Previously the HydraDX team posted an article in the blog introducing the new token LHDX. It caused a huge confusion among the community and a lot of people were asking for more details from the team, how this token will be utilized and will it decrease the value of the original HDX token or increase it instead? The team decided to make an AMA session in Discord as soon as possible and here is the detailed recap of this AMA.

Jakub Gregus — I will try to describe as simply as possible our thinking behind the LHDX token and why we had to do these changes and the main issue and concerns with previous design.

Imagine that some DeFi whales of liquidity mining, who drop incentives schemes a lot. Imagine these guys want to gain power of the whole protocol no matter short perspective or long term perspective, same as acquire power in Sushi or other protocols via Liquidity mining. In our case, it may be even worse because the security of Proof-Of-Stake protocols is usually very high because if anyone wants to buy any POS tokens out there, no matter Polkadot Kusama, Solana, whatever POS chain. The more tokens are about to be bought on the market because of the slippage and fees, any additional purchases are becoming harder because the price starts to increase a lot. Actually, because of the Omnipool of the design it won’t be a case and some whales can deploy a lot of capital to the Omnipool which increases the size of the Omnipool immediately. They have 15,000 BTC and put it in the Omnipool. In that time the Omnipool will match the size of liquidity they put and the pool will be huge, which means the slippage would be almost zero even in any big trade. Even if they start to buy millions of HDX the price will not move anyhow, this is even bad for HDX holders who want to see some value appreciation over time. This is also bad from the security point of view of the whole protocol because someone can perform an attack which would be much cheaper than attacking any other Proof-Of-Stake or governance system because there would be no limitation on HDX tokens.

The main one issue is having power on governance. They even don’t need to supply a lot of liquidity to the pool because Omnipool can be supplied with lot of assets for liquidity mining. If they would be smart and patient, it will be not possible to identify these efforts and differentiate them from normal LM and they can easily perform this attack. So we are more deeply thinking about it when we saw current Curve wars, when we see Magic Internet Money being used for draining Anchor yield resources and other initiatives, when we see that governance is hard and often the most exciting thing in crypto. The attacks on governance can have very low threshold which is quite scary for us as we are taking overall security of the platform as seriously as possible which also leads to delays of front-end on Basilisk because most of the code 80% will be used in HydraDX as well. With this kind of De-Fi hacks via front-end as we are approaching the launch of both protocols finally a lot and this year we will finally go live after a long time. We are rethinking everything even more seriously as before. We realized “oh sh#t this will might be dangerous as fk” and we had long internal discussions about it. If we introduce the second token, how it will be introduced because I was actually expecting this situation will happen, but no one expected it will cause a very ugly FUD that we are doing some rugpull on you. It was obviously not nice and not even close to true.

That’s the story behind it and I hope everybody is understanding why we did it and why it is actually bullish even for HDX. Why HDX will still have a very strong position in the protocol. So we can move to the questions.

lolmschizz — Governance on Dotsama is not the same as you expect on any ethereum chain. Pretty much anything can be changed by anyone.

Jakub Gregus — For example, dYdX governance token or OpenSea governance token. They don’t have much power over underlying protocols. dYdX team was pretty clear about dYdX governance process and voting with dYdX you will not be able to turn on fee distribution from dYdX protocol. On the other hand, you can choose to switch connection from Polkadot to Cosmos or whatever you want by token holders. Someone prepares code for it and token holders vote for it which isn’t hard if you really want to do that. The runtime upgrades are super powerful and useful on the other hand you need to take them seriously because they can change everything.

lolmcshizz — The question we had from a council member. What’s the utility and potential value of HDX staking into consideration if we go to the two token model and if so what’s being employed to increase the value of HDX What’s the benefit of these 2 tokens? What things can you do with HDX?

Jakub Gregus — Yeah exactly, I described it a few minutes ago. Value appreciation of HDX will be much harder if protocol would be supplied with billions of assets which was our aspiration from day 1 obviously, because it would be almost impossible to move price higher because the slippage would be zero even if we trade millions of HDX at once.

Colin — Whatever is the pool token which can be anything, in our case it’s LHDX, whatever is that central token is, supply of it can be changed very dramatically. So our main concern was that in situation if protocol success and we have whole lot of liquidity come in and HDX is central token and every HDX token and HDX supply goes way up that dilutes everyone who’s holding HDX so that sort of alignment between if protocol succeeds therefore tons of HDX get minted and everybody gets diluted that maybe an obstacle and second token LHDX allowing that to take sort of supply volatility if you will, it gives us a stronger tokenomic system.

I would say HDX and LHDX have zero sum competition feature with the right design it can be positive sum. We need to think what’s the right combination and features for these 2 tokens and what system works well. That’s actually what would happen if the system works well: the value of being able to make a decision on what token would be added to this protocol for example or where exactly the fees are distributed. The value of this governance should certainly go up.

Jakub Gregus — Exactly, I was historically against pure governance tokens I really hates them because to me it was really dishonest to community to give some tokens which is meant to govern something but on the other hand it doesn’t have power to change anything. We see it like with Opensea or dYdX tokens. Its’ not the case with HydraDX, you can really change everything and choose where to extract value and where to not. That’s also to be decided by community and by research, what would be the best way how to benefit from the whole infrastructure and from liquidity of HDX. lolmschizz — The next community question. Does it have any governance decision to make token make governance token to be sure governance couldn’t be taken by LIQ providers and this wouldn’t have the issue? Is that similar to what’s going on with Curve Wars how people are really trying to tighten up on the governance of the token because they are actually deciding where the liquidity goes? Is that kind of similar thing where we just make sure big whales can’t come in and do fun and games with the protocol?

Jakub Gregus — Basically yes, that was also a wake up call for us.

Question — Does it make sense why some people have “Oh my goodness it’s came out of the blue. What’s this thing for the whole time? I don’t know. It seems to me like you just looked “oh shoot” which should probably address it and the 2 tokens system seems like an obvious solution that is a really secure on the long-term.

Jakub Gregus — Yeah, we were thinking about it from the very beginning but the Curve Wars and other governance hi-jacks were the last wake up calls, “Okay, we can’t let it just for randomness and pray it will not happen to us”. There will be huge money at stake there will be people who try to game the system.

Jakub Panik — Maybe I could say that we were thinking about this problems from the beginning and we had some solutions in place to mitigate this like doing fees or changing slightly the model of the Omnipool but every solution brings problems to the design. For instance, if we change the Omnipool design it becomes too complicated to compute transactions on-chain. It would be less efficient for trading and the second solution would hinder oracles because there would be a huge spread on HDX. So we were thinking by limiting buying HDX from the pool but it was not ideal and it was in the end the best solution in the end and even better because this limits of supply of HDX which previous design did not.

Jakub Gregus — We spent hundreds of hours making it with Blockscience and came up with this mechanic. They are very deep in governance. Blockscience actually was modelling the governance attack in the Gitcoin community.

lolmschizz — Community question. I have a question about onboarding new tokens. Do you have an idea of the conditions or requisites of adding new tokens? Are we going to focus on big ones at the beginning such as DOT, ETH? Are we also going to give chance to smaller tokens and how frequently do you expect to be adding new tokens? Are we talking about one per week, 10 per week? What’s the frequency?

Jakub Gregus — Yeah, I have been thinking about this lately a lot. We can do some very practical shortcut to focus on majors and blue chips which are included in some indexes same as DPI or whatever is listed on MakerDAO, Compound, Aave. All the tokens that pass their security reviews I trust them a lot. These things have internal security audit teams who are super deep dive in all the possible risks associated with these tokens. All of them are pretty safe, then all the L1 tokens which would be possible to bridge and most legit projects from them. These are okay and I can imagine that some legit teams with even like new projects can be listed faster. Imagine some team with the quality of Acala or Interlay would pop-up in the ecosystem and we will see they are doing the great job on every side. They have security audits and after that there’s not much reason to wait one year or years until they would be listed. Obviously, there would be some volume requirements which we also can get from other oracles.

Jakub Panik — We could also use Basilisk to gauge if assets have enough volume or it safe enough for us. We are thinking about mechanisms in the future that might allow us to list even less secure assets into the Omnipool but they would be constrained by liquidity so they are not a huge risk to other assets.

Jakub Gregus — The key would be to aggregate multiple oracles. The chainlink kind of battle tested but still not all people are okay with it. We can aggregate a few other oracle sources.

Question — The whole DEX defi market has become pretty crowded over the last year, some various dexes, some different chains. What is your marketing strategy to gain sustainable liquidity on HydraDX ? The omnipool seems to be pretty nice honeypot for hacks, how do you assist the risk of draining the liquiditty of the omnipool and what are your mitigation measures?

Jakub Panik — The first thing is to not list assets which are not secure but we are thinking about multiple measures. 1- Fee that is based on volume, if there is a huge pressure on one token, so we would increase fee to the infinity, so that you cannot drain a pool in a short time and 2 — we are thinking about stop button, which will be governance process if something happens and it’s really bad we should have this measure to be able to stop if enough people is deciding to do that which I don’t know if other projects have this.

Jakub Gregus — This basically called “circuit breaker”. I also have a vision about how to do decentralized custody in a more safer way. We need to wait for this on Entropy which is one of the coolest Substrate project under the radar which would make trading much more safer because all assets would be custodied elsewhere maybe on Statemine and Statemint and DOTsama DeFi would be using claims on them and there will be some withdrawing period to have some buffer if any hack will happen or any flaw or bug in code will happen, not just in HydraDX or Basilisk, but also in bridges, xcm and other components of network or whatever. And then obviously this is standard ones, security audits as much as possible. Trying to verify code etc. We are trying to get these companies who are specializing in it but they have ton of work in different ecosystems, mostly in Ethereum. The first question was about the strategy behind us to be successful. The short term one will be liquidity mining initiatives which won’t be subsidised only by us but we see many projects in the Dotsama ecosystem who really will propose their own incentives, so there will be waterfall incentives for dotsama users. There are also some talks about incentivizing bootstrapping liquidity in the whole ecosystem via Kusama and Polkadot treasury. Actually, the Polkadot treasury is a better candidate fir it. The ecosystem is pretty behind other ecosystems, so we need to push harder on every front and big incentives programs where successfully used by most relevant alternative ecosystems to ETH. So there’s no other way around it. So in mid term / long term solutions would be bonds, a little bit similar to Oympus bonds but ours will be different, it will be similar to traditional bonds. As Olympus you have bonds with duration of 5 days , actually we will have some kind of auctions which will be incentivizing bonds with maturity as long as possible. There might be people who can choose to lock their liquidity in HydraDX for even for years. I would probably do that as well, which will offer the highest APY than we have in the secondary market for these bonds. You can use these bonds as a collateral on Angular or maybe other Money markets because bonds are much more superior to liquidity to keeping liquidity than liquidity mining initiatives. Most of them are very wasteful, this is another observation from Curve Wars where you have deployed billions of Dollars value in some pools while this pools generating just few thousand dollars in fees per day or volume is much smaller so fees are slippage is very negligible so you don’t need really need to incentivize pools to have be like swollen. but what do you actually need is to incentivize its usage, so we will introduce Volume incentives which makes much more sense because it’s nothing really unique or groundbreaking because all CEX I don’t mean just crypto CEX but Stock exchanges or any kind of Exchanges in the world are using it for the whole history incentivizing the market makers or other parties who are able to produce volume on the markets to be there and offer them fee rebates or negative rebates they are actually making money on producing volume there because if you have liquidity pools with billions of assets who are just sitting there and no one is really using them for trading or swapping assets isn’t’ really useful but wasteful. And this is not just focus on incentivizing market makers to be there and trade as much as possible but this is also incentivizing integrations to plug to HydraDX and Basilisk and you enabling users to pay fees on destination protocol on destination dApps which they want to pay. For example, users of some wallet need to some smart contract call on Astar or ETH or elsewhere but they don’t want to pay fees in more scarce asset. They want predictable cost for it so Hydra and Basilisk can provide for this service on the Back End. Users will be able to pay with Stablecoins whenever they want with whatever wallet which will integrate our SDK this is like one of the first obvious use-cases which we had to finish and prepare on the back end for the long time. We saw that AMMs are actually perfect for this use cases improving crypto UX so it’s clear incentive for other dApp developers to plug to us. The second thing move forward our design and improve it over time, introduce some other features which we have in pipeline. I even made short list of features which we will proposing from early days of HydraDX and which was implemented in other protocols by other teams where similarly or different fashion but still validating a lot of ideas on the market. We can’t wait until we can put them together to improve capital efficiency of DeFi as much as possible. We will release an updated roadmap with granular points which will outline our strategy for 2022 and further.

Question — Announcement of new token wasn’t good because it was in the middle of the crowdloan and holiday. My question what’s the team are going to do to improve the communication because it could cost Hydra’s spot in Polkadot. Sometimes I feel that there is a hole between the team and community. What are you doing to improve communication? Are you going to do something? The next question: where are we in HydraDX development?

Jakub Gregus — The issues with communication we had almost whole our history because until now we were a super small team like 6 guys being on top of everything and testing and integrating all the newest stuff from Polkadot and Substrate and stuff from Parity kitchen. Doing all this bleeding research but fortunately we had filled all positions missing in our organization which we were realizing just lately unfortunately. We were too deep in research or back-end development. The solution has been already found. Most of the November and December we were onboarding great people who can fill these holes in the organization not just on the development positions but exactly in communications, organizing, governance operations and in general, more professionalizing everything because we are heading to start. It needs to be more subtle and be more cautious about all changes. This last fk up with blog just highlighted the importance more deeply of what it will look like for people who are less initiated or less involved in the projects so they don’t understand all nuances. Every other major change will be communicated, we will at least pick randomly some people from the community and the feedback and move to the more open development even more open source fashion. We had open-source almost everything but practically from the development process or point of view we are not super ready for it. We are trying to do it from the very beginning of the year but it wasn’t very effective because you need to have a bigger organization and much more granular tasks and much better analyze these tasks and everything will be done. There were missing people for this which we finally resolved so there is no silver bullet for it but we are working on it to make it better like with publishing strategy for this year and updated roadmap. It will be the point and everything will be public for the community first.

We now have some people who are responsible for community development or who will be able to onboard new people faster. Basically, even aggregating all our research and specifications was really challenging for new people which we finally did and the reason why in past there was like holes between us and you that until now we were moving to quickly sometimes like trying to be first on Rococo and they try to do the first cross-chain call and transfers and then in the meantime to do all this crazy and hard research I don’t want to excuse but it was too much for us and we were constantly lacking not only developers but also community positions as we were onboarding more developers and identify we need more non-developers positions for operations and outreaching new people and that we have crazy amount of communication. We have hundreds of channels. I mean not with the community but with all other projects. Projects who want to integrate with us, who want to cooperate with us, who want to work with us or join research, join liquidity mining etc. It was not the intention to hide but it was too many things in parallel which is finally getting better. We have some people who’re specifically in charge of specific things like back-end, front-end, security community, research, governance, hiring etc. There is no need to reinvent the wheel.

Finally, we can manage all the things more effectively and start breaking all the things by small pieces and even developers who will join us they can see what they need to do some specific things and not to research all the code and details without being lost and without us for being to onboard them for weeks or even months which just very common thing especially in Substrate ecosystem as Substrate and Polkadot are huge spaceships and often even like their creators or core developers they don’t know everything because this is so big. It will be much more granular and structured but it was not possible until now. I was digging a lot of other DAO and realised no matter if its dao or company or corporation or whatever, the biggest issues all the time and why all these organizations are struggling from original founders, for example from their kids or external managers etc., it’s because no one fully understands the vision for the project and where the whole heading and where it is going in next week, next month etc. No one can ever spend so much time on it. When all the infrastucture is done and the Omnipool is settled. We can start this process and communicate with the community more efficiently.

Jakub Panik — Regarding the state of development. We took a step back because we need to hire more people and seeing a few people on crowdloan pages and it crashes and the nodes can’t keep up. We realised that we need to rebuild infrastructure and cooperate with other projects on it. What we did is we took a step back we started working with Subsquid on the processors to give users proper data so they can use applications and they would be fast and performant but everything, In this sense even like Dev-Ops and spinning up this instances and making everything decentralized. It was much more effort just to launch but we decided to do it because it will be a long-term thing that will help us in the future by doing this we are preventing all the issues, it will still happen in the beginning but we much less we knew if 5 thousands people come to our page in the latest architecture it’s just crash and nobody will use it. We decided to take a step back and rebuild everything from the ground, proper infrastructure and this can be 90% used for HydraDX as well. We are not just doing for Basilisk but this is reusable stuff. Mostly that will be able to utilize and it will greatly reduce the time to ship Hydra.

I don’t want to give dates or anything, we made these mistakes before and it was a huge change. It won’t be as long as some people might think based on what I just said. Don’t get us wrong we participated in startups but in most startups there is no communication at all, you just talk to your investors and they are ok all the time if you’re doing good. This is something new for us and we will do better in future.

Jakub Gregus — For the Hydra, Colin shipped the final specification of the Omnipool which is again double checked and validated by the Blockscience. Developers are starting to work on it for the implementation. We have realised that implementation of Hydra is much easier one than Basilisk as Jakub mentioned before. A lot of imported middleware will be recycled.

Colin — On the omnipool side, we are at the stage where the basic structure is locked in. We are modelling different things like how high fees should be and what’s gonna make us attractive in terms of liquidity. The structure is set and ready to be implemented.

Question — When you mention about adding the assets to the Omnipool I want to ask if this would be made on the beginning by the technical community from the governance and later for example made upon proposal referenda and governance decisions made by HDX holders.

Second question, you said HDX holders would be accruing the fees from the protocol. How the fees would be distributed to HDX holders if yes could you give more lights how the mechanics would look like in reference of distribution is it stake HDX somewhere or fees distributed to the holders some way of dividends or something like that if you could give more lights on that.

Colin — We don’t have this altogether and how fees would look like on mainnet launch. I was giving a list of examples of what could be enabled the point was really even if we start with no distribution to no HDX tokens are used to govern the protocol in terms of substrate you have to change a lot with runtime upgrade. For hdx holders would be really use to change to raise fee to be distributed to HDX holders. The mechanism for HDX holders to see that LHDX-HDX pair is not quite working since that governance. They have the ability to tweak that tokenomics and this is not gonna happen on day 1.

Question — What would be the procedure or the mechanics of fees? For example, governance will decide they want to raise the fees from the protocol and then in goes with runtime upgrade after such a decision how the mechanics would look like? Providining liquidity or staking?

Colin — That’s to be determined. We’ve been looking at something like Curve setup.

Jakub Panik — Fees will be collected in some treasury or some secondary treasury and once we have that treasury we can allow or people can allow themselves to get a part of it.

Jakub Gregus — Fees distribution is always tricky because you don’t want to become a clear security token and provoke regulators. Regulatory feedback on it pure redistribution of fees is a clear security token, so regulators will fine you or shut you. Crypto work around is buybacks which is kind of an indirect redistribution or burn model or Curve model with waited escrow which we can see is becoming like standard and many protocols who are using these mechanics and they analyze with lawyers this model if it’s okay and it looks okay.

You need to do some work and work materialize by voting power. That’s the point of the Curve model which is the best candidate for us to implement that is all crypto community is very familiar. At least one time we won’t be confusing people.

Jakub Panik — Regarding the technical committee. We’d like to make a technical council because of regulators. I don’t know if we form some committee that we’ll be able to assist or if we will find a mechanism that will be able to mitigate all the risks of adding new tokens to Omnipool. This is to be decided first it will be a tech committee. Jakub Gregus — Some networks are providing service for Compound. They are measuring property of liquidity of assets and then the outcomes from the models setting overcollaterization ratios, interest rates etc . I would like to have something economic council not just tech council who will be support more economical questions what should be the volume ratio what should be the size of fees which part take fees how to utilize liquidity . Maybe Hydra governance can redirect some of the DOTs to the crowdloans and rewards from this crowdloans use as a liquidity to Hydra and recycle it and all this other economic questions we support with tech committee who will be responsible for tech security of this assets. I hope this committee will be built from the best people in the industry and happy to vote for very nice wages to do this.

Question — When we go to the mainnet the fear of slashing gets real in the mainnet. it’s not so real in the testnet but in the mainnet it will be for real. I hear a lot of messages on discord of some validators saying I’m not getting subscribers. will that lead to slashing? This is an issue with that? Make people afraid to stake. Will that reduce staking amount because we need more validators to strengthen the network. if the validator goes offline then he gets slashed?

Jakub Panik — For the last part of the question, you can go offline and update your node. It’s not forbidden, on the contrary it’s encouraged. The first part of question, probably we will not have staking as we have it right now because of the shared security it means that we don’t need to do it. We have been thinking about staking and use of it in mainnet but right now as it is we don’t need it in the beginning. We need only node runners, we don’t need an exact number of people doing that as they are doing right now. That’s the bigger concern because we need to find out what to do with people who are currently validating but we have the solution which is maybe too soon to talk about it but we want to decentralize infrastructure and not just back-end infrastructure and node infrastructure but also other infrastructure. We will probably have incentive schemes running this infrastructure but now it’s too soon to talk about it and we will polish it moving through the mainnet.

Jakub Gregus — in this case slashing won’t be so harsh or even not possible. The worst outcome of this that node is not available at this case the user will switch to other node automatically. Listening you it reminds me, there is a still big confusion in the Polkadot and Substrate community about role of validators and node runners because the validators of parachain are Polkadot validators you don’t need to have own validators as a parachains you need to have collators. it can be 1 node, 10 nodes, 100 hundreds nodes whatever but these collator nodes can’t do invalid state transitions, so their security properties aren’t so important as the security of validators. Collators and full nodes are more service providers rather than POS validators which you can see in POS networks or relay chain validators on the relay-chain Polkadot / Kusama.

Substrate is offering a super powerful feature which is called off-chain workers and this can be used for doing a lot of useful work which can be parallelized or done off-chain but still they need to have some skin in the game to make protocol save and make validation is done correctly. It can be included on-chain for that part. There would be some staking included and these off-chain workers can match transactions, so it doesn’t need to be done fully on-chain but just produce like true — it could be like zero-knowledge proof to save a lot of stotrage etc.

Jakub Panik — Maybe it can be data providers. Middleware nodes who provide data they can have some stake and say my data is correct or if it’s incorrect there will be slashing.

Question — My question is about your travels and your feelings about the ecosystem in general. What is your perspective on the Substrate after working on it for 1 year. Is it more or less powerful and how do you see the interaction with other teams? I know you mentioned kUSD as a first point of view to put in the Omnipool. What are the incentives from the Acala side to encourage HydraDX when they have their own proper swap functionality. How do you see yourself acting in the ecosystem and where is your spirit?

Jakub Gregus — this is a great question. For example in early 2020 when we started development when we started Substrate with Hydra we had much more concerns about the ecosystem. There were not many parachains at least visible or planned. This is not a concern anymore. On the other hand, for me personally i don’t see much flow of new parachain projects to be honest this is my opinion. On the other hand, interesting Substrate chains are very specialized and they have very unexpected use-cases. I am much more bullish on Substrate than any time before speaking with a lot of other builders last year. Especially talking with other developers from other ecosystems and when I see how is it implemented, how a lot of Substrate ideas or parts are implemented elsewhere. Obviously Cosmos SDK has better interaction because it much more older and battle tested and there wasn’t any breaking changes in 2019 and 2020, so many projects went there, this is as much more stable solution for development but when you see that polygon is using Substrate for data availability chain or Octopus Network on Near protocol is using Substrate for connecting specific application chains to Near or Compound is choosing Substrate, which is why I’m not super happy about it. Also, I see other Cosmos developers are having huge respect to Substrate and some of them even choosing Substrate for their latest projects or Ethereum developers who are developing ETH 2.0 client actually going for Substrate and being super happy and super hyped about off-chain workers and the Substrate features especially runtime upgrades. I was speaking few weeks ago with guy who was organizing and made first hard fork for Cosmos. We agreed how hard it’s to do this on any chain or system while any Substrate chain no matter if it’s Polkadot or Kusama or anything is doing hard forks just like that even every 2–3 weeks it’s mental in comparison to other teams and other projects. I see this is as a one of the under appreciated feature because there was some mantra how blockchain should be immutable as much as possible but I don’t think it’s’ true even bitcoin in 2018 or 2019 had like very critical inflation bugs and you wouldn’t expected that old school base code and more simple blockchain had some flaws that needs to be fixed asap and they were supercritical. At the end of the day, it still needs people to maintain the software to maintain the network, provide energy and electricity.

Every chain is still just a tool for people to coordinate and to do something so you can’t just disappear “oh, immutable software”. No, it needs to be maintained and that’s why I think runtime upgrade is the ability to evolve in something better with overtime in a very elegant way is like the best killer feature which Substrate offers.

To the point of the ecosystem, meeting many founders make me more calm and especially their developers make me more calm as I realised many of them are super talented people who go for the Substrate or Polkadot from other ecosystems like Algorand, Cosmos and they are actually great people not just by knowledge and experience but as persons as well. Obviously, there are people who are not so cool who don’t have so honest intentions to build something great more like to do quick cash but its elsewhere. I am much more happy about ecosystem than I was before. On the other hand, ecosystem has many flaws becaise it’s one of hardest ecosystems to build out because Avalanche and everything what’s using EVM it’s doing great. Of course, you can fork everything what’s living on Ethereum and doing great and just use and put it Metamask and use infrastructre, so the tooling is helping to any developers to be super quick and deploy things in a weeks or months while in Substrate in Polkadot there is no much proven or battle tested code that you can fork and build on top of it or improve it. This is an issue and also the tooling since Substrate and Polkadot is changing too fast that was also causing a lot of delays on our side a lot of tooling and infrastructure was outdated and not working very well. It was very hard in 2019, 2020, 2021 as well but its just growing pain of any new ecosystem. Solana was last year or 2020 very much the same it was super hard to build something. There was no code to fork there was no tooling. It need to be built. It’s also a great opportunity for everyone who can see this issues and instead of complaining just find solutions for it and ask for treasury or grant for it. Treasury in both Polkadot and Kusama was never so full as now. I think it will finally encourage a lot of people to work in the ecosystem. So the ecosystem overall has everything, all the things which are nice and things which are ugly but every ecosystem is like that. I was speaking with many founders from other ecosystems everybody was complaining about something. It’s always like that. The whole crypto is so early, even Ethereum is so early. There are so many missing things or not done very well. I think we should see this as a big opportunity rather than block and help builders.

We are at the stage when we need to build the ecosystem and its improving a lot. Right now, we are at the stage what i wasn’t expecting in 2019 or 2020, it was like much more concerning us but now when we see parachains and XCM, all this stuff that was FUD a lot by competition. This is not a case anymore, this is working and now we can finally move to the phase of Polkadot and Substrate where most of the code will be reflected, optimised and improved. I’m more bullish than ever but other projects should think more about working together as a family instead of trying to build everything by themselves. Otherwise, there is no ecosystem, they can go and build their own ecosystem. It would be great to see better collaboration between teams but it wasn’t the case until now because everybody was too busy with development of their own stuff. Finally more teams are getting to the stage when they are trying to integrate, like Interlay they are doing a lot of integrations, Moonriver and Moonbeam will have XCM and Acala and Astar and few other best teams are getting to the point when they are doing integrations with others. we are getting to the point of the ecosystem and not just a collection of standalone chains.

Jakub Panik — I had love-hate-love relationships with Substrate. It’s in the beginning allows us to spin up the blockchain really fast which is unprecedented. We tried more staff and we’ve seen more staff before but it was the fastest then we needed to do something special and it was really hard because there were a lot of updates and that slowed us down. This was the growing pain of Polkadot and Kusama needing to launch. They needed to solve issues fast and launch it fast, so I understand it and few times when we had issues I was diving deep into the code of Substrate and I was like thinking “oh shit it has millions lines of codes: but it’s not like bloat code this is really nice concise code with research behind it and documentation. I think I saw some blog by Gavin which said it has 2 million lines of code which is a huge help if you have a framework that you can use and it’s really powerful and you can build on top of it and you can swap stuff as you wish. It takes a lot of time to dive deep because it was changing but right now we are speaking with Robert and people who are developing Substrate and they are basically finished with basic functionality. They are just making it more performant now. It will not change a lot, so if you want to start building something there is no better time. We know a lot about it because we started sooner but you will not have problems that we have. I want to encourage all founders who were confused by lot of changes which slowed everyone down and stuff was not ready it’s not the case anymore. Most of the stuff is done and ready, if you are considering building something you should it right now and I think it’s really powerful. I don’t know the better option to build custom blockchain right now. We are looking for other solutions constantly but there are cons and pros to everything but this is a really good ecosystem with killer developers and support. I don’t want to build anywhere else..

Question — You spoke about family and Web3 Grants you got. How it tends in cooperation with Web3 foundation, does it provide support for example from Gavin Wood for HydraDX? Is that the whole ecosystem is waiting for the Omnipool and sees the value in it? Is this going to embrace it? What do you think?

Jakub Gregus — I don’t know how much he is aware of us, probably yes. We are not much in touch with Web3 foundation more with Parity. Web3 foundation is funding and organizing research but this research is implemented by Parity at the end of the day. Parity is a more important player in the ecosystem in some sense or for the projects it would be better to be closer to them. Grants program is useful for the newcomers who see some opportunity, some tooling or if you want to develop something specific which can be useful for others and it will little bit decrease your cost on the development but you can’t rely on the grants only if its something important like ETH bridge or BTC bridge or something like that. We had a grant for validator monitoring in 2019 but it wasn’t prolonged for some weird reason which at first pissed us a lot then moved us forward by choosing to build something which is not relying on grants too much. If you want to build something that is missing in the ecosystem, asking for a grant is one of the best ways that you can do, you can also have some guidance from them and how to build it. When you will be delivering it you will be also guided if you’re delivering it in the wrong way. Are you referring to the Subauction grant?

Question — I wanted to know if you’re working together with Parity and if they’re waiting for the product from you and see the value of using it for the ecosystem.

Jakub Gregus — This organization they need to be very cautious about what they communicating outside, they needs to stay credible neutral they don’t want to hype or communicate much about some specific projects to not create impression on community or retail people this is the chosen one this is the right project where you should put money or sometimes some projects in the Polkadot ecosystems and other ecosystems they are using this hype or marketing like “oh we are getting grant from Web3 foundation they are supporting us” which is very questionable.

Question — I mean, this is not a normal DEX or AMM, it should be disrupting technology. Does the other side appreciate your ideas?

Jakub Gregus — I personally think that they don’t get how revolutionary or how innovative the project is because most of the people who are working in Web3 foundation or Parity they are not DeFi experts. They are experts in cryptography, Rust, back-end development , networking and other assets. So when they see an Omnipool or something they can’t assist, like how it is better than sushiswap or other xyk model.

Jakub Panik — What I can tell you, we are working with these people in Parity and when we are talking with them and we love them these are really good developers and people in general. Mostly I guess from what we can feel some of them I can not name. I guess, there is some trust.

Jakub Gregus — When we ask them to do some code review for us and they did it and they told us there were no big bugs, just some minor cosmetic issues. They are telling this to other colleagues and they are spreading good word of mouth about us when they see other solutions to spinning infrastructure which is something they are also trying to develop and they see how hard this is with much bigger resources and we did it with less. They can assist with only things which they are familiar with. When we were at Rococo when we did the first xcm.

Jakub Panik — This is not a great question for us because me and Jakub hate bragging and it might be a better question for them.

Jakub Gregus — Unfortunately, In my opinion, they don’t think much about how it is better or different and also they don’t have any time to think about it. There is extreme pressure on everyone in Parity and Web3 foundation to deliver Polkadot and Kusama fully operational, fully working and successful because everybody is expecting this will be more successful or one of the most successful ecosystems because Gavin built Ethereum and etc. They have so much work.

Question — Are you looking to implement fractional algorithmical pricing for LHDX?

Jakub Gregus — This impressive and interesting question. For example, when we started working with Blockscience in December last year. One of their first questions was like if we don’t want to make from LHDX the stablecoin? It would make many things much easier. We thought it was an impressive idea but we don’t want to do stablecoin because it has too many nuances. As we were thinking about it, maybe not stablecoin but some anchor or related asset like RAI Reflexer that would be very impressive. Also, issue which can have USD stablecoins or other fiat currencies start developing and inflation is a relly So, I’m not sure if stablecoin would be attractive maybe some anchor related. Floating currency or reflexer with boundaries from up and down. If you look at FEI protocol it’s very similar to HydraDX but they don’t have their own DEX or Terra is quite similar in some sense but having native token as a collateral is very dangerous. We saw that Terra is almost got in a death spiral in May. For that reason they are thinking about introducing BTC as another asset in their pool. These ideas are on point and very interesting. It would allow to build stablecoin that can be very scalable. Also, it could have very organic demand because it would stabilize the pool but this is very futuristic right now. It’s possible but it’s not our priority. If anyone wants to work on it they are very much welcome and supported and maybe even funded but that’s not on the program of the day. Let’s ship HydraDX and Basilisk first and we don’t want to build everything by ourselves on top of Hydra and Basilisk. We have more practical ideas or features which need to be built on top.

Jakub Gregus — I just want to look back on last year and thank everyone for their extreme patience. We were communicating poorly and were leaving you in chaos. That wasn’t our intention, no one was hiding, no one was spending your money. Thank you everyone and we hope for your support when we finally go live!

About HydraDX

HydraDX is a natural swap solution for all assets built on Substrate and in the fast-growing Polkadot ecosystem — a place to bootstrap liquidity. The unique solution enables putting all assets into one shared liquidity pool — unlocking unparalleled efficiency. HydraDX is designed to communicate with other networks. Ethereum based assets will be ultimately liquid on HydraDX.

What is PromoTeam?

PromoTeam — is the international team of Polkadot fans with experience and professional abilities: We excel in community growth, business communications and strategy, promotion, advertising, mathematics, programming, entrepreneurship, and many others areas. Our main goal is to increase adoption and the value of the Substrate ecosystem. By nurturing a grassroots community and involving as many people as we can. Our mission is to give the Polkadot and Substrate community the utility it needs to promote a Polkadot ecosystem. Subscribe not to miss important info:

• YouTube PromoTeam Channel

• Telegram Parachain News и PromoTeam

• Twitter Parachain News и PromoTeam

• SubSocial space Polkadot Ecosystem PromoTeam