BREAKING NEWS: gigaDOT and HOLLAR
Polkadot DeFi Preparing to Punch Above Its Weight
Over the past year we saw many pieces of the DeFi lego we call Hydration come together. We improved the efficiency of swaps, launched Lending and Borrowing, and proved to the world that DeFi can be made simple with user-friendly interfaces.
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.