Since our previous two monthly recaps put a lot of extra focus on critical factors that are independent of Hydranet, like the OHM rebase bug and The Merge (ETH), we’d like to use the October recap to focus on the state of Hydranet DEX, HDX, and the DAO in finer detail. A new build of Atlas has been deployed to our testnet group, market maker bots and swap rates have improved significantly, WhiteBIT deposits and withdrawals have resumed, and a new official Hydranet podcast has begun. There is a lot to cover, be sure to read to the end!
The State of Atlas
The end of October marks the 6 month anniversary of Lazarus’ public debut! Hydranet DEX has undergone rapid developments since then, and the public launch of Atlas is in sight. Now is the perfect time for a refresher on Hydranet DEX’s purpose within the industry, and how much development progress has been made on it.
The goal of Hydranet DEX is clear:
1.) Secure, reliable, trustless trading between parties who can opt for anonymity if they so, please.
2.) Precise interoperability between fundamentally-incompatible blockchains, like BTC and ETH, via L2 and L3 protocols.
3.) Instantaneous, CEX-like transaction settlements for DEXs via off-chain protocols like Lightning Network and Connext.
4.) Utility for HDX as gas, as the point of manifestation for Hydranet DAO’s tokenomics model, and as the “flux” which allows for seamless interoperability between coin pairs on the DEX.
5.) Generous incentives for LPs who provide the DEX the liquidity it needs to handle the high trading volume.
6.) Permanence and immutability.
Its development trajectory is split into 3 distinct stages: Lazarus (Stage 1), Atlas (Stage 2), and Phoenix (Stage 3). Let’s review the intent and purpose of each stage in more detail.
Stage 1: Lazarus debuted publicly at the end of April 2022, exclusively using testnet funds. It served as Hydranet DAO’s proof-of-concept to the public, effectively demonstrating that off-chain trading between BTC, ETH, and ERC tokens was not only possible but viable. As the first public rollout with a wide pool of testers, Lazarus focused primarily on debugging and stress-testing after launch. The foremost highlight and accomplishment of Lazarus was the introduction of stable, fast, orderbook-based BTC/ETH trading from a non-custodial, off-chain DEX environment — real BTC, quickly traded for real ETH, without the use of any wrapped assets. The addition of coin pairs seldom seen on DEXs, like BTC/USDT and BTC/LTC, further amplified the use case for DEXs based around high-speed, off-chain trading. The Lazarus build also publicly introduced Hydranet DEX’s Simple Swap UI (SSUI), a mechanism that allows easy direct swaps into different assets with 2–3 clicks.
Stage 2: Atlas can best be described as the final prototyping stage of Hydranet DEX, where major infrastructure upgrades, extensive stress tests, and riskier experiments can be undergone to harden the protocols and fundamentals that make the DEX work — all while still using testnet funds exclusively. Hydranet DEX will be ready to take on mainnet assets and real funds when the Atlas stage concludes. A new build of Atlas was deployed to our official Atlas Testing Group on October 10, and it includes several major upgrades:
Arbitrum integration (complete): The Arbitrum Network was first integrated in July, with aETH and HDX (an Arbitrum-token) as the first testing pairs. Hydranet DEX fully supports Arbitrum Nitro!
Connext Watchtower implementation (complete): If there was ETH in a Connext channel, and that channel went offline and become unreachable, Hydranet DEX now supports watchtowers that allow for full leverage and control of off-chain funds directly from the blockchain and layer 1.
L2 Active Enhancement (complete): Simultaneously running multiple instances of LND –..e. BTC LND & LTC LND — eliminates the sync times one would otherwise face when switching between different Lightning-based coin pairs. L2 Active Enhancement allows every Lightning Network daemon supported by Hydranet DEX to be up-to-date at all times.
Switching Ethereum test networks (complete): Rinkeby testnet, used for Lazarus, is not transitioning to proof-of-stake along with the Ethereum mainnet and is shutting down in 2023. In its place, Hydranet DEX now supports goerli (ETH). Work began on the switch in late August, and concluded in early October. After the switch was finished and the goerli implementation was debugged internally, Atlas was deployed to the testing group.
Changing Bitcoin test networks (in progress): We are currently looking for a more reliable Bitcoin testnet to minimize disruptions from Bitcoin block storms during tests to improve diagnostics, simplify debugging, and expedite development.
Pricing API overhaul (complete): Hydranet DEX’s old pricing API required some major reworking. The DEX now utilizes Chainlink for price metrics, with Coingecko as a mirror.
Hydranet’s bot (in progress): Progress picked up rapid speed early this month after a particularly testy bug was eliminated and our market maker bots reached a swap success rate of 94.6% — a fraction of a percent away from our internal target rate of 95% or higher. Now that our bots are coming close to our success rate targets, they are being coupled to more coin pairs.
Taker-pays-Maker (in progress): The “taker-pays-maker” model incentivizes LPs (makers) to provide Hydranet DEX with liquidity by rewarding them shares of transaction fees paid by traders (takers). Work on the implementation of this novel feature has been underway for several months, with multiple revisions and improvements made to it over time. This component is one of the most critical aspects of Hydranet DEX’s tokenomics and ecosystem, but it is not required to be 100% complete to publicly launch Atlas.
Connext DEX Fee Refunds (in progress): If a trade fails, the fee for the failed trade is refunded back to the user. This remains a work in progress, and its completion is not required to launch Atlas.
Stage 3: Phoenix, the final stage of development, will mark the debut of live mainnet trading on Hydranet DEX. It is the final release version of Hydranet DEX. Its release is contingent on the completion of every one of the above features currently in progress, plus a few extra critical targets:
1.) Migrating the DEX and all of its components to the mainnet.
2.) Building a more robust mainnet infrastructure, with redundant servers and decentralized backups.
3.) One final wave of heavy debugging and stress testing.
The requirements for Phoenix, while substantial in their own right, rely primarily on the intensive efforts put into Atlas. It could be argued that the gap between Atlas and Phoenix is much smaller than between Atlas and Lazarus.
That concludes our refresher on the state of the DEX. We look forward to providing you with more updates into Q4 2022 as we make more breakthroughs!
WhiteBIT Resumes HDX Deposits and Withdrawals
WhiteBIT is our most highly-recommended CEX for trading HDX, Hydranet’s native token. While Arbitrum was upgrading to Nitro and Ethereum was upgrading to proof-of-stake, WhiteBIT had to temporarily suspend HDX deposits and withdrawals to make upgrades.
As of October 17, WhiteBIT has fully resumed HDX deposits and withdrawals!
Marketing and Communications Strategies Gearing Up
As we edge closer to Phoenix and a mainnet release, we will be ramping up our efforts to market Hydranet DEX on multiple fronts, including generous referral incentives to expedite adoption.
We launched an official Twitter Space this month! Every Monday, members of f the team join a live audio chat and discuss a wide range of topics related to HDX as well as current events transpiring in the crypto industry. It is similar to a podcast, with each weekly episode being uploaded to Spotify afterward. 3 episodes have been produced so far. You can listen to them back-to-back on Spotify here!
As mentioned in our previous recap (read here), two successive WIP drafts of our tokenomics paper were unveiled to the HDX community in September and a 3rd, likely final draft is still being polished. The community provided a lot of constructive feedback on the first two drafts, which was finally cultivated in the preparation of an investor survey. This survey was published on October 30. If you haven’t done so yet, you can still fill out this survey here.
Potential OHM Exploit Discovered
Our developers detected a potentially-malicious bug in OHM’s codebase. Fortunately, it has been confirmed that HDX, a fork of OHM, has not been affected.
This concludes the October monthly recap. Be sure to check out our Discord channel for more frequent, on-the-fly updates!