Hydra chain, a new Proof of Stake blockchain emerged earlier this year and built by combining the best features of Bitcoin, Ethereum and Qtum chains, announced the launch of its native DEX this week.
By taking this step, Hydra joins the ranks of only a handful of blockchains that offer DEX capability (Ethereum, BSC, Polygon, EOS, Tron, Solana and now also Hydra).
Will Hydra become the next big thing?
Hydra was launched in late 2020 and has since grown by more than 1,000% in price. Through its multiple campaigns the chain quickly established a strong node infrastructure and now counts more than 500 validators across the globe.
Stakers currently enjoy an APR of around 80% – which the team behind Hydra calls the “seed phase incentive” for early adopters.
In the few months since its inception, the ecosystem has grown considerably, with five projects already being built on the Hydra chain right now:
- LockTrip (blockchain-based travel marketplace with up to 60% discounts on hotels)
- GoMeat (speciality meat delivery application – currently during its ICO stage)
- Evedo (online ticketing platform for some of the biggest events worldwide)
- Rezchain (blockchain based booking verification technology of Webjet – the second biggest travel supplier in the world)
- Hydra DeFi ecosystem
But the ambitions seem not to stop there.
Why the Hydra DEX is about to Supercharge the Ecosystem
The community has long anticipated the launch of the DEX, as it represents a critical milestone in the development roadmap of the ecosystem. Through it, projects can now create strong liquidity pools and improve the trading experience considerably. Hence new projects launching on the Hydra chain will have a much easier path to success – by accessing the global liquidity and financial markets within a few clicks.
While this is great news for more projects joining the ecosystem, the team behind Hydra has also a plan for existing projects that are currently on alternative chains such as Ethereum and BSC.
A new application called the “Hydra Bridge” is currently being built and aims to create a single click cross-chain gateway between Hydra and Ethereum. In parallel to this, a targeted liquidity mining program is being designed which has the capability to significantly boost the APR on Hydra-based liquidity pools. High APR pools have historically been very successful in attracting capital.
The combination of the bridge with the liquidity mining program is thus expected to lead to a steady flow of capital from the currently popular chains towards Hydra – strengthening its position in the global markets.
The Holy Grail of the DEXes
Current DEX applications such as Uniswap or Pancakeswap all share one common and very serious problem. Since traders directly interact with the liquidity pools, the balances of the two sides of a pool are constantly subject to change – and thus liquidity providers who aim to profit from the trading fees have a high risk of ending up with a different asset combination than they initially deposited.
The main problem however is that this risk is not random – but systematic instead. Which means that liquidity providers are always on the losing side. The question is not IF they lose, but how much. And whether the trading fees are able to compensate for the losses.
This phenomenon is called impermanent loss and is commonly known among liquidity providers. The team behind the Hydra DEX claims to be working on a solution against impermanent loss. If the end result works that way, then Hydra DEX could very well take a leading role in the space. Will they capture the “Holy Grail” of all DEXes? Time will tell!
Another issue that plagues liquidity providers is that with most DEX applications, you can only deploy both sides of the pool simultaneously. Thus the LP needs to invest into both assets – and carry double the exposure. Hydra DEX claims to have found a solution to this problem, although the team keeps their cards well hidden for now.
If successful, this could unlock plenty of potential as holders of various tokens and coins could put their assets to work without having to worry about the other side of the pool. Especially when it comes to stablecoins and fixed-supply tokens, a relatively low APR of 5-10% could appear highly attractive to the crypto community.
What do you think about the potential of the Hydra chain? Will it be able to break into the top places by following this strategy? Share your thoughts in the comments section below.
You may also join the Hydra community to engage directly with the core team members.
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