RFC: Open HRMP channels between Centrifuge and HydraDX

[jgreen]

Can you do it for us?

[ImdioR]

Good day
Yes, i will help you with uploading and OpenSquare snapshot

[ImdioR]

Good morning here @jgreen !
The draft of proposal was uploaded on github (Pullrequest #34)

centrifuge/cps/blob/37d7c37147306b34c86f83624480f5986ebfda43/cps/CP34.md

GCG would like to ask you to provide the missed part :

High-level objective

Once you will provide this i will update the draft and we will be ready to pass to the next step.

Hello @nuno you was add in proposal as responsabile from Centrifuge side.

That will work for you?

[jgreen]

HLO: List CFG into the HydraDX Omnipool and provide a native and trustless way to utilize CFG.

[ImdioR]

@jgreen

List CFG into the HydraDX Omnipool and provide a native and trustless way to utilize CFG.

Added this information to the draft.
Thank you.

[Vad]

I’ve been waiting for this one long time

[Tjure07]

Great, Vladym! Did you vote with your CFG on the public proposal already to support this idea?

CP34(GI): Open HRMP channels between Centrifuge and HydraDX

Hello This proposal was discussed in the RFC here . The proposal has been submitted to the Proposal Repository on GitHub so it is now final. Link to the proposal on GitHub: cps/CP34.md at main · centrifuge/cps · GitHub Changes or improvements proposed: Opening HRMP channels which allow cross-chain communication, as per Cross-Consensus Message Format (XCM) The proposal has now moved on to an OpenSquare Snapshot. Please vote here: CP3…

[lakejynch]

Hi there. A few questions:

1. Could you tell us a little bit more about how HydraDX handles markets between multiple asset pairs?
2. Specifically, where / how is impermanent loss incurred?
3. Are there any other known financial risks when providing liquidty for HDX?

[jrafaelangarita]

hey sirs, im not jgreen, only part of the Hydradx community

maybe can help a little with the answers

1)This is possible thanks to the HUB token, LRNA, which is minted and burned, depending on whether liquidity is added or removed from Omnnipol

An way to understand the hub token concept is to imagine every single asset within the Omnipool as a synthetic 50/50 liquidity pool, with the only difference being that the 2nd leg of the pair is always LRNA i.e. TKN:LRNA.

This design allows the Protocol to use LRNA as a proxy which reflects the value locked in the Omnipool, including trading activity and price fluctuations, in an abstract manner.

2)There is a mechanism behind it, which you can read in detail here Omnipool Design | HydraDX Docs
but in theory you are only exposed to the price of the LRNA token, which represents the liquidity of the Omnipol

3)Since all the assets are in the same pool, it could be considered a risk that an asset becomes toxic, however, various measures have been taken to prevent a toxic asset from trying to drain the liquidity of the Omnipool, including weight caps. that each asset has from the Omnipool tvl, this to avoid great damages in case an asset becomes toxic, where the largest established assets such as DOT and DAI, obtain a much higher weight cap

Another defensive mechanism is the targeted pausing function which enables the HydraDX Technical Committee to temporarily pause transactions calling specific functions of our pallets.

Also our POL - Omnipool provides a large amount of liquidity to the Omnipool and won’t be participating in any bank run situation. Think of the protocol as LP of last resort - it won’t race you to the bottom, it’ll go down with the ship

As well as other measures that are being developed:

• Oracles & Dynamic Fees Oracles pallet will provide volume and price data which will be used to adjust LP & Protocol fees during times of greater volatility. This helps to protect LPs from IL during major crypto moves by moving some of the cost to traders.

• protected xyk pools/ circuit breaker - TLDR automatically remove liquidity from Omnipool once certain triggers are hit (again, from our oracles] to significantly reduce impact of toxic flow. (Think e.g. removing an asset from 5% of pool to 0.5%)

• XCM monitoring and triggers - TLDR (dem oracles again maybe) limiting flow of assets through XCM that are suspicious/irregular to prevent them flowing onto HydraDX chain or stop them from leaving

This information is found both in the docs and in the Hydradx chats, where ideas and developments are shared.

[Tjure07]

Thanks for the detailed reply and explanations. @lakejynch have all your questions been answered?

[lakejynch]

Yes - this reminds me of Tokemak. However, I believe Tokemak used ETH as a standard LP token, which has an added benefit of not being correlated to the platform itself. My concern here is that this is essentially a multi-pool whereby the IL will be taken entirely by the “LP of Last Resort” which is the HydraDX community. The LRNA token would then essentially be correlated to the worst token in the pool and we’d have to be willing to DD all of the other tokens in the pool.

To be clear, if HydraDX is not asking us to put up a large sum of money for this integration, I don’t have a concern. However, if the ask is for us to fund the Centrifuge pool with tokens from the treasury, I believe this is a riskier investment than what we are currently prepared for.

For the sake of keeping the conversation transparent and explicit, @jrafaelangarita @jgreen could you confirm whether you are asking for CFG tokens from the treasury, and if so, how much?

[Rhano]

Thank you for asking these important questions @lakejynch - I agree that we would need some clarification on this before putting it to a vote.

I just want to clarify that this proposal is not directly related to the listing of CFG in Omnipool. It is merely to open the HRMP channels between Centrifuge and Hydra, which is a prerequisite.

We can still have the discussion here now, by all means - but to my understanding, there will be a follow up proposal (if this one passes) with a specific intent of listing CFG in the Omnipool where these details would need to be provided before asking the token holders to vote on it.

For context, I also want to point out that the Centrifuge treasury will not be able to fund the pool in any case right now as there are not adequate funds in it. Only after the Block Rewards have been implemented, will the treasury start to get funded in the short term.

[lakejynch]

@Rhano

We can still have the discussion here now, by all means - but to my understanding, there will be a follow up proposal (if this one passes) with a specific intent of listing CFG in the Omnipool where these details would need to be provided before asking the token holders to vote on it.

Sounds good - thanks for clarifying.

[lakejynch]

Are there any known risks to opening this channel?

[Vad]

Yes, did cast my vote

[Rhano]

To my understanding, there are very low risks related to opening this channel - maybe @nuno can comfirm this and explain it better.

[Rhano]

Hi @jgreen, this proposal is currently being voted on by the community (follow progress here), but would you - or someone else from HydraDX - be interested in joining our Governance Call Thursday 16th March at 18.00 CET (in two days) to talk a bit more about this proposal and how you see the next steps?

It would also be a great opportunity for you to present HydraDX and Omnipool to our community.

Let me know what you think.

cc. @nicolo

[nuno]

@jgreen your channel request has been accepted and our request back to you is now awaiting your approval

Polkadot block #14730506

[jgreen]

Hi, can we forward with adding CFG into the Omnipool? Do you need any help setting up the proposal?

[ImdioR]

Good day @jgreen

@jgreen

Do you need any help setting up the proposal?

Hydra should post the proposal (CP4). You can check previous proposal as example or just read and follow our gov process Centrifuge Framework . Example Cp21.
Process:

1. RFC
2. Submitting on GitHub
3. Opensquare snapshot
4. Onchain voting
   If you need any help feel free to ask me or @Rhano