After dialogue with the @hydration_net team and our own additional research, PolkaWorld has decided to change NAY to AYE! Supporting this liquidity incentive plan! polkadot.subsquare.io/referenda/1542
Initially, PolkaWorld's doubts about the proposal focused on the following points:
5 million DOT is a huge amount.
There is no clear incentive plan, specifically regarding how the 5 million DOT will be allocated.
The treasury acts as an 'investor' but does not have a clear 'return on investment'
After multiple communications, we believe that the Hydration team has answered all our questions so far.
The 5 million DOT will still be kept in the @Polkadot treasury, only disbursed linearly by the hydration proxy account, without directly withdrawing 5 million DOT from the treasury; unspent incentive funds can be reclaimed by the treasury.
Hydration subsequently provided the incentive distribution of 500w DOT, allowing the community to see the various incentive plans more clearly.
"Return on investment" is to increase Polkadot's overall TVL; additionally, Hydration promises to bring integration for Assets Hub, aiming to:
• Kraken: Supports native stablecoins
• Coinbase: Supports native stablecoins
• CoinMarketCap: DEX integration
• CoinGecko Terminal: DEX integration
• DefiLlama: Fully integrated
4. Additional information: In fact, the Hydration team had addressed our main questions about 1 and 2 a long time ago, but we have not received a specific response on the third point until the last couple of days. Additionally, regarding the Sui incentive activities proposed by Hydration in the Aptos ecosystem, we communicated with the dex team and some developers in the Sui ecosystem in China, and learned that the Sui Foundation had previously used its own Sui to incentivize liquidity for different dexes in the ecosystem, with more than 10 projects incentivized, aiming to enhance the overall TVL of Sui. From the current situation, it is evident that their operational strategy has been effective. Although not all ecosystems will do this, this case provides us a reference point; Polkadot's overall TVL needs a boost like this.
Additionally, the PolkaWorld team recently had a call with the OKX team, as we discovered that their OKX wallet
does not integrate Substrate chains and Assets hub. Apart from technical issues, they mentioned liquidity as the biggest reason for considering integration. This call also made us realize the importance of liquidity.
Above all, we are not here to guarantee the Hydration team, but to provide a perspective for the community based on the information we have gathered!
Therefore, after so many communications, PolkaWorld has decided to support this proposal! Wishing us all good luck! Also wishing Polkadot's TVL to soar soon!
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PolkaWorld also participated in the AAG program this week, observing the Hydration team's responses to various questions. PolkaWorld has compiled their replies to some main questions here:
1. What specific returns does this proposal bring to the Polkadot ecosystem?
Bringing more transaction flow and integration;
Helping Asset Hub gain support for stablecoins;
Enabling liquidity strategies that can bring buying pressure;
Attracting more developers and external funds;
Driving a 50% increase in TVL for projects like Bifrost.
2. Why should the treasury funds bear all the incentives?
Currently, Polkadot's TVL ranks 155th and urgently needs improvement;
Other funding sources are currently not feasible;
Incentives are a necessary means to build DeFi attractiveness.
Regarding this answer, attendees still have doubts. They believe that:
Incentives are useful, but whether they should be solely borne by the treasury is debatable;
If such incentive proposals increase, we need to clarify support standards;
In the future, should we uniformly incentivize other projects?
3. Will the 5 million DOT go to waste?
Unlikely, similar practices have been validated in other ecosystems and traditional industries (such as Optimism, Uber, and infrastructure subsidies in China). It is also expected that Polkadot's treasury can restore the 5 million DOT 'recharge' in three to four months.
4. Is Hydration manipulating voting with funds (e.g., voting for OpenGov)?
Proposal funds are converted to VDOT→GigaDOT, which cannot be used for voting;
Even using VDOT requires locking in Bifrost, and the treasury is a proxy account that cannot operate;
If there is an attempt to manipulate voting, the community can completely 'shut it down';
So these funds will not affect the voting system.
5. Why are the top 20 incentive addresses all from the Hydration team?
Not true. Many are EVM addresses and belong to external funds;
Community members such as Giraffe (from the Acala community) and SM (non-hydration members) are also involved;
Having the same first four digits in addresses does not mean they are the same person;
"The Hydration team taking the incentives" is a conspiracy theory.
6. Can we limit the maximum incentive amount each wallet can receive?
This is technically meaningless;
Users can easily generate thousands of wallets to bypass restrictions;
If you want users to take risks to provide capital, you must provide returns;
Just like staking rewards cannot be limited, otherwise no one will provide security.
7. Is the Hydration team 'milking' the system? I heard that members of the Hydration team hold a large amount of AV DOT; is it self-serving?
Jacob's personal response:
I do hold about 25,600 AV DOT, but these are leveraged assets (looped position), not too much;
If I am the largest wallet, it indicates our ecosystem is too poor;
I love the products we make and don't want to dump DOT to buy luxury goods.
8. Will this proposal set a 'precedent' and lead other projects to follow suit?
All incentives will be handled on a case-by-case basis;
This proposal has clearly outlined the implementation methods, transparency, and operational boundaries;
Encourage other projects to apply for incentives, but they must provide clear value.
9. What do you think of external criticism? (Summarized by several supporters):
I suggest everyone read the proposal content carefully, not just the title;
Focus the discussion on substantive content, and do not fall into conspiracy theories;
Instead of spending time creating FUD, it is better to build the ecosystem.
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As of the date of this article, the approval rate for proposal 1542 is 56.3%!
