The Polkadot Ecosystem has been growing recently with more and more decentralised applications or DApps being built on top of it.
Not only are those DApps already fully functional, it can also communicate with other DApps on other blockchains.
Some of them are built in the form of a protocol on the Parachain, meaning it exists as its own blockchain as well as its own DApp.
One of them is HydraDX, which is an omni chain DeFi platform bringing multiple blockchain’s liquidity into one platform.
What is HydraDX
HydraDX is an omni chain protocol built on top of the Polkadot Parachain to give user a DeFi platform to do all DeFi things including swapping tokens and coins, farming, staking, lending, and borrowing, like most DeFi platforms do.
Omni chain means that it can connect with multiple blockchain, meaning that users of the DApp can access liquidity from other blockchains aside from the HydraDX Parachain.
The platform was developed in 2020 but has fully launched all of its features, including the omni chain feature in 2023.
It was originally developed as its own Parachain blockchain but has shifted its focus to a DeFi-focused protocol,
The platform was built on Substrate like most other protocols and DApp that are currently running on the Polkadot Parachain.
It was built with around $200,000 of initial funding which they used to continue building the project as well as secure their Parachain spot through the auction.
They officially secured their Parachain spot in February 2022, where it looks like that most of the money came from their own but some was gathered through a crowd loan.
What are its Features?
HydraDX officially kept their spot until today where they have processed a significant amount of transactions.
All of those transactions are processed through the HydraDX platform which is currently live and is available to use with an EVM wallet as well as a Polkadot Wallet.
There are currently seven tabs that represent the features that are available on the HydraDX DeFi platform, starting with the most used one which is the trade feature.
Trade
HydraDX offers a unique swap feature that replicates the features of a centralised exchange as well as a decentralised exchange.
The decentralised exchange features are replicated through a normal swap platform similar to what most implements.
It uses an AMM or automated market maker feature to ensure that liquidity is kept at a good condition so that there are no delays when transacting on the platform.
Aside from that, the unique feature lies in the OTC and DCA platform which are similar to what centralised exchanges implement.
OTC is short for over the counter trading, which means that it implements a similar feature to what centralised exchanges used for institutional investors and whales, but in a decentralised manner.
This means that there are no middlemen and the transaction only involves the two sides who are buying and selling.
The feature is similar to a decentralised P2P or peer to peer transaction where there are no middle man but the two sides agree on a specific price rather than a market price.
The other feature which is the DCA feature, stands for Dollar Cost Averaging, which is an auto invest feature to let the platform buy a specific crypto automatically during price volatility, almost like a bot.
There are two types of DCA in this platform which are the Yield DCA that only lets users use vDOT to buy other tokens or coins on the platform, and the Trade DCA that lets users use all kinds of tokens and coins to buy other kinds of tokens and coins.
vDOT is a liquid staking token that represents an ownership of a staked DOT, so holders of it can get more returns automatically by using the Yield DCA.
These features are great for long term investors who are looking to continue accumulating the same token or coin but cannot monitor their movement at all time.
There is one more feature on this section which is the Bond feature, which is an asset that acts like a traditional bond with a maturity date, but has no yield.
The bond can be bought with HDX, the native token of HydraDX, where you will get HDXb which is the token name for the bond.
When you buy 1 HDXb you will need to pay with 1 HDX, but the value of the two might differ, hence creating the arbitrage opportunity for yields.
Liquidity
Next is the Liquidity feature, which is a liquidity farming platform for HydraDX’s users. The platform can be used to earn passive yields from simply locking one token or a pair of tokens.
As you can see the yields range from less than 1% to more than 10% which differs according to the tokens being used.
The yield comes from the fees that are taken when someone buys or sells those tokens on the swap feature of the HydraDX DeFi Platform.
Wallet and Referrals
On the HydraDX platform, you can also maintain your wallet through its wallet feature to manage your assets that are currently being used or have been used on the HydraDX platform.
You can see what tokens are being locked and what rewards you are earning only by connecting your wallet to the platform.
There is also a referral feature that lets you send links to other people that have not used the platform, which will earn you commissions on their transactions if they decide to use your link to connect to the DApp.
The commission will be perpetual, meaning every time they transact you will get a commission without a limit on it.
However, to create a link by paying 222 HDX plus transaction fees, which equates to around $3 overall.
Cross Chain Bridge
HydraDX also has its own bridge to fully realise the value of omni chain that it pushes to the public.
Currently you can send directly from four chains on the Polkadot Ecosystem, which are Polkadot itself, HydraDX, Bifrost, and AssetHub.
The cost to use this platform is currently less than $0.1 which is okay compared to other bridges in the crypto space.
You can also send tokens and coins to other blockchains outside of the Polkadot Ecosystem, specifically into the EVM ecosystem.
However, you will be directed to use a Carrier, which is an external DApp connected to HydraDX to process the transactions.
Currently the carrier can only process EVM transactions as HydraDX is also compatible with EVM Blockchains.
Staking
If you own some HDX, which is the native token of the protocol, you can use it to earn passive rewards through the staking feature.
You can earn an average of 4,71% annual yield by locking your HDX, which is arguably below average in terms of the rewards.
However, it is safer as the low yield means that the token is not used for high risk activities, so investors’ funds are kept safe.
Stats
Last is the stats tab which is short for statistics in which users can use them to see how much transactions are being processed and locked on the HydraDX platform.
This feature is helpful for researchers or investors who are looking deep into the platform to see how valuable the platform is.
DAO Platform
Aside from those seven, there is one more platform which operates outside of the HydraDX platform.
The feature is the DAO or decentralised autonomous organisation which is the platform that is used by holders of HDX to vote on proposals that might change the HydraDX DeFi platform.
To access it, you can go to the platform and click on the connect wallet button to let the platform detect your HDX so that you can participate in all the DAO activities. The platform is built on substrate, so it utilises the overall Parachain infrastructure.
Current Conditions
Looking at the statistics tab on the HydraDX platform, it can be seen that there are currently more than $23 Million of funds being locked on the platform.
This is a huge accomplishment considering HydraDX has only been in the market for less than a year, but has managed to attract many investors to use its platform.
The treasury that the platform managed to continue its growth stands at more than $16 Million indicating that it has fuel to keep building.
What is most impressive is its transaction volume where currently the daily transaction volume exceeds $1 Million, and it is not even at its highest value.
This means that the project keeps on growing and growing indicating that it might have potential in the future if the marketing team stepped up their game.
After launching everything in the second half of 2023, the project has continue to increase their traction, where currently it has almost 5,000 members on its Discord channel.
The Twitter (X) account also shows growth as it currently has more than 32,000 followers, meaning that the platform is considered well known in the crypto space.
HDX Token Economics
The popularity of this platform started to rise in the late days of 2023, specifically in November 2023 up until February 2024 where it reached its highest price of all time.
The token rose more than 800% in just less than six months, which is why the platform suddenly became popular and more users started to explore the HydraDX Ecosystem.
Sadly the token itself started to trend downwards after it reached its higher price where until today it shows no signs of recovery.
If you are still interested in owning this token, let’s take a look at the token economics of HDX to further consider if this token is worth it or not.
Looking at the utilities, it can be seen that the token is used as a utility token to pay for fees on the platform and as locking tokens to earn passive rewards.
It is also used as a governance token which holders can use to vote for changes in the HydraDX Ecosystem overall.
The total supply of this token stands at 6.5 Billion HDX, where the overall team, contributors, and early investors who funded their initial capital gets an allocation of 27% of the overall supply.
This means that 67.5% of the supply is allocated towards the public through the initial supporters, including the participants of the crowd loan and the initial liquidity bootstrapping of this project.
There are 5.5% allocated towards the DAO, which could be allocated for future developments of the project as well as potential marketing campaigns to grow the community.
The vesting period is around 129 months or a little south of 11 Years, where the emission schedule is not set by the team which can change over time through the governance proposal.
Looking at the token economics, it is quite solid to pursue investors to have trust in the team. This is because the team controls a small amount of tokens which means that it can be far from price manipulation, even though the price is currently trending downwards.
Plans Ahead
However, a price recovery is not impossible as we are heading into the predicted bull market of 2025, while the project is also developing some upgrade to overall enhance the quality of the HydraDX Ecosystem.
Looking at the roadmap, there are currently four things that are being developed, which are:
- Order Batching method to increase the transaction speed of the platform.
- Lending and Borrowing feature to enhance the experience of the platform.
- Liquidation Engine to keep liquidity in tack on the platform with the upcoming lending and borrowing feature.
- Backrunning auctions, which might increase the quality of the DCA feature and the overall security of the platform.
With the upcoming lending and borrowing feature, HydraDX is looking to create its own stablecoin called HOLLAR which will be backed by multiple assets which might implement a combination of an algorithmic stablecoin and a crypto-backed stablecoin mechanism.
It is said that users will need to mint the stablecoin by depositing some tokens on the platform, but details are not explained yet, and will probably be released after the stablecoin is launched.
Lastly, there are plans of rebranding the project from HydraDX to Hydration which might spur new interests towards this DeFi Project.
Conclusion
Overall the project seems solid, as the team have plans to continue developing and building the project with plans that have been agreed by the holders and are already given to the public.
Two things to be concerned about is the marketing of the project and the stablecoin launch. The team needs to step up their marketing in order to compete with the overall DeFi trend that has been rising in the crypto space.
This means more AMAs and other collaboration to overall increase activities in the community of this project.
The stablecoin launch might also be something to think about as it might give out negative sentiments from investors thinking that all non-fiat backed stablecoins will end up like UST because of the trauma from the Terra or LUNA project.
But looking at the team, all these problems will be taken care of. So if you are looking to capitalise on the growth of this project, make sure to always use proper risk management, because aside from the project having potential, volatility might occur more and more in the development process.
