What Can HydraSwap Provide for Solana Ecosystem
HydraSwap is determined to create the AMM of the future on Solana, and we strive to help the overall ecosystem thrive while we are at it.
In HMM v1.0, the key problem we wanted to solve was the pricing intelligence on AMMs, given that most of the existing DEXes are inward looking and rely solely on their inventory for pricing. To tackle this, HMM needs additional market information, and we are proud to partner with Pyth to obtain reliable oracle data. Thanks to the oracle input to HMM, we are able to introduce a ‘compensation parameter’ that optimally incentivizes arbitrageur while protecting LP returns. LPs can now achieve upto 4x returns by reducing impermanent loss significantly.
Other key innovations in HMM also target to benefit LPs in the ecosystem, so that they can provide more liquidity to grow DeFi on Solana without worrying about the potential losses due to the current inadequacies of AMMs. Firstly, we have created an enhanced concentrated liquidity model that integrates with the ‘compensation parameter’. This could help maximize capital efficiency while reducing impermanent loss for LPs. Additionally, we have created a volatility adjusted fee to adequately compensate LPs for the level of risk that they take by providing liquidity.
Moving forward, HydraSwap will also help liquidity providers to seamlessly provide liquidity in a cross-chain world by partnering with bridging solutions. It is our aim to create an easy mechanism for liquidity providers to deposit assets into Solana projects.
User experience is a top priority at HydraSwap. We are committed to lowering the entry requirements into DeFi by simplification and providing a CEX-level exchange that could allow our liquidity providers to generate returns like traditional market makers. With HydraSwap’s unremitting efforts, we believe the Solana ecosystem can be enriched while also improving user scale and retention, so that the HydraSwap and broader Solana ecosystem can reach a mutually beneficial partnership.