# Hydro: Q1 2025 progress report
**URL:** https://forum.cosmos.network/t/hydro-q1-2025-progress-report/15386
**Category:** Proposal updates
**Created:** [April 7, 2025, 8:10pm UTC](https://forum.cosmos.network/t/hydro-q1-2025-progress-report/15386 "2025-04-07T20:10:04Z")
**Posts on this page:** 4
**Page:** 1
### Author:  [@Thyborg](https://forum.cosmos.network/u/Thyborg)
#### Post date: [April 7, 2025, 8:10pm UTC](https://forum.cosmos.network/t/hydro-q1-2025-progress-report/15386/1 "2025-04-07T20:10:04Z")
As committed in our [January funding proposal](https://www.mintscan.io/cosmos/proposals/986), the Hydro Team will provide quarterly progress reports. Our primary goal is expanding the size and value of ATOM deployments processed through the application. Additionally, we aim to increase the number of protocols participating in the auction process. Together, these efforts drive progress toward our third goal - maximizing payouts to ATOM stakers and making sure [their investment pays off](https://x.com/HydroTeam_/status/1906772422541664701).
Here’s how we performed on these goals in Q1 2025:
| Metric | Value |
| --- | --- |
| Value of deployments | 983,754 ATOM |
| Number of deployments | 20 |
| Number of bids | 32 |
| Number of protocols | 13 |
| Total tributes paid out | $14,005 |
- numbers include round 5 bids & tributes (value as of 28-Mar)
The trendline is strongly positive, with nearly all metrics increasing consistently each round, culminating in Round 5 as our most successful to date.
On the technical side, our priority is to automate the deployments & clawbacks and open up new safe use cases for deployments. This is what we worked on over the past 3 months:
| Feature | Description |
| --- | --- |
| Stream | Stream is an integration between Hydro & Valence to automate deployments. Round 5 deployments to Astroport will be made without the committee having to sign txs. Osmosis deployments will follow shortly |
| Vortex | Vortex is an off-chain program that ensures that Hydro doesn’t suffer impermanent loss on volatile LP positions. It enables Hydro to automatically unwind & claw-back positions if the collateral falls below a liquidation threshold |
| USDC bucket | The USDC liquidity bucket (sourced from the Hub community pool) was integrated into the Hydro front-end and made available for project bidders during round 5. The first deployments of USDC will happen shortly |
| OSMO lockups | In preparation of a new BTC liquidity bucket sourced from the Osmosis community pool, we’re working on enabling OSMO lock-ups into Hydro so that OSMO and OSMO LSTs holders can allocate new liquidity buckets |
| Governance | We’ve customized DAO DAO to provide Hydro users with the ability to vote on governance proposals, define the protocol parameters, manage the treasury and elect (or remove) the Hydro committee members |
| Auto-compound | We’ve made it possible for Hydro users to claim, swap to ATOM and (soon) compound everything into lock-ups directly from the Hydro interface. This feature bypasses the Hydro global lock-up cap & rewards early adopters |
| Project dashboard | We’ve built a dashboard so projects can submit bids via a user interface instead of having to use the CLI. We’re now working on making the UI automatically work out deployment caps based on security restrictions |
New hires have joined the Hydro Team over the past 3 months: 1 FTE Growth Lead, 0.5 FTE Operation Coordinator and 0.5 FTE Technical Advisor
Several other people are supporting the team on an as-needed basis: Legal Counsel, Finance Coordinator, HR Coordinator
Our Product Lead (Brian) is leaving the Hydro Team to focus on his family. We are thankful for his contributions and wish him the best in his next chapter.
The Hydro Team’s total expenditures amounted to $228,577 for Q1. Hydro Labs is currently in the process of setting up an entity in the British Virgin Islands to spin out of Informal, which should be complete in early Q2. Given this transition period, all Q1 costs have been covered by Informal Systems. The funding allocated from the Cosmos Hub community pool remains untouched and will be used to reimburse Informal once the entity is officially registered and able to open a bank account. At the current burn rate, we expect this funding to cover expenses beyond the anticipated 6 months mandate planned in [Prop 986](https://www.mintscan.io/cosmos/proposals/986).
During Q1, we also allocated $66,603 in Hydro-related grants via the [Hydro Grant DAO](https://daodao.zone/dao/cosmos1stxad87r0c9x9skn5ap6eyx9wwmj5xuqcpd3n974qpg5stv92sqqj2zrh4/home). Below is a breakdown of how this budget was used:
| Recipient | Notes | Amount |
| --- | --- | --- |
| Hydro committee | Liquidity deployments & general advisory | $11,656 |
| Telegram admins | Moderation & user support | $1,403 |
| Indexing & deployments | Liquidity deployments & indexing | $6,750 |
| Data processing | Ingestion pipelines and API endpoints | $2,400 |
| Stream & Vortex | Engineering support | $26,839 |
| Current | NFT marketplace for locked ATOM positions | $6,000 |
| Other code contributions | Snapshot script development & other PRs | $11,555 |
Similar to the Hydro Team DAO, we expect the funding received by Hydro Grants DAOs to sustain costs beyond Q2. By then, our goal will be to transition to using the Hydro Treasury rather than requesting additional funding from the Hub’s community pool.
We’re pleased with the progress made in Q1, excited to see the impact of Stream & Vortex on Hydro’s growth during Q2, and thankful to the Hub community for the continued support 🌊
---
### Author:  [@Govmos](https://forum.cosmos.network/u/Govmos)
#### Post date: [April 8, 2025, 9:05am UTC](https://forum.cosmos.network/t/hydro-q1-2025-progress-report/15386/2 "2025-04-08T09:05:05Z")
We would like to thank the Hydro team for this clear and informative Q1 progress report. It’s encouraging to see a project that not only delivers on its mandate but also maintains a forward-thinking and sustainable approach.
> [@Thyborg](#):
>
> Our primary goal is expanding the size and value of ATOM deployments processed through the application. Additionally, we aim to increase the number of protocols participating in the auction process.
This strategic focus is perfectly aligned with what the Cosmos Hub ecosystem needs: deeper liquidity, higher ATOM utility, and broader protocol participation. The attention given to increasing both value and adoption speaks volumes about the maturity and ambition of the team.
> [@Thyborg](#):
>
> At the current burn rate, we expect this funding to cover expenses beyond the anticipated 6 months mandate planned in [Prop 986](https://www.mintscan.io/cosmos/proposals/986).
> [@Thyborg](#):
>
> Similar to the Hydro Team DAO, we expect the funding received by Hydro Grants DAOs to sustain costs beyond Q2. By then, our goal will be to transition to using the Hydro Treasury rather than requesting additional funding from the Hub’s community pool.
We particularly appreciate the responsible financial management demonstrated here. The ability to extend the project’s runway while laying the foundation for self-sustainability through the Hydro Treasury reflects a commendable sense of accountability toward the community pool. This is exactly the type of fiscal prudence and long-term planning we wish to see more often in the ecosystem.
> [@Thyborg](#):
>
> We’re pleased with the progress made in Q1, excited to see the impact of Stream & Vortex on Hydro’s growth during Q2, and thankful to the Hub community for the continued support 🌊
We share your excitement about the upcoming developments, especially with the introduction of **Stream** and **Vortex**. Both features could represent key catalysts for Hydro’s next phase of growth, and we look forward to monitoring their impact.
* * *
In conclusion, Hydro continues to represent a strong example of aligned incentives, ecosystem utility, and operational transparency. We remain supportive of the initiative and look forward to seeing its role within the Cosmos Hub continue to expand in Q2 and beyond.
* * *
Thank you once again for your ongoing efforts and community engagement.
Govmos
[](https://forum.cosmos.network/t/pro-delegators-validator-profile/12956)
---
### Author:  [@Cosmos\_Nanny](https://forum.cosmos.network/u/Cosmos_Nanny)
#### Post date: [April 12, 2025, 4:46pm UTC](https://forum.cosmos.network/t/hydro-q1-2025-progress-report/15386/3 "2025-04-12T16:46:51Z")
Hm.
Can you clarify your reasoning/methodology and any other metrics underlying your claim of “strongly positive trendline”?
Based on the reported figures above, not seeing it.
And you don’t provide a breakdown of round-over-round improvement in bid density, payout ratios etc
Show, rather than tell.
---
### Author:  [@Thyborg](https://forum.cosmos.network/u/Thyborg)
#### Post date: [April 13, 2025, 12:26pm UTC](https://forum.cosmos.network/t/hydro-q1-2025-progress-report/15386/4 "2025-04-13T12:26:49Z")
We’ve been working with Numia to make round-by-round data easily available:[https://hydro.cosmos.network/metrics/](https://hydro.cosmos.network/metrics/)
The 0.8% is a decent estimate of the tribute yield already distributed to Hydro participants (because it’s paid upfront) but that’s just one part of Hydro’s revenue. There’s also deployment yield (swap fees, lending income, external incentives) which hasn’t been distributed yet - it’s collected at the end of each deployment and sent to the Hydro treasury.
Most deployments run for 3 months, so we don’t have a large dataset yet, but I expect the average yield for LPs on ATOM derivatives and single-sided liquidity to be around 5% average. With [Vortex](https://x.com/HydroTeam_/status/1909965275346182627), Hydro will start entering volatile pools, and we should start seeing double-digit APRs. I’ve been testing Magma in preparation for integration and my [ATOM-USDC vault](https://app.magma.eco/vault/osmo1sj9uuumg03l22a0ljxwvctx4u60u73qsdjqy2jnnlr0f342fezrsd27gvq) is above 30%.
It’s worth noting that 0.8% tribute APR on deployments translates to something like 16% for Hydro participants, so they double their staking APR. Also, because tributes are paid in various tokens (STRD, SHD, ELYS, NLS, etc.), the actual round-by-round APR depends on their relative price to ATOM at the end of each round.
So It’s not a straightforward calculation, but for the next progress update, we’ll have cleaner, automated metrics in place on the /metrics page. This page right now is still a work-in-progress because we haven’t yet standardized performance tracking across protocols and venues.
If you put aside the fact that it started at Informal, and you’re obviously not a fan - what is the good-faith case against Hydro? Here are a few critiques I’ve seen so far:
“ **Hydro will not be profitable** ”: Yes Hydro will be a net cost in 2025. Isn’t it easy to see how that changes with growth ?
| Scenarios | Now | Later? |
| --- | --- | --- |
| ATOM price | $5.00 | $10.00 |
| ATOM deployments | 2,000,000 | 6,000,000 |
| Average yield | 5% | 10% |
| Yearly revenues | $500,000 | $6,000,000 |
| Yearly cost | $1,500,000 | $1,500,000 |
| Yearly PnL | -$1,000,000 | $4,500,000 |
“ **PoL drives away real users** ”: This really doesn’t hold up. “Real users” are getting a smaller share of a much larger pie. Better liquidity, tighter spreads, and lower borrowing costs induce more demand (that’s why Hydro bidders keep coming back to bid) meaning more returns for everyone in these pools.
“ **PoL is risky** ”: This is the strongest argument, but risk cuts both ways. Eureka carries risks (bridges are responsible for a massive share of hacks) yet most people would agree it is likely the best thing that’s ever happened to the Hub. Hydro already has a [risk framework](https://hydro.cosmos.network/docs/committee/risk-management) and as it matures, it can enforce even stricter standards on bidders. We are also looking to implement voter slashing (opt-in) as a form of insurance for the protocol.
On the other side of the ledger:
- Hydro boosts demand through deeper liquidity
- Hydro enables efficient treasury management
- Hydro reduces sell pressure via lockups
- Hydro rewards active community members
I know we still have a lot to prove, but it could become a core part of ATOM tokenomics - what Proof-of-Liquidity is for Berachain and Initia VIP is for Initia. Like @Mag, I think the Hub should focus on [increasing demand](https://t.me/atomOGchat/591581) rather than reducing supply and Hydro has a role to play.