Wish For Change: Polkadot acquisition of Hydration

[sourabhniyogi]

Summary

We propose the acquisition of the Hydration (HDX) network by the Polkadot Treasury through a token conversion agreement of 1 DOT : 550 HDX, absorbing HDX into the Polkadot ecosystem over 8 quarters or earlier, with 8,000,000 DOT allocated in total. This phased integration aligns technical development and user growth (measured largely in TVL) with Polkadot’s medium-term Revive-on-Asset-Hub strategy and long-term JAM / Coreplay vision, unifying Polkadot DeFi behind its leading DeFi parachain. By deploying incentives in one defi system chain (Hydration) rather than two, this settles outstanding channel conflict between the dominant Polkadot system chain (Asset Hub) and the now dominant defi parachain (Hydration). This WFC proposal can be seen as complementary to OpenGov #1542, or in contrast to it.

Motivation

Hydration (formerly HydraDX) is one of the two most successful and operationally resilient DeFi parachains in the Polkadot ecosystem—alongside Bifrost—and leads in protocol-native liquidity, asset routing, and execution. Hydration’s architecture is modular, DOT-native, and has become Polkadot’s DeFi backbone. It is widely loved, easy to use, and has a solid team fully loyal to Polkadot.

However, Hydration has not incorporated revive, Asset Hub’s solution to programmable assets, and CoreVM+CorePlay have not matured yet to support defi applications.

This Wish-for-Change proposal represents a desire for long-term economic alignment and user growth, outlines a rough path for product development, while retiring short-term token incentives and maximizing treasury efficiency.

Why Hydration?

Among candidates such as Moonbeam/Stellaswap, Astar, Acala, Parallel, Equilibrium, and others, Hydration stands out due to:

• Native Substrate-first design, avoiding EVM dependency
• Proven leadership in XCM integration and Polkadot-native assets
• Commitment to decentralized liquidity infrastructure
• A credibly decentralized Hydration DAO
• A highly loyal and competent technical team capable of executing on Polkadot’s Coreplay/CoreVM roadmap

Hydration is already positioned as Polkadot’s DeFi hub. Other candidates have not achieved or maintained basic KPI metrics of TVL and user growth, despite being EVM-centric and “earlier” in many cases. Rather than exposing Polkadot to risk by centralizing liquidity solely in Asset Hub, this proposal recognizes Hydration as the dominant DOT-native liquidity parachain, and proposes making it a Polkadot DeFi system chain, offering:

• Technical: asynchronous (XCM) and synchronous (revive)
• Reduced defi protocol fragmentation, improving Treasury efficiency
• An optimized surface for defi incentives concentrated in Hydration

This does not in any way detract from the utility of Asset Hub, which will continue to be the home of staking, governance, and home for fungible assets (USDT, USDC, DOT, etc.) and instead supports a hybrid chain architecture. Potentially, the deployment of revive and future potential for Coreplay on Hydration may pave the way for other system chains and parachains.

Revive, CorePlay/CoreVM, and the Future of DOT Compute

The Revive project compiles Solidity contracts to the Polkadot Virtual Machine (PVM), and is slated for deployment on Asset Hub in Summer/Fall 2025. This Wish-for-Change proposal aims to have Revive also target Hydration, which would provide:

• Access to DeFi liquidity largely now concentrated on Hydration, rather than Asset Hub
• EVM address compatibility across Hydration and Asset Hub
• Seamless Solidity developer migration

Hydration’s roadmap would include:

1. Integration of Revive-compatible Solidity execution in late 2025 and early 2026
2. Deployment of Coreplay (or CoreVM) at scale in late 2026 to early 2027, in deep collaboration with the Polkadot Technical Fellowship to ensure success across Polkadot’s JAM Services stack for 2026–2027

It is believed the path for (1) is technically possible right now, whereas (2) requires maturation.

Proposal Details

These are initial parameter suggestions, with the total cost to the Polkadot Treasury estimated at 10MM DOT

Parameter	Value
Token Conversion Rate	1 DOT : 550 HDX
Total DOT Allocated	8,000,000 DOT
Duration	8 Quarters (Q3 2025 – Q2 2027)
Liquidity Incentives	2,000,000 DOT/year (500,000 DOT per quarter) for DOT-native LPs and user onboarding
Conversion Method	On-chain migration portal; managed by Hydration and Polkadot Fellowship multisig
HDX Deprecation	Token to be sunset after final migration in Q2 2027 (Quarter 8)

Polkadot culture prioritizes long-term sustainability. This 10 million DOT proposal (8M + 2M DOT) is exactly 2× the cost of Referendum 1542 (5M DOT), but also spans 2× the timeframe (2 years instead of 1 year), and is designed to position Polkadot DeFi for long-term success rather than short-term incentives.

If 1542 passes, the 2MM DOT incentive would be unnecessary, and this WFC should be considered for 8MM DOT only.

Through this Wish-for-Change, we welcome Hydration DAO to propose alternate parameters that better position Polkadot for even greater success. Adjusting the liquidity incentives, token conversion rate, refining product milestones, and mitigating execution risk would all be highly desirable. This should only be taken as a rough draft.

Disbursement and Milestones

Each quarter’s 1,000,000 DOT disbursement is milestone-based, tied to product deliverables and user growth KPIs:

Quarter	Period	Product Milestone	User Growth Milestone
Quarter 1	Q3 2025	DOT-HDX conversion mechanism	__,000 accounts representing __ TVL
Quarter 2	Q4 2025	Revive Milestone A	__,000 accounts representing __ TVL
Quarter 3	Q1 2026	Revive Milestone B	__,000 accounts representing __ TVL
Quarter 4	Q2 2026	Revive Milestone C	__,000 accounts representing __ TVL
Quarter 5	Q3 2026	Coreplay/CoreVM Testnet Milestone D	__,000 accounts representing __ TVL
Quarter 6	Q4 2026	Coreplay/CoreVM Testnet Milestone E	__,000 accounts representing __ TVL
Quarter 7	Q1 2027	Coreplay/CoreVM Production Milestone F	__,000 accounts representing __ TVL
Quarter 8	Q2 2027	Coreplay/CoreVM Production Milestone G	__,000 accounts representing __ TVL

The precise content of Revive Milestones A-C and Coreplay/CoreVM Milestones D-G, as well as TVL + account targets are intentionally left blank at present but may be refined in a follow-on “Treasurer” proposal.

Governance and Oversight

• Formation of a Joint Migration Council:

  • 5 members from the Polkadot Fellowship, qualified to oversee Revive and Coreplay/CoreVM milestones
  • 3 members from Hydration DAO
  • 2 non-technical members from the Polkadot community

• Milestone verification will be based on:

  • Public audits on Milestone execution by the Polkadot Fellowship
  • On-chain metrics on Hydration TVL and user growth from Polkadot data ecosystem partipicants (Subscan, Dune, Parity Data, …) with Open reporting dashboards

• Funds are disbursed quarterly via Treasury proposals upon milestone validation.

Comparison to OpenGov Referendum 1542

Polkadot OpenGov Referendum 1542 is slated to approve 5 million DOT over 1 year for short-term liquidity bootstrapping and support new Defi integrations (primarily through the “Defi bounty”). That referendum is:

• Single-year focused: Limited to 2024–2025 incentives
• Primarily reactive: Aimed at arresting DeFi liquidity decay and incentivizing usage of Polkadot through Hydration
• Non-integrated: Did not establish system-chain level strategic alignment with any one DeFi parachain
• Time-limited: Liquidity incentives were not tied to long-term product development or migration infrastructure

In contrast, this Hydration acquisition WFC proposal:

Feature	Referendum 1542	Hydration Wish-for-Change
Total DOT	5 million DOT	8-10 million DOT (8M + 2M incentives)
Duration	1 year	2 years
Strategic Objective	Liquidity incentives for user growth	Strategic acquisition of Polkadot’s DeFi chain
System Chain Integration	None	Yes — promote Hydration to DeFi system chain
Product Milestones	Not specified	Yes — Revive, CoreVM, Coreplay roadmap gated
DAO Coordination	Continued “lassez faire” parachain	Targeted partnership with Hydration DAO leading to acquisition
Governance Structure	Treasury-only disbursement	Joint Migration Council (DAO + Fellowship)

Discussion

It is believed this shifts Polkadot Treasury investment from being solely-incentive based (cf Ref 1542) to one which elevates Hydration and defi to be a key part of Polkadot strategic product roadmap.

The proposed solution is compatible with Asset Hub. Instead of continued system chain vs parachain channel conflict, business development activities can focus programmable assets in the larger TVL Hydration in 2025-206 and JAM’s Coreplay architecture in 2027 and beyond.

This is not merely a treasury spend—it is a strategic unification of Polkadot’s most advanced DeFi parachain into a key DeFi system parachain.

Rather than excluding DeFi from Polkadot’s strategic future, this proposal recognizes:

• That DeFi is central to Polkadot’s utility and user growth
• That Hydration is the best positioned project to lead it
• That Hydration can execute this vision in alignment with revive and JAM’s CorePlay service

Hydration enables:

• A single DOT-native liquidity system chain
• Developer migration via Revive and Solidity-to-PVM support
• A credible growth path into CorePlay (and/or CoreVM)

This plan retires fragmentation, eliminates channel conflict, and simplifies tokenomics—positioning Polkadot to lead the next generation of on-chain finance and trustless supercomputing with a super entrepreneurial team.

Open Technical & Governance Questions

The Hydration core team raised several important questions related to security, incentives, revenue design, and multi-chain expansion. These are addressed partly below to clarify the vision and feasibility of this proposal.

1. How do we ensure safety between Revive contracts and pallets (e.g., flash loans, oracles)?

Opening up Revive on Hydration introduces cross-context execution concerns—especially if contracts interact with liquidity pallets. To avoid flashloan-based exploits or oracle manipulation:

• Execution segmentation: Revive contracts will execute in a gated environment with limited interfaces to sensitive pallets.
• Permissioned bridging between contracts and liquidity primitives (e.g., whitelist of safe interfaces for price or liquidity updates).
• Unified oracle design: Governance-approved oracle relays or robust on-chain aggregation should be mandated for price feeds.

This complexity is acknowledged—but also solvable—using engineering principles already familiar to the Polkadot communities.

---

2. How are HDX holders and the Hydration team incentivized?

The current proposal provides:

• A 1 DOT : 550 HDX conversion, distributed over 8 quarters via an on-chain portal.
• A Joint Migration Council, including Hydration DAO representation, to manage roadmap delivery and funding oversight.
• A Hydration Contributor DAO could be established to:
  • Allocate a portion of DOT-based liquidity incentives or core rewards
  • Fund the team and contributors post-acquisition
  • Operate a transitional governance process

Governance Path:

• Governance for system-level proposals will transition to Polkadot OpenGov.
• Economic and roadmap-specific governance may initially remain partially delegated to Hydration DAO, ensuring continuity and commitment during integration.

---

3. What happens to Hydration’s current revenue-sharing and value capture model?

Hydration currently earns fees in HDX and routes them toward liquidity providers, team funding, or DAO reserves (check?)

In the new setup:

• All protocol revenue will be DOT-denominated: swaps, bridging, or lending revenue will be routed to the Polkadot treasury.
• A revenue distribution contract governed by the OpenGov can specify:
  • LP rewards
  • Contributor/Team compensation
  • Treasury growth mechanisms (e.g., protocol-owned liquidity)

DOT-native revenue sharing simplifies user incentives and aligns ecosystem value capture around a unified token.

4. What about Hydration’s multi-chain and multi-core expansion roadmap?

Hydration’s broader roadmap includes:

• Deploying the POL protocol and assets to external chains via Snowbridge and Hyperbridge
• Solver-based compute layers
• Expanding into multi-core JAM execution

These plans are fully compatible with this WFC and Polkadot revive + JAM’s Coreplay/CoreVM services. JAM multi-core design supports massive defi scalability. Simply put, there is zero excuse for Hydration to not use it. Bridges are DOT-aligned infrastructure, and their use will further drive cross-chain liquidity back to Hydration.

Let’s have Hydration lead Polkadot DeFi to long-term success.

[Cyphertux]

Why I will vote AGAINST the acquisition of Hydration

Respect to the Hydration team my disagreement lies with the strategy, not the builders.

1. Killing healthy competition

Polkadot was designed as a market of parachains, where multiple teams push innovation through competition. Acquiring the leading DeFi chain is like nationalizing an entire sector:

• it eliminates the incentive for others to innovate or even try;
• it creates a monopoly dynamic that reduces optionality;
• and it sets a dangerous precedent: “if you succeed, you’ll be bought out.”

2. A disproportionate expense

Even with Hydration’s recent growth (~200M TVL / Omni>50M + Treasury>24M), the requested 10M DOT represents a huge portion of the Treasury especially in a volatile market.

We must be cautious with capital allocation. From my perspective, I’ve seen a number of Treasury spends with nearly zero visible return. This proposal would lock up a massive amount of funds in a single direction with uncertain ROI, and high execution risk.

3. No clear competitive advantage for Polkadot

Hydration is already growing massively without being acquired. So what exactly are we buying? Not a new user base, not proprietary infrastructure, not regulatory access.

Why pay for what’s already happening organically?

4. A dangerous precedent

If this deal passes, every successful parachain will expect its exit via the Treasury. This institutionalizes a warped logic:

• Socialized profits (HDX holders get premium conversion),
• Privatized risks (if it fails, the ecosystem eats the loss).

5. Strategic misalignment we should focus outside

The real battle isn’t internal. It’s external. Polkadot must:

• attract TVL and developers from Ethereum, Cosmos, Solana;
• fund integrations, bridges, and RWA partners;
• incentivize multi-chain liquidity flow.

Locking 10M DOT into a single internal system-chain is the opposite of strategic expansion.

6. It contradicts the JAM/Coreplay vision

JAM is about execution diversity. Promoting a single DeFi system-chain this early hardcodes centralization into a modular architecture. It may:

• stifle experimentation across Coreplay/CoreVM,
• concentrate governance conflicts,
• and reduce resilience through single-point pressure.

7. There are lighter, smarter alternatives

Instead of a full acquisition:

1. Targeted grants (e.g. Revive support, audits, Coreplay testnets).
2. Incentive frameworks linked to real KPIs (TVL, fees).
3. DeFi development fund supporting multiple parachains to avoid centralization.

Final thought

This proposal, in my view, is a major strategic mistake. It overexposes the Treasury, weakens the decentralized structure of Polkadot, and misallocates capital we could use to grow outward.

I will vote AGAINST and I encourage others to ask for leaner, more future-proof paths to support Hydration and DeFi on Polkadot.

[karlo]

Top 3 worst ideas that I’ve heard in my life

No one with good intetions and/or competence to tap into topic of DeFi would suggest something like this

I feel sorry for anyone that will read this and waste their time

[sourabhniyogi]

@Cyphertux

nationalizing an entire sector:

Ref 1542 for 5MM DOT is nationalizing Hydration … instead of Polkadot Hub. As of this moment, its passing handily, and it will support new integrations with 1542-supported TVL rather than Polkadot Hub TVL. Having TWO refs of 1542, one for Hydration and another one for Polkadot Hub (which was never even proposed!) would be just insane!

This WFC proposes to finish nationalization and recognizes the same thing that its proponents recognize: out of 10+ defi centric parachains, Hydration outdid them all. Its better to have 1 dominant defi chain than 2 (Hydration + Polkadot Hub) or more (all the other less successful ones, many of whom “defected”). I’m not sure what Hydration’s “healthy competition” is – who are you even talking about? No new entrant will do better. I believe they have outdone the competition, including Polkadot Hub itself. Waiting 2+ years for a new team to do things in a Coreplay centric way is perhaps a nice idea but no one will integrate with that team’s work… they will integrate with Hydration+Polkadot Hub, and be even more likely to integrate with Polkadot with Hydration as a Defi system chain.

@Cyphertux

This proposal would lock up a massive amount of funds in a single direction with uncertain ROI, and high execution risk.

Ref 1542 is for 5MM DOT for short term incentives. There is also massive execution risk there, that Velocity Labs doesn’t get the integrations expected. This proposal aims for 2x the amount for more efficient ROI. With probability approaching 1, one year later, there will be a follow up for 1542 for a similar or greater amount =) with basically all the same arguments. By having programmable assets on Hydration (defi) AND Polkadot Hub (staking, goverance) would conclude the business of channel conflict. Polkadot Hub and Hydration dating back to when @joepetrowski presented the Statemint roadmap.

Also, its not that massive when you spread it out over 5-8 quarters. But, yes, its a record setter.

@Cyphertux

Why pay for what’s already happening organically?

Did you write this with an LLM unaware of OpenGov refs? Prompt ChatGPT with: please read Ref 1542 and its precedessor Ref 561 and try again! =)

To call Treasury supported incentives “organic” is just … false. It was paid for by DOT Tokenholders.

@Cyphertux

Hydration is already growing massively without being acquired.

Hydration TVL is growing due to Treasury supported incentives, which flow to a small number of accounts in a power-law distribution.

Take away the incentives/“rented liquidity” and this growth is much slower.

This TVL growth is paid for by OpenGov.

They will play hard to get, as most acquisition targets are wont to do, but in the end, they are amongst Polkadot’s greatest entrepreneurs and I hope the equations will make sense to both DAOs so everyone wins.

@Cyphertux

If this deal passes, every successful parachain will expect its exit via the Treasury.

There are many other successful parachains (Mythos, energywebx, peaq, etc.) that are executing without strong Treasury dependence. The equations, simply put, do not align as well. Defi to web3 is like Office is to Windows. To treat defi like other verticals is just … devoid of reality.

@Cyphertux

Locking 10M DOT into a single internal system-chain is the opposite of strategic expansion.

Concentrating Polkadot liquidity is way smarter than fragmented liquidity. Very obviously strategic! The Polkadot Hub vs Hydration of 2025 channel conflict needs to be settled.

@Cyphertux

There are lighter, smarter alternatives

This ref invests heavily in quality talent + Polkadot-centric product development rather than just the top N accounts who hop around between morpho and xyz competitor with ZERO loyalty – its a total joke to call them “users” – any one who thinks this is about user growth has never studied the top N users.

To be effective, this proposal needs to have good incentives for the talent to execute with a high sense of urgency to incorporate revive now, Coreplay/… later and do it all in the name of DOT, and DOT alone.

[Cyphertux]

I appreciate the detailed answer, but several key distinctions are being blurred.
Below I address your main points one by one.

1 / “Ref 1542 already nationalises Hydration, so finishing the job makes sense”

Not the same thing.

• Ref 561 (1 M DOT) and Ref 1542 (5 M DOT) are temporary incentive programmes – they rent liquidity for 12 months.
• The WFC is an acquisition that sunsets the HDX token forever and concentrates governance + execution in one place.
  Temporary incentives ≠ permanent ownership. One is reversible; the other is not.

2 / “Better one dominant DeFi chain than two or three mediocre ones”

Monopoly is efficient until it isn’t. Healthy competition:

• keeps fees in check,
• drives technical differentiation (new AMMs, money-markets, etc.),
• offers redundancy if a chain is hacked or mis-configured.

Fragmentation can be mitigated via XCM routing and intent-based execution – no need to delete the rest of the field.

3 / “Hydration outdid every rival; no new entrant will do better”

That logic would have crowned Uniswap v2 forever. Yet Curve, Balancer, GMX, and others all emerged after Uniswap’s dominance.
A JAM / Coreplay world will invite new execution models (rollup-style cores, custom VMs). Freezing the landscape in 2025 is premature.

4 / “WFC offers 2 × DOT for a more efficient ROI than Ref 1542”

ROI is only “efficient” if:

1. Cash flows cover the cost.
   • Hydration fees are ~1.8 M $/yr ⇒ < 4 % yield on 50 M $.
2. Execution succeeds.
   • Revive + Coreplay delivery is unproven and milestones are blank.

Paying twice as much for an un-costed roadmap is not efficiency – it is leverage.

5 / “Spreading 10 M DOT over 5–8 quarters isn’t that massive”

The Treasury is finite and volatile. Locking ~10 M DOT now removes optionality for:

• bridge incentives,
• RWA pilots,
• infra grants tied to JAM adoption.

Opportunity cost matters, regardless of vesting schedule.

6 / “Why pay for what’s already happening organically? liquidity is Treasury-rented”

Exactly.
If Treasury incentives are the core driver, keep using them as flexible levers.
Acquisition is over-payment for liquidity we already rent at 5 M DOT per year.
Why buy the cow when we only need the milk for another cycle?

7 / “Every successful parachain will expect an exit? Not true, look at Mythos, EnergyWebX…”

Thank you for proving my point: plenty of teams succeed without heavy Treasury dependence.
The WFC would signal that success = buy-out, distorting founder expectations.

8 / “Concentrated liquidity > fragmented liquidity: obviously strategic”

XCM, intent routers, and upcoming cross-chain price-matching solve fragmentation without acquisitions.
We should invest in those primitives, not in buying an AMM outright.

9 / “LLM prompt-engineering comment ”

Yes, I’ve read Refs 561 & 1542.
That is precisely why I worry: moving from 1 M → 5 M → 10 M DOT in ever-larger cheques is a slippery slope.
We need spending discipline, not bigger numbers.

---

Conclusion

• Temporary incentives (Refs 561 & 1542) can be adjusted, paused, or redirected.
• A full acquisition is irreversible, centralising risk and governance at the worst possible time.
• Polkadot’s edge is its modular, multi-parachain design; the WFC undermines that advantage for uncertain returns.

For these reasons, I remain AGAINST/NAY the Hydration acquisition and in favour of lighter, KPI-tied support mechanisms.

[sourabhniyogi]

@karlo

No one with good intetions and/or competence to tap into topic of DeFi would suggest something like this

Intentions are for the long-term benefit of DOT token holders. I assume you are playing hard to get =), very natural.

Our team doesn’t live or breathe Hydration (or own a lot of HDX), so of course you’re more competent at Polkadot defi. We did, however, build these dashboards included in Ref 1542:

Since you’re so much more competent, can you answer this question:

What top N accounts got 80% of the 1MM DOT?

If you can do this in a Dune Query, that Matthias and 0xCrane can check or build on, that would be awesome!

[Cyphertux]

My final position: This proposal is unnecessary, and I disapprove of it

Let me be very clear:
This acquisition is not needed, not strategic, and not aligned with Polkadot’s long-term vision.

Hydration can continue to thrive with support through grants, incentives, and coordination we don’t need to buy it. There is zero justification for spending 10M DOT to sunset HDX and centralize DeFi into a system chain. It weakens the ecosystem’s diversity, reduces competition, and locks us into a single direction based on speculative assumptions.

The only people who may find this “strategic” are those sitting on large HDX bags looking for a guaranteed exit.

As a DOT holder who believes in Polkadot’s design, I say it bluntly:

I disapprove of this proposal
I will vote NAY
And I encourage others to do the same, unless they genuinely believe central planning and token buyouts are the future of a modular blockchain network.

Let’s support Hydration but without rewriting the rules of the ecosystem just to make a few portfolios happy.

[Cyphertux]

@sourabhniyogi

Since you’re so much more competent, can you answer this question:

What top N accounts got 80% of the 1MM DOT?

If you can do this in a Dune Query, that Matthias and 0xCrane can check or build on, that would be awesome!

Whether someone supports or rejects this WFC, it doesn’t make them malicious or ignorant. This kind of comment just poisons the debate and distracts from real analysis.

As for your reply, sourabhniyogi:
I appreciate the attempt at keeping the tone light, but the sarcasm towards others in the community is not helpful. We’re all trying to act in the best interest of the Polkadot ecosystem and that includes challenging proposals we believe are fundamentally flawed.

To be absolutely clear:
This proposal makes no strategic sense.
Hydration is currently working perfectly fine as an independent chain with a strong token and community.
The idea of absorbing it, killing HDX, and locking 10M DOT to do so is not just unnecessary, it’s absurd.

Many of us genuinely don’t understand how something like this can even be suggested, let alone supported.
We’re not here to “play hard to get” we’re here to say no, this isn’t the future we want for Polkadot.

I stand by my opposition.

[filippoweb3]

The idea that Polkadot can ‘acquire’ Hydration like a traditional company fundamentally misunderstands what it means to be a decentralized protocol.

Hydration isn’t a centralized startup with equity to buy out—it’s a DAO-governed network with distributed tokenholders, protocol-level logic, and community-anchored incentives. Attempting a “conversion acquisition” through DOT-denominated incentives assumes alignment can be bought, when in reality, protocol alignment must be co-built and co-governed.

The 1 DOT : 550 HDX proposal not only is unfair for any HDX holder but it resembles a merger without mutual governance negotiation. Where is the hard-coded, on-chain mechanism for shared sovereignty? For incentive neutrality across parachains? For preserving community voice?

This also sets a dangerous precedent: if the Treasury can buy its way into protocol control, what signal does that send to other parachains about autonomy?

This isn’t just about Hydration. It’s about how Polkadot defines and defends decentralization especially with the upcoming JAM era.

We can—and should—coordinate deeply with strong projects like Hydration. But coordination ≠ acquisition. Let’s build aligned infrastructure, not simulate corporate takeovers.

Hydration DAO deserves collaboration, not absorption.

[Rom1.io]

We’re discussing a chain buyout like it’s some kind of Web2 M&A deal.
Honestly, it’s absurd.

Hydration isn’t some underperforming project we need to save.
It’s working. It’s used. It’s loved.
It’s a DAO-native chain built on Substrate, with real community trust and protocol-level utility.
So why would we kill its token, dissolve its governance, and hand over control to a multisig and a milestone committee?

The motivation literally says Hydration is one of the most successful and resilient DeFi parachains in the ecosystem, and the answer is to dismantle it?
That’s not strategic, that’s disrespectful.

The 1 DOT : 550 HDX rate? That’s a joke.
It’s not a “conversion,” it’s a devaluation.
You’re not valuing what’s been built, you’re pricing a takeover.
This isn’t alignment. It’s extraction.

And it goes deeper than that.

This whole thing assumes that alignment can be bought, That governance is something you can “streamline” with incentives and a multisig. But that’s not how Web3 works. That’s not why we’re here.
DAOs are not tools to be folded into a roadmap. They are sovereign systems, co-owned by their communities.

And let’s not pretend this solves the real issue.

Polkadot’s problem isn’t that there are too many chains.
The problem is no one can actually use them properly.

➤ We don’t need to unify treasuries or tokens or system chains.
➤ We need to unify UX, user journeys, and interaction layers.

Because at the end of the day, users don’t care about what’s a “system chain” and what’s not.
They care about whether things work, smoothly, consistently, and without friction.

In the Cypherpunk tradition, we build systems to resist control, not to centralize it under the banner of efficiency.
This proposal doesn’t unify anything. It flattens everything:
One token, one structure, one gatekeeper logic.

Web3 should be messy, diverse, and modular by design.
It’s not supposed to be clean on paper, it’s supposed to be uncapturable.

What we’re seeing here is a soft form of protocol capture, wrapped in strategic language.
It’s short-sighted. And it’s dangerous.
Because if this passes, any successful DAO could be next in line for “absorption”.

And let’s be clear:
This cannot be decided by OpenGov alone.
It must go through Hydration DAO.
Anything else is governance theater.

You don’t absorb a DAO like this and call it “alignment”.
You’re not scaling resilience, you’re killing it.

Hydration doesn’t need to be saved. It needs to be respected.

[jimmy-tudeski]

This proposal is not just flawed. It’s a fundamental misunderstanding of decentralized ecosystems, how DAOs work, and what kind of growth Polkadot needs.

You Don’t Acquire a DAO, You Compete With It!

Hydration is not a startup with a CEO you can send a term sheet to. It’s a community-governed DAO with a native token, on-chain treasury, and decentralized development. Proposing to acquire it, like a series A fund buying out a startup, isn’t just tone-deaf. It’s a category error.

Decentralized protocols don’t get bought out. They collaborate. They compete. They compose

And who’s doing this acquisition anyway?

Polkadot Treasury is not a venture capital fund. It doesn’t own the network. It’s meant to grow the ecosystem, not consolidate it under one DeFi stack. This isn’t M&A. It’s a protocol. And protocols don’t centralize control, they enable permissionless innovation.

And apart from the above, the irony here is that Hydration is probably the best-performing parachain in the entire Polkadot ecosystem right now, with the highest TVL, most active DeFi stack, and real cross-chain liquidity routing. And somehow the idea is - They’re doing great. Let’s buy them and make them official

Imagine if Ethereum proposed to acquire Uniswap to make it the official DEX. Or if Cosmos wanted to absorb Osmosis. It would be laughed out of the room.

That’s not how modular, decentralized ecosystems work. In ecosystems with real decentralization, success is earned, not bought; treasury funding supports ecosystems, not consumes them, and governance is opt-in, not forcibly merged. If Hydration is crushing it, that’s more than awesome. Let’s support them in growing their ecosystem, improving user experience, and building cross-chain liquidity. But don’t drag them into some forced DOT-centric absorption scheme.

Success in open ecosystems shouldn’t be punished with a forced acquisition. It should be supported and challenged through open competition. Let’s be honest, this acquisition is probably just a low-effort attempt to get Hydration liquidity from DOT Treasury by marketing it as a win-win. But there is no ask from the Hydration team. There’s no governance alignment. No roadmap needs absorption, and finally, no infrastructure bottleneck requires merging chains, so what are we even doing here?

Hydration’s performance deserves respect, support, and competition, not a treasury-enabled, dot-subsidized, token-diluting acquisition proposal that ignores everything Polkadot is supposed to stand for.

This WFC isn’t just badly framed. It shows a deep misunderstanding of what Polkadot is supposed to be. Acquisitions belong to Web2. In Web3, composability, alignment, and incentives matter more than buyouts.

Hopefully, the community will recognize all flaws of the proposal and put this down where it belongs…

[ThomasR]

Thanks for the good laugh, really i liked it.

Some should focus on making proposals for CEXs, not Polkadot…

[sourabhniyogi]

@Rom1.io

It must go through Hydration DAO.

@filippoweb3

The 1 DOT : 550 HDX proposal not only is unfair for any HDX holder but it resembles a merger without mutual governance negotiation. Where is the hard-coded, on-chain mechanism for shared sovereignty? For incentive neutrality across parachains? For preserving community voice?

Absolutely! I have “Through this Wish-for-Change, we welcome Hydration DAO to propose alternate parameters that better position Polkadot for even greater success. Adjusting the liquidity incentives, token conversion rate, refining product milestones, and mitigating execution risk would all be highly desirable. This should only be taken as a rough draft.” in the doc, but I’ll edit to make this super obvious, I assumed everyone would just know, sorry about that!

@jimmy-tudeski

Proposing to acquire it, like a series A fund buying out a startup, isn’t just tone-deaf. It’s a category error.

It is a different category, but Polkadot is extremely well equipped to handle acquiring its own parachain, which is basically already nationalized =).

Here is Polkadot founder @gavofyork talking about M&A in 2020:

Gavin Wood: Chain Mergers and Acquisitions

Gavin Wood: Chain Mergers and Acquisitions

Key slides:

For a decent (but non-comprehensive) summary of DAO M&A: (courtesy of @otar)

State of DAO M&A - DAOstar, Areta, and Emory, February 2025

[bLd]

Looking forward for this post to transform into WFC « Communism can win on Polkadot! »

[guido]

[polka.dom]

Seems a simpler solution would be for the Polkadot DAO to buy HDX on the open market. Easier to parameterize it’s influence over Hydration’s OpenGov that way + it’s unilateral and therefore simpler in design.