Good morning/afternoon,

My name is Barney, I am a Polkadot community member and avid swimmer in the HydraDX Omnipool. Recently, with the help of some other community members I have founded the Polkadot Marketplace Builders. This is a grassroots community of people who's sole objective is to facilitate the most liquid and greatest place to swap assets within the Polkadot ecosystem. Polkadot is a clearly misunderstood ecosystem where many great dAPPs are being built, but the greater Crypto community has been unable to participate due to 

1. Misunderstood wallets and inferior wallet UI 
2. Lack of live Parachains to test the customization of Polkadot Parachains in action and 
3. A marketplace with deep liquidity and a high number of Parachain assets to be able to exchange into in order to easily participate in the ecosystem at large.

Wallet UI has been greatly improved over the last year+ by various different teams and is now, in my view, entering a stage where non-Polkadot wallets haven’t gone before. Parachain teams have begun publishing their products left and right with diverse economies springing up on top of them. But still, there is deep fragmentation in the area of DEX’s/marketplaces and difficulty for users to access tokens in a decentralized and trustless manner.

For instance, if I wanted to participate in KILT Protocol's governance/protocol, I would be unable to because I do not have the ability to trustlessly swap into KILT and store in a wallet that I control the keys to. This creates friction between participants who wish to be active members of our communities. To make matters worse, if it were possible for me to trustlessly swap my assets into Kilt, the likelihood of me finding an exchange where liquidity allows for less than .5% slippage on an order would be a tall task indeed. 

This is where HydraDX's Omnipool marketplace comes in. Through the design of the Omnipool, HydraDX has been able to address the problems that plague 1st and 2nd generation AMM DEX's. Within the Omnipool, each asset is able to be swapped for any other asset without making multiple jumps or having to have set up multiple pools. The magic is in the simplicity that the user experiences when wanting to go between two separate assets. This allows users to receive minimal slippage and have access to all of the tokens in the Omnipool.

HydraDX did the hard work to build such a protocol and will be the most liquid place to trade DOT once Q2’s Protocol Owned Liquidity spending is complete (HydraDX governance has authorized the protocol to buy and provide over $3,330,000 in DOT to the Omnipool, adding to the already existing DOT POL), and now the opportunity arises where I, and others, are calling for other Parachains to help usher forth Polkadot adoption by seeding liquidity to the DEX so that participants have one place to go to access every corner of our ecosystem.

Now that I have introduced the discussion, we ask that KILT Protocol governance discuss and hopefully approve the below bullets:

1. Open channels with HydraDX to allow cross chain message transferring between the parachains. Currently, the following channels have been opened with discussions underway with the communities to add Treasury tokens and/or have already added liquidity

- Zeitgeist - Channel opened and Treasury has deposited liquidity
- Astar - Channel opened, Liquidity will be provided, final preparations being made on the Astar team’s side
- Centrifuge - Channel opened, discussions ongoing to add liquidity from the Treasury: https://gov.centrifuge.io/t/rfc-listing-cfg-in-hydradx-omnipool-seeding-initial-liquidity/5412 
- Interlay - Channel opened, discussions ongoing to add liquidity from the Treasury: https://interlay.subsquare.io/post/18 
- Moonbeam - Channel opening referendum currently passing, discussion ongoing to add liquidity from the Treasury with positive feedback so far from the Moonbeam team: https://moonbeam.polkassembly.network/referendum/95 
- Others to come

2. KILT Protocol treasury deposits X amount of KILT tokens to the Omnipool to be used as liquidity for trading.

Bullet one is self explanatory and all parachains are hopefully already working to integrate with each other to take full advantage of Polkadot's system.

Bullet 2 is less self explanatory due to the truly next-gen technology of the Omnipool. Let me break it down.

A traditional AMM, or XYK AMM, requires liquidity to be fragmented between pools. This would mean, for KILT to be widely swapped there would need to be KILT-USDT, KILT-DOT, KILT-X, etc pools for participants to choose what assets they want to use to acquire KILT. This is a net negative as in order to do this KILT would either need to;

1. Dilute the treasury to acquire equal sided amounts of USDT, DOT or another asset to create a pool

2. Incentivize others to create these pools which also dilutes the treasury 

The team at HydraDX saw this early and has implemented a protocol that solves for both of these dilemmas, making it a net-positive protocol for Treasury management and growth.

Through the Omnipool’s design, the KILT Protocol treasury could deposit its own KILT token into the Omnipool where it would be able to be traded between every other token in the pool. This allows for no sales of KILT to create separate pools, no forced holding of assets that may or may not be desirable for the KILT treasury to hold, i.e. selling KILT for USDT, DOT, or another asset in order to set up the pool.

Because of this single sided liquidity provision feature, the KILT treasury is able to make fees from asset exchanging without any need to incentivize liquidity provision elsewhere. With the omnipool being designed to be the ultimate liquidity hub of Polkadot, it should be the largest source of liquidity for all assets and thus be the protocol of choice for those wishing to swap. Thus, driving volume and fees back to the KILT treasury. 

When broken down like this, it is clearly ground-breaking for how a protocol's treasury can manage itself. There are a whole host of other features being worked on and implemented by the team for this exact purpose, treasury management, and I believe upcoming features will further provide value to KILT/Parachain Treasuries. **All of this is able to be done trustlessly and with the KILT treasury maintaining complete control of its assets that have been deposited.**

My discussion is centered around the above 2 points, HRMP channel opening and initial liquidity deposited into the omnipool from the KILT treasury, but if/when both of those are agreed as mutually beneficial, it will need to be discussed as to how much the KILT treasury should deposit.

My views are that the liquidity provided should immediately be enough to make the Omnipool the most liquid source for acquiring KILT, thus being the de facto place for swapping to occur which results in more fees earned for the KILT Treasury. 

I look forward to hearing your comments and concerns and hopefully look forward to seeing this partnership between promising Parachain protocols come to fruition.


:
1. Members of the Polkadot Marketplace Builders are encouraging Parachains to open cross-chain messaging channels with HydraDX and add Treasury tokens or liquidity to the HydraDX Omnipool. 
2. Discussion is underway for KILT Protocol's treasury to add liquidity to the Omnipool. This would mean no need to dilute the treasury to acquire equal sided amounts of USDT, DOT or other assets. 
3. It is proposed that the liquidity provided should immediately be enough to make the Omnipool the most liquid source for acquiring KILT.

#225 Integration with HydraDX - KILT into the Omnipool

No Active Proposals