Apparently only 5% of the ocean has been discovered. Yet the fascination with space is far greater than that of the ocean. We look up but have no idea what lurks in the darkest corner of the ocean. The idea of Dark Forest seems to be misplaced.
The depths of the liquid mass enveloping our planet is the true Dark Forest. Inhabited with scary and creepy looking creatures that can withstand insane amounts of pressure, the ocean becomes a source of life but is also an inhospitable place.
Ocean is an inspiration to our vision of finance. Both, the ocean and finance; are made of the very same fabric - liquidity. Fluidity of atoms inspires fluidity of bits.
On Liquidity & Old Mental Models
“Liquidity refers to the ease with which an asset, or security, can be converted into ready cash without affecting its market price.“ - Investopedia
Liquidity is a key to a well functioning financial system. If our ultimate goal is to rebuild the world of finance from scratch, deep and barrier-less liquidity should be a base layer on which we must base our new financial system. Only after we achieve the “escape liquidity” we can hope to build financial applications that can compete with traditional incumbents on scale. And for that;
we need to provide a solution that is 10x better than what we currently have.
While researching and investing in crypto space for the past three years, reviewing the design of various decentralized exchanges and liquidity pools, we always felt like the rabbit hole can go much deeper. But transcending the old mental models of “exchange” and “liquidity pool” is no easy feat
Both traditional finance and the current crypto ecosystem are very fragmented. Their pools of liquidity are mere fishbowls. Assets can jump from one to another based on market conditions, but the overall architecture is inefficient and rigid.
Merely copying traditional finance with incrementally better tech is not enough. We can't just build a couple of competing crypto exchanges, expecting to change the world.
Rebuilding finance is an ambitious endeavour. For now, populating fishbowls was good enough. Now, we will pour its contents into one giant pool. Liquidity becomes borderless and ever present. Just like the ocean.
Our “Few Understand” Thesis
The most efficient way to bootstrap liquidity of a new financial ecosystem is to build a single unified layer - deep, fluid and interconnected ocean of liquidity. We must replace the model of limited fishbowls with an ocean where assets flow freely.
Fractured liquidity pools will give way to an Omnipool.
While we saw many great DEX and AMM designs, no one was bold enough to build what we wanted to see. Thus, we decided to build it ourselves around a core tenet:
“A liquid is a nearly incompressible fluid that conforms to the shape of its container but retains a (nearly) constant volume independent of pressure. As such, it is one of the four fundamental states of matter and is the only state with a definite volume but no fixed shape.” - Wikipedia
Enter HydraDX - The Ultimate Liquidity Layer, The Deep Ocean of Assets, The Limitless Omnipool (pick your favorite buzzphrase).
Trying to compare HydraDX with Uniswap, Balancer or Serum will give you a hard time. While these projects are great for various reasons, they are still limited in many ways. One of the limitations is that they have solid form and an artificial shape, like a fishbowl.
Whereas HydraDX is like an ocean - its shapeless, its deep, it expands and contracts (with the “gravity of the Moon”), it supports many different lifeforms and it is self-sustained.
In the next installment of HydraDX Intro series we will release more technical details and the roadmap. In the meantime do not forget to subscribe to the newsletter and follow us on Twitter.