Dear Hydrators,
This month marks the 8-month anniversary of our beloved Omnipool. That’s right, they say time flies, but in our case it feels like it’s standing still. With so many exciting developments having happened in such a short timeframe, we thought we should write a smol reflection.
Building the foundation of any great piece of infrastructure is typically the most demanding, time-consuming and under-appreciated type of work. Yet, a good foundation is key to accommodating future growth. This is exactly what we are currently witnessing with the Omnipool - the many months of R&D which were invested in the past allow us to quickly iterate now and ship features which redefine user experience in DeFi.
A noteworthy example of such innovative features are DCA and Split Trade. Besides being completely on-chain and trustless, these features allow users to achieve supreme capital efficiency when trading larger orders in the Omnipool. The trades are split and executed in small chunks to enable low slippage that is previously unseen in a bear market environment with scarce liquidity.
Thanks to this and other great features (check the full list below), our Protocol managed to forge new relationships and to become the go-to DEX on Polkadot. We partnered up with some amazing projects which provided liquidity to the Omnipool as their market maker of choice: ZTG, ASTR, CFG, BNC (GLMR and several others are in the pipeline). To further strengthen our position within the eco, we deployed a decent amount of our POL into other native assets such as DOT and iBTC
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And then come the stables. 8 months ago, it was impossible to get our hands on any native stablecoin liquidity - which informed the choice for the Wormhole / Acala route. Now, the HydraDX Omnipool provides the biggest source of liquidity for native USDT ($2.2M). Also, Circle officially made their USDC launch on Polkadot just 3 days ago, and the Protocol has placed an OTC order to accumulate $2M+ worth of USDC. In conjunction with the upcoming Stableswap feature, the accumulation of deep native liquidity will render the Omnipool the most efficient ecosystem venue for trading stablecoins.
Some other noteworthy achievements lay in the area of non-custodial management of protocol funds. We managed to swap a considerable chunk of the HydraDX POL without any trusted parties, using democracy to place OTC and regular Omnipool orders. Furthermore, we wrote history with Centrifuge as the first project in DeFi to trustlessly provide liquidity from its treasury to an AMM on another chain (again, following a democracy vote).
Finally, a couple of words on security - a topic which has kept us busy. We successfully handled and resolved a major Omnipool vulnerability that was disclosed to us by a top whitehat via our bug bounty program. Independent of this, we shipped an array of features which improve security: Oracles, dynamic trading and withdrawal fees, circuit breakers and a staking program to incentivize governance participation. Also, we are just kicking off with the Polkadot Assurance Legion which will deploy 540,000 DOT to bolster the auditing capabilities of the ecosystem, making Polkadot both more secure and attractive to newcomers.
Shipped Features
OTC Trading
This feature allows traders to buy/sell any amounts of an asset at an agreed price, enabling HydraDX to purchase native tokens (i.e., USDT) in a decentralized and trustless manner.
EWA Oracles
This feature provides exponential moving average (EMA) oracles of different periods for price, volume, and liquidity for a combination of sources and asset pairs based on data coming in from different sources.
Liquidity Mining
This feature allows for the distribution of rewards to deposited LP positions in the Omnipool. Multiple farms can be set up to reward the same LPs - e.g., HDX & DOT rewards to DOT LPs in the Omnipool.
DCA and Split Trading
This feature allows users to gradually accumulate/distribute an asset position without incurring major slippage, achieving better average pricing. Protocols and project teams can also leverage this to diversify their treasury holdings.
Dynamic Fees
This feature allows the Protocol to charge varying fees based on volatility (via price and volume oracle data), increasing profitability for LPs, including HydraDX's POL position, which are hit harder in volatile trading environments.
XCM Rate Limiter
This security feature limits the rate of both inbound and outbound transfers. A key use case would be to limit token transfers of an exploited token to HydraDX and prevent the exploiter from draining other assets with this token.
HDX Staking
This non-inflationary staking mechanism for HDX secures the network from potential malicious governance activity. Yields for HDX stakers are generated from on-chain activity - other factors such as time locked and governance participation will impact individual reward rates.
APIs
We shipped a scalable API infrastructure to serve the data needs of integrating the HydraDX Omnipool into Coingecko, Defi Llama + more to come.
Features under Development
Stableswap Pools
This feature allows for the creation of Stableswap Pools - closely pegged assets traded based on a different invariant curve (similar to Curve Protocol) - within the Omnipool. This is most ideal for stablecoins and like-paired assets (e.g. WBTC<>iBTC)
Current Status: UI implementation ongoing.
Bonds
This feature allows for HDX to be sold as bonds, locked and vested over a pre-determined period of time. Proceeds of bond sales will be sent to the Treasury as Protocol owned Liquidity (POL).
Current Status: Runtime implementation complete; UI implementation ongoing.
Permissionless Asset Registry
This feature allows new assets to be added to the Asset Registry without requiring them to be added through governance.
Current Status: Runtime implementation ongoing.
EVM Support
This feature implements Frontier pallets by Moonbeam, enabling support for EVM and therefore MetaMask wallet and Ledger.
Current Status: Implementation into the HydraDX Runtime and node ongoing; UI implementation ongoing.
XYK Pools
This feature implements the XYK pallet from Basilisk onto HydraDX, allowing permissionless trading pool creation. XYK pools can serve early-stage assets that do not yet meet the distribution and price discovery requirements to be added to the Omnipool.
Current Status: Runtime implementation ongoing; Design ongoing.
LBP
This feature implements the LBP pallet from Basilisk onto HydraDX, allowing price discovery on HydraDX for the entire Polkadot ecosystem. The LBP pallet could also be used as the initial distribution method for HDX Bonds.
Current Status: Runtime implementation complte; UI implementation ongoing.
LFG
Besides working on the features mentioned above, we will also be iterating on some of the already delivered items to ship improvements that make their UX even better. Another focus area will be partnerships, and attracting more projects to provide their liquidity into the Omnipool.
As all of this comes together, the positioning of HydraDX as the go-to DEX on Polkadot will become ever stronger. In that regard, we are looking forward to the launch of LBP and XYK which will allow any parachain to list their token and undergo price discovery - permissionlessly and without the need to comply with the high standards for an Omnipool listing.
Before we round up this reflection, Galactic Council would like to let the HydraDX community know that it will be requesting the 2nd 6-monthly instalment for covering protocol development costs as part of the previously earmarked development funding that was approved by HydraDX Funding Proposal (ref #35).
Stay hydrated!