Happy New Year! Putting the genesis and evolution of Hydranet into words is no easy task. Nevertheless, this annual recap of 2022 intends to do exactly that. Let’s take a look at how Hydranet and HDX formed into what they are today, revisit its past once more before leaving it behind for good, retouch on all of the breakthroughs that Hydranet DEX has made leading up to the launch of Atlas on December 19, 2022, and look onward to Phoenix and the future beyond.
January 1, 2022: New Year, New Uncertainties
It’s New Year’s Day 2022, 10 days since the official, “final” release of Stakenet DEX launched, and the atmosphere is tense. Stakenet DEX has been under development for 3 years, targeting an unapologetically lofty goal of building a 100% off-chain trading environment capable of high frequency trading and cross-chain interoperability. The pressure to deliver has grown insurmountable — every next step has become more “make-or-break” than the last, and the odds are heavily favoring the latter of those two paths forward.
It had not always been so uncertain: early prototypes of Stakenet DEX, circa 2020, had demonstrated an enormous amount of potential. A fully-working DEX for P2P BTC/LTC Lightning swaps was trialed and built upon for months, with publicly available builds that anyone could try capable of swapping real funds. These early proof-of-concepts attracted healthy interest and a hardcore following that has, over time, proven as hopeful as it is tenacious.
The community was very eager when ETH integration became the central focus of development in the 2nd half of 2020. However, the sheer complexity of making two fundamentally-different blockchains speak fluently with each other — from scratch — started to prove more difficult than anticipated, unintentionally creating several missed deadlines, delays, over-promises, and under-deliveries. The saying “it’s better to say nothing than to say everything” comes to mind. The word “soon” became heavily-peppered into announcements that were most notable for breaking weeks of radio silence. The word grew especially infamous as weeks stretched to months and Easter stretched to Christmas.
In trying to get ETH integration working, various parts of the DEX that worked in older builds were suddenly removed or gutted. Somehow, new builds of the DEX were released at a slower pace than ever with less use and functionality than builds from 18 months prior. Updates slowed to a crawl before regressing as each new release broke more features to try and get one very important one working. The core goal began to look like Moby Dick and the old team like an unenthusiastic Captain Ahab. A painful sense of skepticism in competency began to arise among investors. 6 months ago, the team announced with scant detail that Stakenet’s blockchain (XSN) was being deprecated — soon, mind you — in favor of an OHM fork to be called Hydra Smart Chain (HSC). More information about HSC was guaranteed within a few weeks of the initial announcement, but after 6 months it has yet to arrive. More and more aspects about everything — from the DEX, to the project management, to the future of everyone’s coins and the blockchain itself — turned from high confidence to high anxiety at a rapid pace. Everyone has grown tired of waiting. Calls to send the team’s credibility marching orders from the line to the chopping block are on the rise, and it looks like anything could make things spiral out of control.
It can be stated boldly and without a hint of melodrama that the December 2021 launch of Stakenet DEX had to be absolutely perfect in every way if it were to have any chance of surviving into 2022. All the core functionalities that were promised — BTC-ETH/USDT swaps, the one-click SSUI, high volume capacity, and a sophisticated marketing blitz were a given.
It likely goes without saying that Stakenet DEX had a disastrous launch. None of its core functionalities worked right. There was little marketing, and any momentum that was built was merely gunpowder for the ensuing backfire following the end result of the final product. Making matters worse, the old team reacted to the poor launch in the worst way imaginable: by avoiding it and setting brand new goals completely unrelated to the DEX and the future of the project’s native token.
The odds of this project recovering from a state this dire are surely <1%. The only glimmer of hope at all is that, in the aftermath of the launch, one vocal member of the community, Victo, volunteered his tasking and project management skills to streamline development and the original vision of the DEX.
Victo was a member of the private beta testing group for at least 6 months leading up to the launch. During this time, he was among the most vocal with his discontentment about the DEX, yet among the most passionate about the core idea behind it and the most supportive of Stakenet as a project. Victo spared no scrutiny in publicly airing the shortfalls of new beta releases to the broader community.
March 14, 2022: A Mutiny…?
It’s the middle of March. Surprisingly, Stakenet DEX has made some excellent progress. Victo has become the spearhead of the entire project. The community trusts him because of his blunt honesty and the significant progress that Stakenet DEX had made in just a matter of weeks since his initial involvement. Joining Victo shortly after were 2 more community members from the private beta test group. Kilppari and Philipp1992 volunteered their respective skills in programming and immediately began fixing front-end bugs. Together, this group had become known as the MCLW Taskforce. Despite being unpaid, they quickly proved themselves effective and attracted a sizable amount of donations from within the community by introducing “bugpots”, which were periodically proposed by the Taskforce and focused on fixing or improving the various features of the DEX. The community, delighted to see the progress being made, provided their full support to the Task Force. They have agreed to raise additional funds between themselves on numerous occasions. With a lot of convincing from Victo, who had become the de facto leader, the old team gave Kilpari and Philipp full access to the back-end source code and swap protocol. They were provided no documentation on the code, yet they were able to make their own as they went through it and, within a few weeks, they were able to fix major bugs on the back-end. Multiple new builds started coming out weekly again.
Amidst all this excellent progress, the official team recently broke silence to usher in the coin swap from XSN and share some new, highly-controversial details about the future token: Hydranet (HDX). The swap will be 1:1 XSN:HDX, yet significantly more tokens are going to be minted on top of the max supply. The community is immediately outraged for multiple reasons:
1.) The old team had already proposed a controversial one-time mint in 2019 to further develop Stakenet DEX. When they did, they guaranteed the community that they would never inflate the supply again.
2.) The old team wants most of the minted funds to pay for the development of a new project (Hydranet Bridge) completely unrelated to the DEX, not only backtracking on their original promise but also putting the main focus of their last promise and mint on the back burner to fund a new pet project from scratch.
3.) The only people who were actually making any demonstrable progress with the DEX were unpaid volunteers who were living off of donations, yet all the newly-minted funds were allotted to the official team who had delivered less in the past year than the volunteers had in the handful of weeks that had passed since their involvement.
4.) The old team hired new, completely unknown and anonymous talents that had little-to-zero interaction with the community and wanted to pay them to start building the new project instead of paying the volunteers who fixed their old project.
The community was so intensively revolted and outraged that a sizable number of people grew hostile and began calling for mutiny. Victo, in his unique spot for being outspoken and critical of the product yet supportive of the team and project, was allegedly awake for 18 hours straight negotiating a treatise between old and well-established factions and alliances within the community with pull and influence calling for renegade forks, the MCLW Task Force, and the official team members (EVM devs) in peril. He successfully managed to strike a balance and unify all the warring interests and factions, and today it appears that HDX may be able to recover. The teams will co-exist with a healthy 50/50 split. The Task Force will receive better funding to develop the DEX, the EVM team will make some sacrifices to its ambitions and focus on HDX. Both will manage their respective corners and build a healthy report with one another.
March 31, 2022: A Mutiny.
It’s been 2-and-a-half weeks since the treatise was established, and it already fell apart. The community had settled down and agreed to give the EVM team one more chance. Amidst the coin swap, everyone felt that they were failing to hold up to their end of the deal. The XSN blockchain was growing very unstable. They did a poor job of communicating with the MCLW Task Force and the wider community and frequently omitted serious details when they did. Above all, the EVM team had full control of HDX. Hostility resurfaced once more, and Victo stepped in once again to respectfully negotiate a final transfer of power.
The multi-sig contract was transferred from the old team to a group of highly-trusted community members who were in alliance with the MCLW Task Force, with beljora serving as its chief director.
With this, Q1 2022 concluded with the community completely taking over the project. All the remaining obligations of Stakenet, including the ongoing coin swap away from XSN, all business-related and social media accounts, and the future of Hydranet, which was still a nearly-vanilla OHM fork in its infancy with a questionable supply and no unique tokenomics, was entirely in their hands. The only remaining members from the old Stakenet team were Jo Park and Alex.
Jo Park started with the old team as a community moderator, gradually moving up to writing announcements, providing DEX support, writing articles (including German translations), running or administering social media accounts, and public relations. Despite working with the Stakenet team for quite some time, there was a consistent lack of communication between its internal groups that made it very difficult to make clear announcements and PR. After he was given little information about Stakenet DEX in the leadup to its disastrous December 2021 launch, he formally resigned. In the aftermath, Jo Park remained active as a community member and provided voluntary support to both the old and new team. He was highly-trusted within the community from his many years assisting people and was deemed the best fit to serve as the new leader of HDX.
Alex is a developer who helped maintain the XSN blockchain. He and his team have kindly provided assistance to the new team in wrapping up the coin swap as more people are swapping out of XSN and its blockchain is becoming increasingly unstable. Xhiroz, a former member of the old team, provided the new team assistance in closing down XSN Cloud.
April 30, 2022: New Team Unites, Lazarus Debuts
It’s been exactly one month since the “hostile community takeover” concluded. In place of the old team is JoPark leading Project Management, Philipp1992 spearheading overhauls and further development of Hydranet DEX with support from Kilppari, fedeparma74 leading Research & Design, and the wider community becoming much more enthusiastic and directly involved in shaping the project. In such a short time, the new team has united to fire on all cylinders and re-launch the MCLW DEX to the public — complete with a live event and Q&A.
This build is dubbed “Lazarus” as its intent was to “resurrect” a DEX that was, for all intents and purposes, dead. Reworking the DEX from the state it was in was a massive undertaking. Beyond gaining access to the source code, it had little documentation, a substantial number of bugs, and custom LNDs based on antiquated builds. It is truly remarkable that the new development team led by Philipp1992 was, in only 16 weeks, able to fully-document the code, fix a substantial number of issues (including reverting to standard, up-to-date LNDs), restore all of the core functionalities of the MCLW DEX, and greatly expand upon them with the implementation of ETH and ERC20s. With additional help from fedeparma74, who created Hydranet DEX’s grid bot trading interface so that individual traders don’t need to wait for a 3rd party to transact with, these efforts combined to establish a robust off-chain trading environment. Laxarus was launched alongside a live YouTube and Twitch demonstration done in co-operation with WoAS and an expansive video tutorial series.
Lazarus was the first official build of Hydranet DEX from the new team, and served as the first proof of concept and offering from all the people who took over the project. Unlike all the builds of Stakenet DEX going back to 2019, it utilized testnet blockchains and testnet funds — allowing for a much wider group to participate without risking their own personal funds. Lazarus fixed every feature that had been broken and included every single feature that the old team promised but never delivered upon: off-chain swaps between BTC/ETH, BTC/USDT, BTC/USDC, a one-click “Simple Swap” interface, and the return of a working BTC/LTC swap environment. All these features were working reliably, honoring the original vision of the DEX.
In just a matter of 16 weeks, the new team accomplished and delivered more than the old team had in the preceding 16 months!
May 31, 2022: Putting the Past Away
It’s been 11 days since the coin swap concluded. The XSN blockchain has been officially decommissioned. Any traces of Stakenet and XSN have been removed from the DEX. After a Snapshot vote, a lingering supply of 4.52 million XSN lost in the January 2019 Cryptopia hack were burned.
Despite being unpopular, the new team honored the old team’s desire to build a bridge aggregator and developed a proof-of-concept for Hydranet Bridge. After another Snapshot vote, it was decided to discontinue it and focus all remaining development efforts on Hydranet DEX.
May saw the beginning of Snapshot votes to repair HDX’s POL strategy, tokenomics, and supply from the basic framework it started with post-swap. The start of May also saw the departure of Victo from serving on the team in any official capacity. Victo’s primary goal was to demonstrate the effectiveness and viability of the DEX if given a different team and group of developers, and to that effect he succeeded. He returned to stress-testing new builds of the DEX, which he continues to do to this day.
June 30, 2022: All Eyes on Atlas and Fixing HDX
Just 2 months after the release of Lazarus, the new team announced that development of Atlas — stage 2 of the DEX and a direct followup to Lazarus — was now underway.
One of the first new upgrades to the DEX post-Lazarus was something called L2 Active Enhancement. Previously, when a trader switched coin pairs on the MCLW DEX, they would have to wait for respective Lightning Network coins to sync up. BTC LND may have been current and up-to-date if the trader used it recently, but LTC LND may have been weeks out of date if the trader hasn’t used it in a while. L2 Active Enhancement allows all LND and L2 instances to run simultaneously — allowing all coin pairs to stay synced at all times, drastically reducing wait times.
The Snapshot results from the previous month saw a reduction in the amount of staking rewards to 7.5% to combat inflation. It was also announced that HDX’s tokenomics were being drafted.
The team expanded. June saw the addition of Daniel (previously known as Huibuh) as a blockchain engineer. Daniel wrote his Master’s thesis on ETH scaling solutions and was attracted to Hydranet for its unique approach to a DEX architecture and the inherent potential and value within.
Walleye the Stake, a veteran member of the community and the beta-testing group, joined the team as a coordinator for beta tests and events.
Saggy, another long-time community member, officially joined the HDX team to assist with marketing materials, marketing data/stats, SEO, and social media marketing. Prior to joining the team, saggy volunteered his effort during the Lazarus debut to make several tutorials on how to use the MCLW.
June also marked the official debut of HDX on a reputable CEX: WhiteBIT, an Estonian exchange in full compliance with EU Custody and Exchange Laws among the Top 15 exchanges by volume. Work also began to get reliable price-tracking from index sites like CoinMarketCap and CoinGecko.
August 31, 2022: The rebase bug
With the integration of Arbitrum, aETH, and HDX coin pairs, July had ushered in the Atlas stage of Hydranet DEX development and an intensive private beta testing phase. Work was underway on overhauling the orderbooks, the pricing API, redesigning Vortex (DEX’s bot trading interface) to be open and easily accessible for further development, and a complete UX overhaul.
August delivered more updates to the DEX, most notably L1 ETH withdrawals from Connext state channels. In the event that the Connext network is unavailable, a trader can retrieve their funds from a state channel directly from the ETH blockchain.
An International Community Representative drive was also instituted in July, and several members stepped up to offer chat and translation support for multiple languages, including: Chinese, Dutch, German, Japanese, Spanish, and Turkish.
In early July, while the Hydranet DEX were under full development, HDX encountered a rebase bug. This bug was derived from OHM. It had been patched in OHM, but HDX forked before the fix was put in place. The rebase bug greatly inflated the supply, creating an extra ~5.5 million HDX, causing the circulating supply to exceed the total supply and leading the HDX team to temporarily pause staking.
After the bug was patched in HDX, a Snapshot vote was proposed throughout August to close the gap between circulating and max supply. The options were either to pause staking until the supply catches up, or mint the extra staking rewards that were received by investors. The vote was overwhelmingly in favor of minting the extra tokens.
Shortly after the bugfix and mint concluded, a near-final draft of the HDX tokenomics paper was published at the end of August.
August saw the addition of T-Яex as a Content Creator, Pospatriot as a Business Strategy Specialist, and Argon and Gainz to the multisig team. Argon and Gainz replaced 2 members, Sadhill, who led the overhaul of hydranet.ai and has since returned to the team as a web developer, and muppet, who played an instrumental role during the transition from HDX as the first marketing chief and one of the first multi-sig holders.
October 31, 2022: Adjusting to the Merge
September 2022 marked a historic event, wherein Ethereum switched from proof-of-work (PoW) consensus to proof-of-stake (PoS) in an event dubbed “The Merge”. Hydranet DEX had been relying on the Rinkeby ETH testnet for all ERC20 and Connext concerns, and it was announced that Rinkeby would not be switching to PoS. In the fall, Rinkeby Ethereum support was dropped from Hydranet DEX and successfully replaced with Goerli.
September also saw the launch of Arbitrum’s mainnet, Nitro. Being based on Arbitrum, HDX immediately benefited from these upgrades. After the launch, WhiteBIT, our primary CEX, had to temporarily freeze deposits and withdrawals while it upgraded its exchange to support Arbitrum Nitro. This freeze lasted for about 6 weeks, and ceased as of October 17.
2 rounds of Tokenomics drafts have been published for feedback, providing the team with critical feedback that led to the creation of a tokenomics investor survey at the end of October. October also saw the debut of Hydranet’s Twitter Space, an ongoing space to discuss events related to HDX and happenings in the cryptocurrency space.
November 30, 2022: 98% Swap Success Rate Attained on Hydranet DEX
November saw the original swap rate success goal for Hydranet DEX, 95%, be met and exceeded. By the end of the month, the DEX had a 98% swap success rate. The bot trading interface was simplified, significantly reducing the amount of complex coin pair setups and channels involved in building a smooth bot trading interface, and allowing all coin pairs to be serviceable with only one instance. DNS, LND, and geth stability were also improved upon, and a release strategy was unveiled for Atlas.
With Atlas now on the horizon, the team produced a series of short videos demonstrating the new build and Hydranet DEX’s unique features. Hydranet.ai was also upgraded significantly. In the interest of preservation, the team migrated to self-hosting its own content. The Hydranet Gitbook docs are directly available from the website. The site has been translated into 4 additional languages: German, Japanese, Spanish, and Turkish. It now features a dark/light mode.
The Tokenomics Investor Survey that launched at the end of October attracted 150 participants, again providing excellent feedback towards improving the final results.
November saw the addition of more talents: Smurf, a long-time community member, joined on as a Content Creator. Zerga, also a community veteran, stepped in to provide support as a moderator. The month also saw the return of Kilppari to the development team after a break following the debut of Lazarus.
December 31, 2022: All I Wanted for Christmas was Atlas (and I got it)
December started off with community-oriented contests: the User Experience Competition, and the 24 Days of Hydranet Christmas giveaway. The UX Competition proactively invites the community to participate in giving feedback on everything from the location of buttons and tabs to the terminology used to describe balances and ideas (i.e. off-chain, can send, can receive, etc).
On December 15, a comprehensive set of tutorials, voiced by Saggy, was released to the public to demonstrate Atlas and provide guidance on how to use its new features. Many of these new features are described in this quick, easy-to-understand video below:
4 days later, on December 19, Atlas launched to the public with a live AMA and much fanfare. It was the first major followup to Lazarus. You can watch the AMA here:
Phase 2, the start and end of Atlas, had more flex-room. The more that was accomplished and tested during the Atlas phase, the easier it would be to move to stage 3 (Phoenix, mainnet). At this point in time, so much has been accomplished in phase 2 that there aren’t many steps left before Hydranet DEX moves to mainnet! We are getting close!
One of the most remarkable things about Atlas is that it launched almost exactly one year after the disastrous launch of Stakenet DEX at the end of 2021. Within the span of 12 months, the Hydranet team took a completely dead project with poor communications, a broken product and a cynical community and overhauled it all into a thriving project with a bright future, excellent transparent communications, an excellent fully-featured product, and an engaged and proactive community. The DEX has made more development progress in 2022 alone than it did between 2018–2021. To say that Hydranet has accomplished a lot in 2022 would be an understatement.
In hindsight, if any little thing went wrong with the launch of Stakenet DEX, it would have permanently ruined the future of the project. Fortunately, everything went wrong.
With the publication of this article, we welcome you all to join us in leaving Stakenet and XSN in the hazy, distant past for good. Here’s to 2023, here’s to HDX, here’s to the team who got it to the place it is now, here’s to Hydranet DEX, and here’s to one of the most unorthodox online communities in cyber space!