community trust – a successful LBP that raised over 22M DAI. This show of faith empowered us to pursue our mission of making DeFi efficient, simple, and unstoppable. On January 6th, 2023 - exactly two years ago, that mission took its first tangible form with the launch of the Omnipool.

Like many transformative ideas, the Omnipool started modestly. We began with carefully calibrated parameters and what some might call training wheels – not out of timidity, but out of respect for the magnitude of what we were building. This wasn't just another AMM; it was a fundamental reimagining of how liquidity could work in DeFi. Our patient, methodical approach to expanding its capabilities has proven prescient, leading to a protocol that's both robust and revolutionary.

A Year of Metamorphosis

2024 marked our evolution from HydraDX to Hydration Network, but this transformation went far deeper than just a name change. Like water itself, we adapted, flowed, and found new ways to empower our community. Our fresh identity reflects the energy and dynamism of our ecosystem.

This year, we didn't just reach milestones – we shattered them. Our TVL soared to an all-time high of over $69 million, more than doubling our previous records. But numbers only tell part of the story. The real triumph lies in how we've made DeFi more accessible and efficient than ever before:

• Launched our revolutionary borrowing platform, bringing AAVE v3's battle-tested security to Polkadot

• Introduced Memepad, democratizing token creation and proving that innovation can be fun

• Deployed cutting-edge features like Degen Mode, embracing the spirit of our community

• Launched OpenGov, putting real power in the hands of our users

Building Bridges, Breaking Barriers

2024 was the year we tore down walls between traditional finance and DeFi. One-click bridging from Ethereum, universal fee payments through MetaMask, and seamless Nova Wallet integration – these weren't just features, they were declarations that DeFi should work for everyone, not just the tech-savvy few.

The Polkadot Hydration Campaign was successful. With over $10M in incentives deployed and farming pools yielding up to 260% APR, we proved that sustainable growth and strong returns aren't mutually exclusive. Our referral program turned users into ambassadors, creating a network effect that continues to ripple through the ecosystem.

Innovation Meets Security

In the wild west of DeFi, we've been a beacon of stability. Native Ledger support, comprehensive security audits, and rock-solid infrastructure meant our users could trade, farm, and build with confidence. Because true innovation isn't just about what's new – it's about what's reliable.

A Community That Moves Mountains

The evolution from our initial AMM to today's DeFi ecosystem has been driven by strong community participation. The consistent engagement through trades, farming, and governance has helped shape what Hydration is today. We're grateful to our early supporters from the LBP, to those who joined throughout our development, and to new members of our ecosystem. Your continued involvement has been essential in building a protocol that improves how DeFi works.

Looking Forward: The Future is Hydrated

As we step into 2025, our vision is clearer than ever. We're not just building a protocol; we're creating a future where financial freedom is accessible to everyone. The Omnipool remains our heart, but it now beats in symphony with a complete ecosystem of lending, borrowing, governance, and cross-chain integration. The launch of our upcoming stablecoin is the cherry on top.

With our established foundation and growing ecosystem, we're positioned to push the boundaries of what's possible in DeFi. Our technology is proven, our community is stronger than ever, and our vision is clearer than ever before. Two years ago, we launched a pool. Today, we're building an ocean. Tomorrow, we reshape DeFi - making efficient, simple, and unstoppable.

Stay hydrated! 🚰

The mission of Hydration Protocol is to make DeFi simple, efficient, and unstoppable. If DeFi were to ever stand a chance in the battle against TradFi, these three would be the decisive factors. Onboarding normies demands flawless UX with UIs that abstract all complexities. Great UX also suggests capital-efficient execution of financial transactions. Finally, the system needs to be resilient in order to protect itself from external interference - they will not let you have your cake and eat it.

The last factor - resilience, is often overlooked in the DeFi space. Projects assume to be resilient and decentralized just by the mere fact that they are built on a blockchain. In reality, their functioning relies upon a myriad of multisigs that control everything in between block production, treasury funds, and transaction pausing. Things are okay until they are not, and the operations are interfered with by team members, institutions, Lazarus, or some other assumption of authority.

Built on Polkadot, Hydration already receives a great deal of resilience out-of-the-box. Democracy is an important part of this. Ever since the mainnet was launched and the founding team gave up control over the chain, all decisions affecting the Protocol have been made by HDX holders using referenda - and so far we have 203 of them!

With the launch of OpenGov today, Hydration Protocol undergoes an upgrade in its Democracy processes. OpenGov allows us to have more referenda running in parallel, have different tracks depending on the importance and impact of a referendum, and to sunset the Hydration Council in favor of more decentralization. The old governance mechanism will continue running in parallel for a few months, after which it will be deprecated.

Introducing OpenGov

Some of you may already be familiar with OpenGov from Polkadot. As Hydration relies on the same pallets, it will work in a very similar manner (with a few tweaks).

Anyone can submit an on-chain referendum to one of the available tracks (initially there are 9 tracks). The choice of the track depends on how far-reaching the consequences of the referendum are, with higher tracks posing stricter requirements. For example, a referendum requesting a small tip in HDX will be easier to pass than a Root referendum for upgrading the chain. There are tracks for cancelling and killing (cancel + slash deposit) referenda.

Initially, liquidity operations concerning the management of the Hydration Treasury will be performed using the Root track. Within a few weeks, we are planning to introduce the ability for the Treasurer track to manage all Treasury positions (including LP, Money Market etc). Also, a new Economic Parameters track will be proposed with the powers to make tweaks e.g. to the AAVE risk parameters.

After a referendum has been created, it will only enter the decision phase once the decision deposit has been placed. This is a deposit that can be provided by anyone, and which is returned after the referendum has finished, regardless of the outcome (unless there has been a malicious intent).

Depending on the track, a referendum will run for up to 7 days. After the decision period has elapsed, any referendum with more than 50% approval will be enacted. A referendum can also be approved earlier, provided that it receives sufficient support. Learn more about approval and support in our docs.

Referenda that strictly require fast adoption can be whitelisted by the Technical Committee. Whitelisted referenda have a shorter decision period and require less support to be approved.

Finally, it is important to mention that there are no changes in regard to staking. Stakers can continue voting in OpenGov to boost their HDX rewards. In the upcoming months we will add the ability to vote on referenda directly from the UI without leaving the Hydration app.

This was just a high-level overview of the functioning of Hydration OpenGov. To learn more, we encourage you to visit our docs:

https://docs.hydration.net/community/opengov

https://docs.hydration.net/guides/opengov

Less Committees, More Decentralization

The launch of OpenGov also brings changes to the two existing collectives - the Council and the Technical Committee.

All existing tasks of the Council are fully transferred to OpenGov. The Council will be dismissed once the transition period to OpenGov has been completed, and Gov v1 has formally been removed. On behalf of the Hydration Protocol, a big thank you to all Council members for their service 🫡

The Technical Committee will continue existing under OpenGov, however its powers have been limited to emergency interventions only: They can whitelist referenda that require faster enactment, pause specific transactions, set the tradability of particular assets etc.

Happy (open) governing!

It is with great joy and a healthy amount of pride that we announce the launch of the Money Market on Hydration, allowing users to supply their crypto as collateral, earn interest, and borrow against their positions.

This launch is a milestone not only for Hydration and Polkadot, but also for the wider DeFi space. When we started building Hydration 4 years ago, we embarked upon the mission to make DeFi efficient, simple and unstoppable by uniting the three pillars of DeFi under the roof of a scalable app-chain: Trading, Borrowing, and a Stablecoin currency. This informed our choice for Polkadot as the only piece of trustless blockchain infrastructure able to accommodate our vision.

In this post we share our thoughts on the significance of this achievement, reflecting upon why what we are delivering is revolutionary even by today’s standards. We then continue with a brief explanation of how it works, and we round it up with some example use cases which will inspire you to degen like a pro.

The Need of a DeFi Renaissance

The DeFi summer of 2020 brought us something more than a major use case of the blockchain technology. It brought us the prospect of a free world in which everyone can partake in finance. Devoid of the greed and urge to control by governments and large financial institutions alike, DeFi gave rise to powerful slogans: Banking the Bankless, Finance Without Borders, Money Without Middlemen.

Once the initial hype settled down, the shortcomings of early DeFi quickly became apparent. To begin with, the technology was not optimized for “normies” who struggled in finding their way through clunky UIs. Capital inefficiencies further contributed to the bad user experience: It was, simply said, hard to compete with the efficiency of centralized ledgers. Congested blockchains, MEV, high transaction costs, lack of sustainability, and the reliance upon inflation and ponzinomics to attract liquidity only made the problem more evident.

Liquidations - an essential part of any Lending and Borrowing platform, have also traditionally been plagued by inefficiencies. To begin with, lack of prioritization on the Ethereum blockchain meant that liquidation transactions would be queued somewhere between countless other transactions that trade crypto or NFTs, thereby delaying the execution of the liquidation and leading to a greater loss of collateral for the borrower. Furthermore, this opened up various MEV vectors, ranging from frontrunning and sandwiching attacks, to the mere absorption of the liquidation penalty (i.e. the incentive for performing a liquidation) by bots.

The DeFi Renaissance: Hydrated

As the bull got exhausted, it was time to return to the trenches and improve ourselves. Shortly thereafter, we shipped the Hydration Omnipool - a novel kind of AMM that unlocks capital efficiencies by combining all assets in a single trading pool - thereby reducing the hops between pools, and enabling single-sided liquidity provisioning (which played a central role in the onboarding of liquidity and DAOs). To provide the best trading experience, we accompanied the Omnipool with three other AMMs (Isolated Pools, Stable Pools and Liquidity Bootstrapping Pools), all of this wrapped under a user-friendly UI.

But the journey did not end there. We knew that we could unlock greater efficiency and profitability for the Hydration Protocol by building upon the solid bedrock of our trading AMMs the second pillar of DeFi - Borrowing. Liquidations - which occur when a borrowing position risks to become undercollateralized, are among the most profitable on-chain activities. 

Leveraging the power of the Polkadot infrastructure, we are again able to flip the paradigm. As the masters of our own block production, we can introduce prioritized on-chain liquidations, making sure that they get executed by our collators at the beginning of every block. This minimizes the losses for the borrowed positions and limits the possibility of frontrunning or sandwich attacks. Furthermore, the whole liquidation penalty (usually 2-5% of the liquidated collateral) can be absorbed by the Protocol Treasury, thereby internalizing this MEV opportunity and opening up a generous stream of Protocol revenue which can be directed to HDX stakers or used for other purposes, as to be decided by Hydration Governance.

How To Supply and Borrow

To enable Borrowing on Hydration, we have deployed a fork of AAVE v3, which is the most sophisticated and secure lending protocol to date. In exchange, Hydration governance has decided to accumulate the AAVE token in its POL, and we will be exploring more ways to work together with AAVE to become the official AAVE fork of Polkadot.

If you are unfamiliar with AAVE, here is how the process roughly works. Anyone can supply collateral in one of the accepted crypto assets on the Platform. After doing so, the position starts accumulating yield, with the APR being determined by market forces (supply and demand). Higher demand for a particular asset / lower supply translates to a higher yield for the supplier.

After supplying collateral, users can borrow any other asset against their position. Borrowing is over-collateralized, meaning that - in net terms - users can borrow less than the amount they have supplied. This allows for liquidations to be performed safely, i.e. without putting third-party capital at risk. To prevent a liquidation from happening, borrowers must actively monitor their position and add more collateral (or repay their debt) if their factor deteriorates, meaning that they approach the liquidation threshold.

To supply and borrow, visit the following link:

https://app.hydration.net/borrow

For more information you can consult the following resources:

• Product docs - get to know how it works, and learn the key terminology;

• Guide - how to supply

• Guide - how to borrow and manage risk

• Risk parameters

To kick off the markets, the Hydration Protocol will supply the following assets into the Money Market from its Protocol-Owned Liquidity (POL):

• WBTC

• DOT

• USDT

• USDC

Finally, we would like to mention that during this initial launch phase, the liquidations will be performed in the traditional way, using off-chain bots. However, our revolutionary implementation of on-chain liquidations performed by collators is just around the corner, waiting for an audit.

Example Use-Cases

Borrowing on Hydration can be used as a part of multiple strategies. To begin with, the immediate access to credit can help users cover expenses related to their personal or business needs. Instead of selling their assets that have (perceived) upside potential, users can borrow other crypto against these positions, all of this usually without the need to pay the taxes that are levied upon selling. The resulting capital efficiency - which in TradFi is reserved only for the rich and powerful, is now completely democratized.

Furthermore, users can supply and borrow crypto to create (leveraged) long or short positions on crypto assets. They can do so by borrowing an asset (e.g. USDT) which they expect to underperform their collateral (e.g. BTC). Additionally, they can create a leveraged short on USDT by selling the borrowed USDT for more BTC, and resupplying BTC again as collateral in order to borrow more USDT. This can be repeated several times according to the risk appetite of users.

A final example use-case is arbitrage between borrowing interest rates and other yields. If the interest rate paid for borrowing an asset (e.g. DOT) is lower than the yield from supplying that asset to another venue (e.g. APR from staking or LPing), users can borrow DOT and supply it to the other venue in order to arb the difference between the two rates. Users can increase the profitability of this strategy by supplying and borrowing correlated assets (e.g. DOT / vDOT) by using E-mode, thereby achieving a higher Loan-to-Value (LTV) ratio that allows them to borrow more against their collateral.

Happy borrowing, and don’t forget the name of the game:
Stay hydrated, not liquidated