HydraDX (XHDX) is a decentralized platform capable of operating across different blockchains. It uses Substrate technology and functions in the Polkadot ecosystem as a parachain.
Characteristics of HydraDX
HydraDX is an innovative liquidity protocol that runs on the Substrate platform. The project's goal is to provide continuous liquidity for all cryptocurrency assets by creating a unique Omnipool where different assets are valued using our native HDX token to determine their relative value. Unlike the traditional approach, where assets are traded in pairs in isolated pools, HydraDX offers an innovative solution. The project is proud to be part of the Polkadot ecosystem and looks forward to providing liquidity for all assets built on Substrate.
Furthermore, Polkadot is future-oriented, and many projects are actively developing on its platform today. HydraDX's primary offering is the ability to provide reliable and secure middleware for token exchange both within the Polkadot ecosystem and beyond its borders.
It should be noted that using HydraDX as a parachain on Polkadot allows for significant customization options based on specific needs and use cases.
Thanks to cross-chain support, flexibility, high speed, and reliability, the financial possibilities of using HydraDX are virtually limitless. The key use cases include:
| 1. | Exchanging cryptocurrencies from different blockchains, allowing users to trade between different cryptocurrencies. |
| 2. | Users can provide liquidity and receive rewards for participating in decentralized exchange mechanisms. |
| 3. | Creating new liquidity pools for new tokens, enabling the launch of new projects and tokens. |
| 4. | Developers can integrate exchange operations (swaps) within wallets and connect cryptocurrency storage to decentralized exchanges. |
| 5. | Interacting with various assets, such as bitcoins (BTC), Polkadot (DOT), Ethereum-based tokens (ERC), and other assets on different blockchains, providing developers and users with diverse opportunities. |
These functionalities allow for the use of HydraDX in various scenarios and make financial operations more accessible and flexible.
Liquidity taken from the protocol uses a platform's token called HDX (details of which will be described later). Additionally, half of the liquidity pool consists of HDX, while the other half consists of LP tokens (liquidity providers). The number of coins issued from the pool depends on activity and participation in this pool.
Internal Token HDX
The HDX token is the primary currency of HydraDX. The amount of HDX tokens minted depends on the number of tokens provided by liquidity providers (LP) in a single liquidity pool. In other words, the more assets in this pool, the more HDX tokens are created. On the other hand, when LPs withdraw their assets from the pool, the platform maintains balance by burning excess HDX tokens.
HDX tokens can be exchanged for other assets within the pool or purchased outside the platform. Currently, the following assets are supported in the liquidity pool: the HydraDX's native asset, Ethereum (ETH), and Polkadot (DOT).
The HDX token has other use cases besides providing liquidity in the liquidity pool. For example:
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It can serve as a reference when evaluating one asset relative to another. This helps protect against price drops and improves capital efficiency. It's important to note that price slippage is one of the main issues faced by DeFi platforms using traditional automated market maker (AMM) algorithms.
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The uniqueness of the HydraDX approach lies in the fact that liquidity providers (LPs) can provide individual assets to support liquidity. The HDX token allows the protocol to scale.
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Consequently, the HydraDX Omni-pool, using the project’s native token, can change its size depending on the “inflow and outflow of assets.” This allows the network to reduce liquidity dispersion and improve the quality of trade execution.
Furthermore, the HDX token serves as a staking token that can be locked in a wallet. This allows holders to participate in block discovery and validation processes. HDX holders also receive benefits, including reduced trading fees and lower over-collateralization ratios when borrowing from the network.
However, before transitioning to fully decentralized governance, the HydraDX provides a Discord channel where users can propose changes and improvements for HydraDX. Twitter and Telegram are also used by the HydraDX community to discuss important matters.
While these platforms do not provide fully decentralized governance, they offer high accessibility, easy access, and user-friendliness.
Conclusion
HydraDX is a unique project in the DeFi space, partially explained by its use of an advanced AMM model. This allows liquidity providers to provide a single asset instead of all assets listed in the pool. Additionally, using a shared pool for all tokens improves the user experience, reduces price slippage, and attracts more liquidity.
Using its native token in the protocol allows for easy adaptation to changes in the liquidity pool. Moreover, the HDX token provides additional benefits such as reduced trading fees and rewards for stakers.
As the network is decentralized, the move towards decentralized governance is a natural step. HydraDX's choice to utilize Substrate and Polkadot technologies reflects its commitment to developing a comprehensive network capable of handling changes in the DeFi ecosystem both today and in the future.
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