Written by yay.oi
Hello darkness, my old friend. Just when you thought the “DOT is dead” trope was DED, the same tired narrative resurfaces, and goes viral. Like, putting aside ICOs, bull markets, and speculation, most alts are down, especially against BTC. Or how about a reality check, as some have shut down, changed course, misled, or might need to rethink things.
Do vanity metrics matter? It sure seems like there’s some product-market fit going on in areas like gaming, machines, and AI/knowledge. Where we now see growth in these markets and clear approaches to Web3 adoption. Then there’s the push into new narratives that pitch JAM as a trustless supercomputing protocol, and evolving safety through proof of personhood.
The developer count seems steady, and there's plenty of building. Although, categorization might need some explanation, especially with wallets. Still, one might want to do some research before they fud on them. In DeFi, summer 2024 DOT liquidity incentives gave Hydration and Stellaswap TVLs a boost, but this year’s push may end up even stronger.
As Hydration’s Jakub Gregus points out, the biggest blockchain comebacks have come from doubling down on DeFi. Ethereum did it in 2020, as did Solana in 2023. Deep liquidity and a buzzing user base create a snowball effect that draws builders and investors alike. Now is not the time for half-measures. Catching up means going all in, no holds barred.
In that spirit, the GIGAHydration proposal requested a whopping 5M DOT for 12 months of DeFi incentives on Hydration. The eye-watering figure was a hard-sell for the Polkadot DAO. Not taking any chances, Hydration’s last-minute pledge to return 3M DOT, reduce the campaign to six months, and collaborate on a broader ecosystem incentives program, got it over the line.
Meanwhile, Hydration continued stimulating its lending market by doubling the supply cap for vDOT. As with previous raises, the hunger for vDOT loops resulted in the cap filling within hours. Fortunately, thanks to continued incentivization, GIGADOT provides a viable alternative for those looking to keep on looping.
With Polkadot Treasury funds hitting the Hydration wallets on Thursday June 26th, the team wasted no time ensuring that the GIGAHydration campaign launched the very next day. The to-do list included returning 3M DOT to the treasury, minting the remaining 2M DOT into vDOT, converting it to GDOT, and spinning up the first Hydration farms.
To fast-track the referenda needed to make all of that happen, the Hydration DAO requested whitelisting of all GIGAHydration-related proposals. The final proposal opened for voting at 11:00 on Friday and executed at 16:00, officially launching the GIGAHydration campaign. It’s time to get yapping.
With incentivized farms starting at 69% APR (and even higher for those that hadn’t yet depleted their 2024 incentives), daily yields were turning heads and drawing in fresh liquidity. For existing farmers, if you haven’t already, make sure you join the new GIGAHydration farms, migration isn’t automatic. This will also reset your loyalty curve, so yields won’t peak right away.
Those who are diligent with stable farming or giga looping would have likely noticed their yields get a bump in the first day or two before settling back around the same levels as the previous campaign. That said, a new product has entered the market, and it’s definitely attention-grabbing.
GIGAETH, a new token that accrues yield from staking (wstETH) and lending (aETH), is now live on Hydration. Unlike its DOT counterpart, it is not a collateral asset on the money market, so don’t get excited about looping it. However, farming incentives are still looking quite attractive, hovering around the 40% mark.
While GIGAETH may bring in some foreign liquidity, cross-chain activity within Polkadot is also heating up, surging by more than 60%. This campaign is uniting the ecosystem, offering strong incentives across EVM chains like Astar and Moonbeam, with Kusama also seeing a boost while coincidentally now supporting Solidity smart contracts. Bifrost has also benefited, hitting a new ATH with 16M vDOT minted.
The impact on Hydration is undeniable, with its TVL already soaring past an ATH of $222M. But shipping season isn’t over yet. One crucial piece of the puzzle is still on the horizon. HOLLAR, Hydration’s native decentralized stablecoin is the next major launch, and to kickstart adoption, you can probably count on some generous incentives in the Omnipool and money market.
For farmers chasing a higher risk-to-reward payoff, a hands-on strategy is key. Stellaswap lets liquidity providers tailor their trading ranges, maximizing APR potential to the fullest. Still benefitting from 2024’s 1M DOT Incentives campaign, base APRs of high-volume pairs are often well in excess of 200%.
Stellaswap may return to the Polkadot treasury for further incentives later this year. But with the launch of veSTELLA this week, it’s aiming to spark a DeFi flywheel that drives reward self-sufficiency. This will soon bring changes to how liquidity providers earn, with trading fees redirected to veSTELLA holders. They will be more reliant on farming rewards.
When minting veSTELLA users must lock their STELLA for up to two years. Each week, holders vote on how emissions are allocated across liquidity pools, and share in 83.5% of the trading fees from the pools they supported. Longer lockup periods gain more voting power and a greater share of earnings.
Two automated voting strategies are also available to allocate votes, either claim USDC rewards or compound them into veSTELLA. To incentivize voting, bribes can be added to any pool, with 100% distributed proportionally to its voters. Additionally, 10% of revenue from liquid staking derivatives (stDOT) is allocated to veSTELLA holders.
Through token-locking, burning, and deflationary mechanics, Stellaswap aims to build its self-sustaining DeFi economy. A 50% token burn is now complete, bringing total STELLA supply down to 250M, and in addition 50% of veSTELLA will be burned upon early withdrawals. Meanwhile, emissions decrease by 0.25% weekly, driving token scarcity over time.
Looking ahead, there’s potential for broader ecosystem incentives this year, with Hydration spearheading the initiative. Projects like Stellaswap could be part of a larger effort to boost liquidity and adoption, as long as the DAO embraces the all-or-nothing DeFI strategy that Jakub Gregus calls for.
While these incentives could drive serious momentum, it’s worth remembering that Polkadot is far from dead. Continued posting of FUD pieces can generate a lot of engagement, but it can also rally support from unexpected places. Who would’ve thought that Toly (Solana) and Sreeram (Eigenlayer) would join the debate.
We may not have heard the last of that sad old trope, but who’s got time to listen when another Polkadot DeFi summer is just getting started? Grab a seat by the Omnipool, and crack open a can or two of your favorite Hydration. Summer is really starting to heat up, in more ways than one.