Cosmos announces the launch of Hydro, a cross-chain auction platform. Hydro is a bidding and governance platform for efficient deployment of liquidity across the cross-chain ecosystem and is a core part of the “ATOM wars”.
Hydro draws on the “Curve wars” on Ethereum, applying a similar model to enhance governance and strategic liquidity provision.
Hydro will enable the Cosmos Hub and other projects to take advantage of other projects’ demand to add ATOM and other token liquidity to their systems. Hydro provides key features such as token locking, voting rights, bidding rules, voting rules, and fund allocation rules. Native token holders lock their tokens on the platform in exchange for “Hydro locked tokens”, which grant them influence over fund allocation decisions through a series of periodic auctions.
Projects compete for access to these funds through the governance power of hATOM holders (although Hydro may accept locks of multiple native tokens in the future, the current focus is on ATOM/hATOM). This process operates as an auction market. Fund allocations to projects are temporary (similar to loans), promoting competition and ensuring that resources are allocated to multiple projects over time. Auctions are conducted regularly. In each auction round, participating projects detail their funding needs, proposed uses, and the amount they are willing to pay to support hATOM holders. At the end of each round, projects are ranked based on hATOM holder support and funds are allocated accordingly.