Tokenomics
The HDN token is a utility and governance token used by the Hydranet DAO. It can be used for Hydranet DAO governance, trading fee reduction on the Hydranet’s Exchange, and as necessary collateral to run important services of the Hydranet Network and its ecosystem. HDN runs natively on the Arbitrum One blockchain with ERC-20 standards.
The HDN smart contract, deployed in July 2023, has implemented a maximum supply of 300 Million HDN. Uncirculated supply is kept in a vault and requires an approved DAO governance first to be released. Only 5 Million HDN can be released per vote.
Hydranet DAO and community leaders will continuously explore the technical and legal feasibility of offering as many HDN use cases as possible.
HDN Use Cases
Owning HDN tokens provides rewarding opportunities and responsibilities. It enables holders to operate Hydranet Network services, act as Lithium Liquidity Providers, benefit from reduced trading fees on Hydranet’s Exchange, and to actively participate in the Hydranet DAO governance.
Collateral for Hydranet Network services
To facilitate expansion and decentralization of the Hydranet Network, it is planned to establish a network of Hubs and Watchtowers. Hubs, referred to as Titans, will work to decentralize the DEX and will provide order book and routing services for all DEX participants. Watchtowers, referred to as Guardians, will monitor the DEX as well as provide other monitoring services to ensure that all participants act with good conduct. HDN holders will be able to run these services by collateralizing different amounts of HDN. Doing so will make them eligible for a share of the DEX fees as payment for their services and expenses. The fees collected by Hydranet’s Exchange will be converted to a stablecoin on Arbitrum. Every 30 days, earnings will be distributed.
- Titans: 1.000.000 HDN
- Guardian: 120.000 HDN
- Lithium Liquidity providers (LLPs): 50.000 HDN
The ultimate objective is to establish a scenario in which the greater the amount of HDN you possess, the higher your profits ascend, all the while avoiding any undue inflation of your HDN.
Trading fee reduction
By holding a specific amount of HDN in their Hydranet wallet, users can enjoy a corresponding percentage reduction in trading fees when trading on Hydranet’s Exchange.
| Amount of HDN in wallet | Fee reduction |
|---|---|
| 5.000 - 25.000 | 2.5 % |
| 25.001 - 75.000 | 5 % |
| 75.001 - 150.000 | 10 % |
| 150.001-250.000 | 15 % |
| 250.001 - 500.000 | 20 % |
| > 500.000 | 25 % |
Please note: The Hydranet DAO reserves the right to adjust the system and its numbers. Small changes (below 25%) may be deployed without another DAO vote to ensure the profitability of Hydranet. Bigger changes will be subject to DAO votes.
DAO governance
HDN is a unique governance token that empowers its holders with voting rights within a decentralized autonomous organization (DAO). Utilizing snapshot technology, each HDN token represents a single vote, ensuring a fair and democratic decision-making process for the DAO's community-driven operations.
A reputation system supporting the HDN DAO governance is being researched and discussed at the moment, and will be presented to the community once it’s more mature.
Additional plans: HDN as listing fee
Another yet unexplored option is to take HDN as a listing fee. If a team wants to list a new token on Hydranet’s Exchange, they would have to apply and pay a listing fee to the Hydranet DAO and provide the necessary liquidity for their token. The received HDN can then be used for liquidity, payments, or removing HDN tokens from the circulating supply.
Hydranet trade fees
Trade fees generated by Hydranet’s Exchange will be used to reward Hydranet Network roles (Titans and Guardians) for their services and to improve the liquidity of the HDN token.
It is furthermore researched how to implement a fee distribution system that allows participants to benefit from the generated trade fees without needing to operate Titans or Guardians could incentivize broader engagement, especially from those with smaller holdings. By leveraging their collateral, individuals and entities are more likely to frequently use the platform, promote it on social media, and attract new traders.
Reward Sharing: Titans should allocate a certain percentage of their fees to those who delegate tokens to them, with the distribution proportionate to the number of tokens delegated. This approach motivates a wider range of users to become involved with a titan indirectly, sharing in the network's overall success.
Initial: Allocate 60% of the fees collected in the pool to the delegators (i.e., HDN token holders). This strategy allows Titans to remain competitive by offering them the flexibility to adjust their share of the rewards, thereby potentially reducing their portion to attract more delegators.
| Daily volume [USD] | Daily fees (0.2 %) [USD] | Titans | Shared Pool | Guardians | Treasury | Strategic liquidity |
|---|---|---|---|---|---|---|
| 0 | 0 | 70 % | 0 % | 30 % | 0 % | 0 % |
| 100.000 | 200 | 30 % | 30 % | 10 % | 22 % | 8 % |
| 500.000 | 1.000 | 30 % | 30 % | 8 % | 23 % | 9 % |
| 1.000.000 | 2.000 | 25 % | 30 % | 6 % | 19 % | 20 % |
| 5.000.000 | 10.000 | 25 % | 30 % | 4 % | 18 % | 23 % |
| 10.000.000 | 20.000 | 20 % | 25 % | 4 % | 16 % | 35 % |
| 50.000.000 | 100.000 | 2 % | 25 % | 4 % | 14 % | 37 % |
| 100.000.000 | 200.000 | 20 % | 25 % | 4 % | 12 % | 39 % |
| 500.000.000 | 1.000.000 | 15 % | 20 % | 4 % | 10 % | 51 % |
| 1.000.000.000 | 2.000.000 | 15 % | 20 % | 4 % | 6 % | 55 % |
The ultimate objective is to establish a scenario in which the greater the amount of HDN you possess, the higher your profits ascend, all the while avoiding any undue inflation of your HDN.
Overview
The Hydranet DAO's flagship product enables off-chain peer-to-peer trading with a fee range from - 0.05 to + 2% fee per trade. The fees may vary depending on the trading pairs, trading activities, and referrals. DEX fees will be collected by the Hubs and then sent to a multi-sig address managed by the Multi-sig, which acts as a representative of the Hydranet DAO until all flows are working automatically using smart contracts and AI.
Strategic Liquidity
The Multi-sig team will use the fees generated by the Hydranet exchange to build strategic liquidity for HDN. The objectives of strategic liquidity are:
- Deep liquidity in HDN pairs on exchanges.
- HDN token purchases (as a result of providing liquidity) and therefore.
- Reducing the circulating supply (burning of HDN).
This will be done for the entire HDN price range. The Multi-sig team will also prepare mechanisms to minimize the negative impact of individual dumps by creating a deep price floor. It is achieved by focusing a particular share of these DEX fees on a low-price liquidity pool (LP) or limit orders. Since the HDN price is determined by supply and demand on the open market, this price floor will be dynamic and move in accordance with the current price of HDN. The tools used for managing the HDN liquidity will be Market Maker bots on order book exchanges, e.g. Hydranet Exchange and centralized exchanges, and Liquidity Provider NFTs on decentralized exchanges.
An overall increased liquidity of the HDN token will create an environment where the HDN token can develop freely and make the token more attractive to traders. The mechanism used for dump prevention will furthermore create an extra level of stability for all token holders. When the community is satisfied with the status of the HDN liquidity, any bought-back HDN in this process will be eligible to be moved into the HDN Vault.
To react quickly to changing market circumstances and add newly acquired DEX fees to the liquidity management tools, the Multi-sig team will adjust the low-price LP to the best of their knowledge without a public snapshot vote. The NFTs used to manage liquidity will always be visible to everyone in the DAO POL wallet.
Hydranet DAO Treasury
The Multi-sig team will use DEX fees in the following ways:
- To build the Hydranet platform and perform upgrades to the system, which includes team recruiting, training, R&D, legal expenses, and operational expenses.
- For Hydranet branding and marketing, including continuous promotion and education of Hydranet and blockchain innovations in industry mediums. A sufficient budget for various advertisement activities to help Hydranet become popular among investors and attract active users to the platform.
- To pay for Referrals (distributed by Influencers).
- Reserve for any emergency or unexpected situation that might arise.
HDN supply
HDN Distribution
Snapshot of the HDN supply distribution in November 2023:
- 125 Million: Vault (Holding all non-circulating supply of HDN to be used at the discretion of the DAO)
- 6 Million: DAO Protocol-owned Liquidity (POL) (Holding liquidity assets of the DAO, used for providing liquidity on exchanges):
- 8 Million: DAO Treasury (Holding all treasury assets of the DAO, used for paying services, external devs, team members, and marketing expenses)
- 161 Million: Hydranet Community
HDN Emissions
Every new 5 Million HDN made available for bonds must be approved via a public community vote first.
Users can buy HDN bonds with different Arbitrum assets to directly support the DAO and its development. All acquired funds go into the multi-sig treasury and are used to pay servers, market activities, developers, and other operating expenses. When available, bonds can be bought here: https://bonds.hydranet.ai/
Additional info
The Hydranet DAO will continuously try to improve these HDN tokenomics, propose more features, and adjust to new legal insights. Smaller adjustments will be implemented without prior notice, like fixing typos, improving grammar, or reflecting the latest DAO votes. Also, if the HDN ecosystem grows and new products or players enter, the HDN tokenomics might be subject to bigger updates.
Aribitrum Network Info
Network Name: Arb1
RPC: https://arb1.arbitrum.io/rpc
Chain ID: 42161
Currency Symbol: ETH
Block Explorer URL: https://arbiscan.io/
HDN Token Info
Smart-contract: 0x3404149e9EE6f17Fb41DB1Ce593ee48FBDcD9506
Disclaimers
Legal reservation
The Hydranet DAO reserves the right to propose a change to the fee usage to the community if they feel that it is in the community's best interests. Corresponding investigations are planned. The burden sharing of future trade fee discounts and/or referrals will be made, particularly about a fair distribution of the associated benefits.
No financial advice
The information contained in this document is not intended as, and shall not be understood or construed as, financial advice. The Hydranet DAO are not attorneys, accountants, or financial advisors, nor are they claiming themselves to be, and the information contained in this document is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your situation. They have done their best to ensure that the information provided in this document is accurate and provides valuable information. Regardless of anything to the contrary, nothing available on or through this document should be understood as a recommendation that you should not consult with a financial professional to address your particular information. The Hydranet DAO expressly recommends that you seek advice from a professional. Hydranet does not engage in United States markets. Hydranet DAO reserves the right to refuse services to any user, country, jurisdiction, or group that conflicts with Anti-Money Laundering (AML) regulations or is identified as supporting terrorist activities The involved teams shall not be held liable or responsible for any errors or omissions on this document or for any damage you may suffer as a result of failing to seek competent financial advice from a professional who is familiar with your situation.