Today marks a pivotal moment in Hydration's journey toward making DeFi simple, efficient, and unstoppable. We're proud to introduce HOLLAR – Hydration's native decentralized stablecoin and the third pillar of our comprehensive DeFi infrastructure.
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!