Thank you to the Infinity Chain for participating in Ask Me Anything (AMA) with HydraSwap 18 November, 2021. This guest star,
- Tom — HydraSwap Team
- Victor — HydraSwap Team
Victor Lee :
Hi everyone, i’m Victor Lee, core team from Hydraswap.
Victor Lee :
i’m a seasoned crypto-entrepreneur. Been into crypto space since 2017 and never look back since.
I’m Tommy :)
I run Marketing for HydraSwap.
I come from startups where i’ve been building things companies since I was young. I’ve been extremely lucky twice, and have sold 2 companies. And I’ve built many many more than that
Victor Lee :
I’m also semi DeFi Degen. Invested into many DeFi protocols and realized the gap and issues with the DeFi trading algos.
Victor Lee, :
Thus, working with the core team; Ayush, Tommy and Luke to solve this problem ourselves!
I love crypto.
i just see it as how we’ll conduct our lives in the future.
Every other industry has been updated for the 21st century, it’s time to do the same with our money
What is HydraSwap?
Hydraswap is a cross chain advanced DEX on Solana
Our vision is to become a mega app that provides a one stop solution for liquidity providers and traders for managing and trading assets cross-chain.
Our edge will be creating a seamless cross-chain infrastructure, a game changing AMM market making algorithm and a slick & intuitive user interface that is going to greatly enhance the experience of traders & LPs alike and exceed that of CEXs.
We will be building our base DEX on Solana. With a TPS north of 50k and gas costs under 1c, we strongly believe that Solana is best placed for supporting a high frequency trading ecosystem.
With HydraSwap we will bridge the fragmented liquidity on DeFi and coupled with Solana’s throughput we will enable DeFi to scale further unthrottled.
We believe that in order for Decentralized Finance (DeFi) to scale and reach to the masses. We need to solve the bottle neck for DeFi. It is a no-brainer.
Using a simple analogy, banking. Could you imagine going to a bank A and withdrawing $ and get out of the bank physically and go to bank B? THAT DOES NOT MAKE SENSE.
FOR BANKING TO SCALE, we need to solve the DeFi interoperability between chains. That’s how SWIFT network have solved for banking and that’s what we are hoping to solve!
We are solving the problem for the future of DeFi. That’s what excites us everyday. To bring DeFi to the masses.
What triggers you to launch HydraSwap? What are some of the real-world problems/pain points that HydraSwap aims to solve?
Victor Lee :
We personally understand the painpoint of trading as Ayush is from investment banking and manages trading products in his corporate career before going all in for Hydraswap.
Solving the liquidity provider painpoint is crucial for this DeFi space to grow and there is no better place to do it than Solana ecosystem.
We will be able to offer sub 1s transaction times, sub 1c gas costs. This will allow you to significantly improve trading performance.
With Solana’s power we will enable a whole new suite of order types that will give you up to 10x lower price slippage on large orders.
In addition to that, our HMM algorithm really pushes us ahead. Our algo team has over 20 years of traditional finance trading experience.
This makes for a very intuitive trading process. We’ve designed algo and our UI to enable trading of all kinds.
Victor Lee :
It’s a DEX built by traders for traders. We have skin in the game!
Could you please give a brief intro of HydraSwap salient features? What solutions are offered?
We are an exchange, so you can expect many funcitonalities to help you trade. We’ll have all those.
But the core offering that we’ll have on our DEX is tighter pricing with more volume behind those prices
Our focus is on enhanced trading and tighter pricing, and this has driven our entire product roadmap
Instead of focusing on pretty features, bells and whistles. Our first move was to dive into the AMM algorithm and make a change to the fundamental logic that dictates what price you trade at.
Our edge is our AMM, called HMM, Hydra Market Making. It’s based on UniSwap v3’s concentrated liquididty but we go even farther to provide additional protocols like the compensation perameter that aggregates prices from additional sources in order to create tighter pricing.
Our HMM. It’s the core function of a dex, to make and incentivize tight prices that have volume to facilitate trading. And while many people build DEXs, few of them actually operate in this one area where DEX’s matter most, the price making algorithm. And the algo is where we shine. Our HMM provides 2–4x more returns to LPs than other DEXs, and we can prove this with back tested data.
Can you provide an overview of HydraSwap tokenomics? What are the use cases $HYS token in the HydraSwap ecosystem?
Victor Lee :
Total supply of 100,000,000 HYS a SPL token issued on Solana
11% Early Investors
5.5% Treasury, CEX
12% Ecosystem fund.
45% Liquidity mining
12 months for Early investors
48 months for the Team
Some of the crucial components of HYS token:
1. Staking contracts
2. Liquidity mining
3. Profit share via token buyback
The $HYS token is a vital part of the DEX. It’s how we give back to our users for building up the DEX, providing liquidity, staking, everything.
It’s our way returning the value of this project back to the community.
Victor Lee :
Before I forget, HYS is not just a governance token but also boasts a plethora of utilities. With HYS, a user would be granted the following rights:
1. Proposal and voting rights
2. IDO and crowdfunding quota on HydraSwap
3. Transaction fee discount
4. Transaction fee dividends
5. Governance rights
For more indept information, kindly visit https://hydraswap.gitbook.io/hydraswap-gitbook/tokenomics-usdhys/token-issuance
What are the major milestones HydraSwap achieved so far? What are your further plans for HydraSwap that you can share with us here?
We’ve been build for a long time. Working to make the perfect DEX with the best algo.
The team came together in Feb. Each of us put in our own $, and that was the start of the project
In May we released our Alpha
In July we released our Beta
Next we’ll release our FULL app in December and will IDO shortly after
We insisted that we only launch our IDO once a FULL verison of the app was available to our investors with a use case immidiately upon investing. And once we’ve have the the best DEX on Solana. We’ll launch our Cross-chain Bridge. Which will bring assets from other blockchains onto Solana
So we have a busy 2021/Q4–2022/Q1 for you.
Full App release
Release of advance order types.
Cross Chain Bridge
There are some talented traders who are experiencing problems with freedom of expression and access to the free market in countries with high level of censorship. Can these categories of people make use of HydraSwap or your DEX is limited to users in specific regions?
Victor Lee :
No. We do not limit anyone from any region. Anyone can use Hydraswap to trade.
We live by the ethos, DeFi for everyone and anyone; anywhere and anytime.
We created Hydraswap to be permissionless, non-custodial, transparent and fair for anyone, globally.
Why did you choose to use the SOLANA network for the HydraSwap project? how flexible is the SOLANA network in the project ecosystem over the many available network options such as BSC, AVAX , POLYGON, FTM? What are the benefits of HydraSwap using the SOLANA network?
From the beginning we knew we were going to build an exchange that could do all the things a TradFi exchange could do
When we found Solana we felt like we hit the jackpot.
it had everything we needed to facilitate faster trades at an order of magnitude beyond all others
- Solana is proven to be the better layer 1 chain that enables faster throughput (better TPS), lowering cost per transaction and still decentralized enough to enable the next generation of DeFi.
We couldn’t imagine that to scale and replace TradFi, we are using 13second per transaction. That would never work on a sophisticated and advance trading systems.
- Plus, we like working with the #Solana ecosystem team.
- Because among the existing public blockchains, Solana dramatically outperforms the rest in terms of network throughput. Per research conducted in 2020, the maximum theoretical TPS value of Asynchronous Byzantine Protocol is only 20k (Dumbo: Faster Asynchronous BFT Protocols). Meanwhile, Solana achieved up to 65k TPS in a practical experiment, which is a market leading figure. Such high throughput is necessary for the realization of our vision of enabling DeFi to become the financial ecosystem of the future. As such, we chose Solana as our mainnet.
We wrote a whole blog post dedicated just for this topic. For anyone interest please visit [https://medium.com/hydraswap/solana-101-what-is-solana-7d2e6d0b45a6](https://medium.com/hydraswap/solana-101-what-is-solana-7d2e6d0b45a6) for indept explanation
On the algorithm level, “Hydraswap uses HMM algorithm which i guess is a superset of AMM. is it compatible with all AMM use cases, with more appealing possibilities for professional market makers? Tell me more about the HMM core model?
HMM is a game changer
HMM is an updated automated market making algorithm, an AMM. An AMM is the fundamental piece of all DEX’s that is responsible for the pricing and the volume on the DEX. We’ve been building beyond what is a normal AMM.
HMM is an abbreviation of Hydra Market Maker. We’ve built on top of the Uni V3 AMM that has concentrated liquidity and added more.
The core mechanism in an HMM lies in introducing the oracle price as a reference to imitate the manual market making operations. And it introduces a new element that no other AMM has, a ‘Compensation Parameter’
Basically, our prices pull from more sources. And we aggregate the volumes of from these different sources to provide tighter prices with more volume
We have back-tested our HMM algorithm and it provides 2–4x better returns to liquidity providers. By providing better pricing with less price slippage. All of this leads to significantly reduction of impermanent loss.
Here is the back test to prove the value of the HMM. [https://medium.com/hydraswap/hydra-market-making-hmm-backtest-b2cbddfe5aca](https://medium.com/hydraswap/hydra-market-making-hmm-backtest-b2cbddfe5aca)
As you told boldly that HydraSwap is a decentralized exchange. But Are you non-custodial? That means Do you hold our funds?If not, then Would we need to set up a Solana Program Library (SPL) wallet before utilizing the functions on HydraSwap.Share the HydraSwap Supported wallets?
Victor Lee :
Yes. We are non-custodial. We do not touch the LP and $ ever. Everything is on Solana blockchain.
Here are some of the Solana wallets that we being supported on Hydraswap. https://hydraswap.gitbook.io/hydraswap-gitbook/getting-started/spl-wallet
Feel free to try out the beta product at https://beta.hydraswap.io/ and test it out!
HydraSwap provides liquidity for any asset pair through a liquidity pool. My question is, does HydraSwap store the reserves of any two assets through a linear relationship? What is this relationship over which it is possible to maintain these reserves?
Victor Lee :
The trading pairs are in the AMM/HMM pool that is developed by Hydraswap using our latest trading algo that is developed by our trading expert; Ayush.
A traditional market maker (MM) would adjust it’s bid and offer once given a position. This is called applying a price skew.
A CPMM does the same by moving up and down the bonding curve based on the token balances after a trade. Traditional MMs use sophisticated machine learning tools taking into account various signals for adjusting pricing.
CPMM however relies purely on its own token inventory and is completely agnostic to what’s happening in the broader market.
Sometimes this price adjustment can be too aggressive. This leads to pnl leakage as well as adverse selection of trades.
With HMM v1, we introduce a tweak to the CPMM model and introduce a reference oracle price to make a more informed price adjustment mechanism.
For more information, please visit: https://hydraswap.gitbook.io/hydraswap-gitbook/technology/hydra-market-maker-hmm
Most AMM DeFi projects that were deployed under Solana inherit Serum orderbook and features. What can you say are HydraSwap advantages when compared to Serum orderbook and AMM features?
Victor Lee :
HydraSwap is determined to create the AMM of the future on Solana and we strive to help the overall ecosystem thrive while we are at it.
In HMM v1.0, the key problem we wanted to solve was the pricing intelligence on AMMs, given that most of the existing DEXes are inward looking and rely solely on their inventory for pricing.
To tackle this, HMM needs additional market information, and we are proud to partner with Pyth to obtain reliable oracle data. Thanks to the oracle input to HMM, we are able to introduce a ‘compensation parameter’ that optimally incentivizes arbitrageur while protecting LP returns. LPs can now achieve upto 4x returns by reducing impermanent loss significantly.
Other key innovations in HMM also target to benefit LPs in the ecosystem, so that they can provide more liquidity to grow DeFi on Solana without worrying about the potential losses due to the current inadequacies of AMMs.
Firstly, we have created an enhanced concentrated liquidity model that integrates with the ‘compensation parameter’. This could help maximize capital efficiency while reducing impermanent loss for LPs.
Additionally, we have created a volatility adjusted fee to adequately compensate LPs for the level of risk that they take by providing liquidity.
Moving forward, HydraSwap will also help liquidity providers to seamlessly provide liquidity in a cross-chain world by partnering with bridging solutions. It is our aim to create an easy mechanism for liquidity providers to deposit assets into Solana projects.
User experience is a top priority at HydraSwap. We are committed to lowering the entry requirements into DeFi by simplification and providing a CEX-level exchange that could allow our liquidity providers to generate returns like traditional market makers.
With HydraSwap’s unremitting efforts, we believe the Solana ecosystem can be enriched while also improving user scale and retention, so that the HydraSwap and broader Solana ecosystem can reach a mutually beneficial partnership.
Does Hydraswap have plans to explore other chains, to upgrade your infrastructure, and become more successful?
Victor Lee :
Currently we are only focused on Solana as we want to focus on doing 1 thing very very well. That’s our focus.
Our code and smart contract is robust. Please check out Gitbook for more detailed explanation about our code and algo. https://hydraswap.gitbook.io/hydraswap-gitbook/technology/hydra-market-maker-hmm
is it available on the solana network, is there a bridge plan? such as erc, bsc
Victor Lee :
We will be working together with various bridges and wormholes to integrate our HYS token and our product.
Hydraswap will have concentrated liquidity model that integrates with the ‘compensation parameter’.📌 How compensation parameter will solve impermanent loss here? How liquidity model will sustain enough to compensate everytime in case of such losses? Has everything been checked with respect to Rug pulls?
We can say with certainty that the ‘compensation parameter’ will reduce impermanent loss.
And how we do it, is by helping the Liquidity Providers trade at better prices when they’re rebalancing their ratios. Rebalancing is sizeable trade. It requires a decent amount of size on a price to fill that order without trading through the price. The compensation parameter does that, it pulls prices from oracles and determines their trustworthyness in be used as the trading price.
Tell me its 3 unique features that your competitor doesn’t have?
How will people attract toward Your project?
We took a core look at what traders and investors want most. If it was features, functions, pretty UX and UI, news, updates, social proof. And we discovered, it was none of those things. It was better and consistent pricing.
So we focused on the agorithm.
3 unique features that you will get from just our HMM Hydra Market Maker algo:
1) tighter prices
2) more volume
3) reduced impermenant loss.
Thank you for trusting Infinity Chain as the organizer of the event todaRy, hopefully everyone can understand about HydraSwap.
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