Hydranet DAO has reduced staking APY to 0%, and users support it.
Hydranet DAO is focused on building a truly interoperable decentralized exchange (DEX).
Source: Unsplash
What happens when decentralized autonomous organizations (DAOs) prove that commitment to building the DeFi ecosystem crushes the pursuit for immediate gratification, the short-term-focused greed much more compatible with traditional finance?
The first true interoperable DEX
Hydranet is a DAO blockchain project creating a platform for building and launching decentralized finance (DeFi) applications (dApps).
The project is built on top of the Polkadot network, leveraging its high scalability and interoperability features.
Scalability refers to the ability of a blockchain network to handle a large volume of transactions without experiencing significant delays or high transaction fees. Blockchain scalability has always been a major concern: as more users join the network, the number of transactions increases, causing congestion and slowing down the network.
To address this challenge, Hydranet uses strictly Layer 2 protocols, increasing transaction throughput without sacrificing security or decentralization, and ensuring low transaction fees, all while permitting the exchange of assets existing independently from one another without a direct bridge.
Interoperability, on the other hand, refers to the ability of different blockchain networks to communicate and exchange information with each other seamlessly. Fragmentation, which is the result of many blockchain networks operating independently, causes inefficiency across the entire ecosystem.
Hydranet offers interoperability solutions with its decentralized exchange (DEX), which allows different networks to connect and interact with each other, enabling the exchange of assets, data, and other information. Hydranet’s Layer 3 DEX is integrated with Lightning Network and Connext, allowing off-chain Bitcoin transfers and Ethereum transactions respectively. This means BTC and ETH can be traded without the need for a bridge.
By addressing these factors, Hydranet offers improved performance, efficiency, and usability of blockchain technology, all on one platform.
The DAO has consistently demonstrated dedication to being genuinely community-driven, through governance which serves project and users alike. Hydranet users and holders, in turn, are active and committed to the project. The platform’s native token, HDX, can be staked, used for liquidity provision, and voting on network proposals.
The votes are in
On February 18th, Hydranet announced the voting results of the DAO’s 16th proposal — on HDX Staking APY. The submission asked the community to consider getting rid of staking rewards altogether, the alternative being maintaining a then-current 7.5% APY.
“Currently, there is no benefit to the project or the holders for staking on arbitrum since we are not verifying on-chain transactions. Staking adds 12.75 million HDX to the total supply per year. These emissions are airdropping daily HDX for free, leading to possible price suppression.
Eliminating staking before main net can reduce these unnecessary technical emissions and give the project more room for growth in the coming years.”
The concise proposal received major support from 78.55% of voting HDX holders.
On February 20th, the annual percentage yield (APY) for staking HDX was successfully reduced to 0%.
But why would anyone agree to stake their HDX — lock their crypto assets — without rewards? Because the community believes in Hydranet’s Layer 3 DEX enough to know that supporting the project without instant rewards will pay off.
Delayed gratification for a greater purpose
Staking crypto refers to the process of holding a certain amount of a cryptocurrency in a staking wallet, and participating in the validation of transactions on a blockchain network. This process is often referred to as Proof-of-Stake (PoS) consensus mechanism.
In a PoS network, users can participate in validating transactions by locking up a certain amount of the cryptocurrency as collateral in their staking wallet. This collateral is referred to as a stake, and users who hold a stake are known as validators. Validators are then selected to validate transactions based on the size of their stake.
Validators are incentivized to act in the best interest of the network, as they stand to lose their stake if their assets’ value decreases. In exchange for participating in the validation of transactions, validators earn rewards in the form of the same cryptocurrency they are staking. The rewards are often expressed as an APY and can vary depending on the cryptocurrency, the staking period, and the staking pool.
Staking crypto is increasingly popular as it can help increase the security and stability of a blockchain network. It can also provide users with a way to earn passive income by holding onto the cryptocurrency for a longer period.
By eliminating the staking rewards, Hydranet users ensure that staking before the launch of the project’s main net will not plunge the value of HDX. Given the major support from the community in favor of reducing APY, this decision also eliminates anyone trying to “get a quick buck” from staking, without any real commitment to the project.
Hydranet’s developers, in turn, make a case for honesty and diligence. After all, their share of rewards is equally postponed to a future where the project is fully launched.
Choosing to cease issuance of new coins as participation rewards and focus on project development, is a verification of honesty and potential unprecedented in the traditional finance world.
The power of DAO
Trust without the KYC is the foundation of DAOs and their success. The precedent set by Hydranet’s community illuminates the potential of peer-to-peer finance and decentralized development.
Notable also is the lack of media coverage, a complete refusal to acknowledge the efforts and achievements of people within the industry.
While publications and authorities continue to milk centralized exchange fraud cases like FTX for news, they gladly and deliberately ignore that it is centralized entities in possession of the assets of others who fail, not crypto. The scale at which traditional financial institutions do the same, whether by mundane abuse of authority, or through upper-class networking schemes, far exceeds the sums and instances when Bankman-Frieds and Mashinskys have done the same by corrupting the nature of cryptocurrency.
By failing to bring to light the cases where individuals and communities benefit from decentralized finance, media and governments alike persist in a mutually-beneficial symbiosis, parasitic to the public. By crippling the credibility of decentralized finance, through emphasis of all the wrong things and a lack of education, a massive part of the public is deterred from independent learning, and prevented from ever nearing financial freedom.
DAOs like Hydranet, therefore, should remain obscure, like treasure maps to a public discouraged from learning to read or navigate.
