Polkadot treasury allocates $14.4 million to bolster DeFi project Hydration

Polkadot Treasury has allocated 2 million $DOT, valued at $14.4 million, to enhance the liquidity of the DeFi project Hydration, according to a June 10 statement shared with CryptoSlate.

The project stated that the funds will boost the liquidity and efficiency of its single-sided liquidity provisioning platform, Omnipool.

This latest funding aligns with Polkadot’s current efforts to improve and expand the network’s adoption worldwide. Over the past weeks, the blockchain’s Web 3 Foundation has funded several projects, including PolkaPort East and Accelerate Polkadot.

Two-phase execution

This allocation will be executed in two phases. The first phase will disburse 1 million $DOT to attract new liquidity to the Polkadot ecosystem. This includes rewards for liquidity providers (LPs) with an annual percentage yield (APY) exceeding 200%.

Hydration’s Omnipool’s single-sided LP design will facilitate this reward system. Users can earn rewards by depositing single assets or joining an incentive farm with stablecoins, $DOT, and Bitcoin.

The remaining 1 million $DOT will support the Hydration Omnipool, enhancing the native liquidity layer for the Polkadot 2.0 ecosystem. This is in addition to the 690,000 $DOT already deposited into the Hydration Omnipool.

This funding aims to advance liquidity management on the Polkadot network, setting a new standard in blockchain technology. The Polkadot Protocol and OpenGov will administer and manage the funds.

Jakub Gregus, co-founder of Hydration, described the allocation as a pivotal moment for the project. He emphasized that this liquidity injection is crucial for the health of the Polkadot ecosystem. He stated:

“The Hydration Omnipool is designed to provide unparalleled efficiency and accessibility in trading crypto-assets, and this support from the Polkadot treasury is a testament to the potential impact of our forward-looking approach.”

Notably, this funding arrived less than a week after the project was renamed from HydraDX. According to its website, the total value of assets locked on the platform is $28 million, and it has a trading volume of $50 million in the last 30 days.