HYDRA OPEN FOR BUSINESS

Hydra has progressed where it is now possible for developers to test Cardano's L2 scalability solution and dev community engagement is key

• Hydra roadmap reflects developer needs to support scalable real world uses
• Devs have resources to integrate Hydra into their applications

• Number of project proposals based on this challenge setting
• # of dev projects started/approved/funded/completed, including training content, documentation, developer tools, example applications
• # of discussions about the challenge in comms channels (discord and other)
• # of feature requests to Hydra roadmap
• # of Hydra heads deployed in testnet/mainnet (and local devnets/Hydra nodes setup)
• traffic in deployed Hydra heads in testnet/mainnet 
• # of activity on github repo: views, feature requests, discussion posts/questions/comments, downloads

Background

Hydra development has progressed to a point where it is possible for developers to test the technology as a Cardano Layer 2 scalability solution. As such, early engagement by the developer community is key to both:

• Driving the Hydra roadmap going forward to ensure its focus on enabling and enhancing real world business models being built on Cardano
• Building tooling, documentation, and content to lower the barrier to getting started for developing Hydra-ready solutions

This challenge, proposed by IOG, serves to direct development priorities towards uncovering, analyzing, and validating new Hydra-enabled business models, as well as to improve the experience of developing DApps that will rely on Hydra.

Brief

Hydra head protocol is an isomorphic multi-party state channel for Cardano and a layer 2 scalability solution to speed up transaction processing by decreasing latency when validating transactions, increasing transaction throughput, and minimizing transaction cost. Services built directly on the Cardano ledger can be designed to use Hydra head instead for transaction processing, in order to both benefit from these advantages and to reduce the network load on the Cardano ledger.

As a layer 2 solution, Hydra compromises neither in terms of safety, nor in terms of expressiveness and reusability of scripting, since it inherits both the security properties and (being largely isomorphic) scripting capabilities of Cardano layer 1. It also allows service providers on Cardano the flexibility to set their own custom protocol parameters, which in turns makes it possible to e.g. set lower transaction and script execution fees, as well as faster processing of transactions with scripts (including processing of more complex scripts) by freely adjusting the time budget for computing resources like CPU and memory.

The community should have more stake in driving the Hydra roadmap, by encouraging more developer activity in interacting with the Hydra head protocol, as the initial component of the Hydra technology, during its development stage. This developer activity can take form of analyzing and validating scenarios that can take advantage of early iterations of Hydra technology (think case studies, design patterns, reference implementations of relevant use cases), as well as building tools and creating content to improve the experience of both developing Hydra-based applications and operating related infrastructure (think developer documentation, SDKs, training content, and services such as managed Hydra head/node).

Guiding Questions

• Which concrete scalability challenges faced by specific use cases in the Cardano DApp ecosystem can be overcome by the initial implementation of the Hydra head protocol, as outlined in the research paper?
• What would a potential solution look like?
• Which new business models are enabled and how?
• Which challenges will developers face when trying to adapt existing layer 1 DApps or build new DApps using the Hydra head protocol? What can be done to overcome these challenges?
• Which challenges will service providers face when operating a service relying on the Hydra head protocol?  What can be done to overcome these challenges?
• What is the impact on the end user experience when using a layer 2 state channel based solution such as Hydra? How can it be improved?

Inspirational Potential Directions 

• Case studies, models, and reference implementations of business models/use cases in the following areas
• Payments (e.g. tipping, pay-per-use APIs, micropayments, in-game/in-app payments, e-commerce integrations)
• DeFi (e.g. DEX protocols, incl. swaps, order book matching, decentralized oracle feeds)
• Governance (e.g. voting)
• NFTs (auctions, drops)
• Any other use case proposals
• Tools for developers and infrastructure operators
• Reusable frameworks and SDKs for Hydra node
• Managed Hydra head service (custodial)
• Tutorials and education material
• Logging, monitoring, benchmarking and testing tools
• Integration with (light) wallets

What does success look like?

• Hydra implementation and roadmap reflect developer needs and support scalable real world business models on Cardano
• Developers have resources needed to integrate Hydra into their applications (e.g developer tools and frameworks, example applications, case studies, documentation, training content)
• Improved understanding of business models and scenarios that can benefit from the Hydra technology framework, starting with the Hydra head protocol and matching the Hydra roadmap beyond it
• Developer community on Cardano is engaged and actively contributing to the core Hydra technology stack and supporting tools, frameworks, and documentation
• Commercial solutions using Hydra head protocol deployed in the Cardano mainnet

Resources

Hydra Head research paper: https://iohk.io/en/research/library/papers/hydrafast-isomorphic-state-channels/

Hydra Head documentation: https://hydra.family/head-protocol/

Hydra Head roadmap: https://github.com/orgs/input-output-hk/projects/21/views/7

Hydra Head github repo: https://github.com/input-output-hk/hydra-poc

Hydra head example application (a game of rock-paper-scissors): COMING SOON