What is a decentralized exchange (DEX) and how is it different from traditional centralized exchange (CEX)?
A centralized exchange (CEX) is built off-chain, meaning that they rely on a private infrastructure acting as a third-party to match supply and demand. Names that you are familiar with right now, such as Binance and Coinbase are examples of centralized exchange. Despite its dominance, the centralized model poses various problems such as vulnerability to hacks and high regulatory risks.
A decentralized exchange (DEX) was designed to tackle the problems of CEXes, as a DEX brings buyers and sellers directly as a peer-to-peer marketplace built on-chain. Transactions are carried out with smart contracts, and users can remain custodian of their funds.
Do I need to set up an account on HydraSwap to start trading?
As HydraSwap is a decentralized exchange that allows users to transfer tokens directly from their wallets, you do not need to set up an account to start trading on HydraSwap. You only need to set up a wallet that is compatible with HydraSwap and connect it before trading.
How can I start trading on HydraSwap?
Set up a Solana wallet
Get some $SOL ready in your wallet for gas fees
Connect the wallet to HydraSwap
Go to the “Swap” page and start trading!
What wallets can I use with HydraSwap?
HydraSwap currently supports the use of the following wallets: Ledger, Sollet, Sollet Extension, Solong, MathWallet, Phantom, Blocto and Bonfida.
How can I get $SOL in my wallet?
$SOL is traded on several exchanges such as Binance, Coinbase, Huobi and FTX. After obtaining your $SOL, you can then send your $SOL to a wallet that is compatible with HydraSwap.
By using a Sollet Wallet, you can also convert from $ETH to $SOL by connecting your MetaMask wallet, please follow the steps below:
Create both Sollet and MetaMask wallets
On Sollet, click on “Receive” under $SOL
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3. Select “ETH” and click “Connect to MetaMask”
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4. Enter the amount of $ETH that you would like to convert to $SOL, and click “Convert”
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5. Wait for your transaction to be confirmed and start trading!
What is HMM?
HMM is an abbreviation of Hydra Market Maker. Its core mechanism lies in introducing the oracle price as a reference to imitate manual market making operations in traditional finance. With HMM, funds will be concentrated around the market price and would provide high-quality liquidity in the same way centralized exchanges do. Leveraging this, the potential impermanent loss of liquidity providers can be mitigated, a higher fund utilization rate and lower price slippage can also be achieved.For more details about how HMM works, please take a look at our blog post.
What is the ‘c’ component?
The ‘c’ component is a ‘compensation parameter’ that we have incorporated into HMM. The price adjustment incentivizes arbitrageurs to step in to replenish the token balance and reduce impermanent loss for liquidity LPs. The compensation parameter ‘c’ controls how much LPs are willing to compensate arbitrageurs. The ‘c’ can range from 0 to 2, at c=0, the HMM price is always the same as the CPMM price, which would benefit arbitrageurs. When ‘c’ approaches 2, HMM price is closer to oracle price, which benefits LPs by minimizing impermanent loss.
In the first version of HMM, HydraSwap would default the ‘c’ compensation parameter to the best ‘c’ that could minimize the most impermanent loss. In later versions of HMM, we would allow various choices of the ‘c’ parameter for LPs to choose from. For more details about the back testing result of the best ‘c’, please take a look at our blog post.
What fees do I need to pay for trading on HydraSwap?
Swap fee is charged at 0.2% at launch with all of it going back to LPs for providing liquidity. Please note that this may change in the future.
In addition to the swap fee, a ‘gas fee’ is charged for transacting on the Solana blockchain. While gas fee is cheap on Solana (average fee per transaction is at $0.00025), users should keep a small amount of $SOL in their wallet to pay for the gas fee.
What is price slippage?
Price slippage is the expected percentage difference between the quoted and executed prices, this is usually caused by market volatility or low liquidity.
What is the slippage tolerance setting?
With slippage tolerance setting, you can set the maximum percentage of price movement you can accept for your trade. If the tradable market moves above or below the slippage tolerance that you have set, anything that is left would fail to execute.
Would HydraSwap be able to conduct cross-chain trading?
Yes, HydraSwap will be able to conduct cross-chain trading in later versions. At the early stage, Hydra cross-chain bridge would support the bridges of Solana-Polygon and Solana-BSC. More blockchain networks will be supported as we progress.
What are “gas fees”?
Gas fees are fees that are required to be paid by users to compensate for the computational costs to process and validate the trade on the blockchain. Gas fees vary from transaction to transaction, but it is generally cheap on Solana with average fee per transaction costing $0.00025 only.
What if I cannot find a token I want to trade in HydraSwap’s drop-down menu?
Currently, we do not support users to add tokens by themselves. If you are a project owner and want to get your token listed officially on HydraSwap, please contact us via email.
Why is my transaction failing?
Typical reason of failed transactions could be due to the below:
Slippage Tolerance: As trades will fail to execute if the token’s price moves past your designated slippage tolerance level. You can try to increase the slippage tolerance percentage on the Swap page.
Low $SOL balance in your wallet: Please ensure your wallet has at least a small amount of $SOL to pay for gas fees.
Would I be able to provide ‘concentrated liquidity’ with HydraSwap?
Yes, we are currently building a concentrated liquidity for HydraSwap, please stay tuned for beta version and updates.
Would I be able to place orders on HydraSwap?
Yes, we are currently building various advanced order types for our users, including if-done orders, loop orders, sliceberg orders and time-weighted average price orders (TWAP). Please stay tuned for beta versions and updates.
What oracle is HydraSwap integrated with?
HydraSwap is integrated with Pyth as our oracle. To learn more about our partnership, check out our blog post here.