1. Project Name: Hydrex
6. Atlas Profile: https://atlas.optimism.io/project/0xab28184ffcd1429ce9bbcffdba320787e9d2ab1e2f365352af3b5a9ef64f4600
7. Total OP Requested: 350000
8. Grant L2 Delivery Address: 0x74266f2b206D1359B83fc74949EF07176FB3AE03
10. Project & Program Overview: #### Project Description [Hydrex](https://hydrex.fi) is a fully deployed, decentralized liquidity protocol designed to enhance trading efficiency on the Base blockchain by incentivizing liquidity providers through a unique rewards program. By leveraging a combination of open-source smart contracts and a ve(3,3) protocol flywheel, Hydrex aims to significantly increase total value locked (TVL) while ensuring that all fees generated are distributed to token holders, thereby aligning the interests of the community with the protocol's success. This innovative approach not only drives transaction volume but also fosters a sustainable ecosystem for liquidity and trading activities. #### Program Overview Through the OP + oHYDX incentive program, we will increase TVL by rewarding liquidity providers in priority Base ecosystem pairs. During Season 8, Hydrex was named a Top Performer of Season 8 while receiving 1% of the attribution bucket, demonstrating our ability to efficiently deploy incentives to attract TVL. Hydrex intends to run a similar playbook in sourcing net‑new TVL and retaining liquidity in priority pairs across Base. As a direct result of increased TVL, Hydrex would generate more trading volume through our LPs. This is achieved through 2 paths: (i) **Healthy Order Flow** - Hydrex is picked up by all major aggregators (including The Base App & Coinbase's retail DEX). Having more liquidity means we will win more routes as there is less price impact. (ii) **Arbitrage Order Flow** - Due to having more liquidity, there will be more capital to arbitrage against on asset price movement. This will create fees for each rebalance. Together, these mechanisms compound Hydrex's flywheel: more liquidity drives more trades, more trades generate more fees, and veHYDX holders direct ongoing oHYDX emissions toward the highest-fee-generating pools, which retain liquidity even after OP incentives end.
11. Target Liquidity Pairs & Pools: Hydrex will use the OP grant and Hydrex incentives to deepen liquidity in six concentrated liquidity pools on Base: | Token Pair | DEX | Chain | Pool Type | Fee Range (Base) | Fee Range (Medium Volatility) | Fee Range (High) | |------------|-----|-------|-----------|------------------|-------------------------------|------------------| | cbBTC-WETH | Hydrex | Base | Concentrated Liquidity | 0.02% | 0.03% | 0.20% | | cbETH-USDC | Hydrex | Base | Concentrated Liquidity | 0.02% | 0.03% | 0.20% | | EURC-USDC | Hydrex | Base | Concentrated Liquidity | 0.01% | 0.3% | 1.50% | | rETH-WETH | Hydrex | Base | Concentrated Liquidity | 0.01% | 0.29% | 1.20% | | WETH-weETH | Hydrex | Base | Concentrated Liquidity | 0.01% | 0.29% | 1.20% | | WETH-wstETH | Hydrex | Base | Concentrated Liquidity | 0.01% | 0.29% | 1.20% |
12. Lending Market Alignment: Hydrex has chosen assets that are available on Aave and Morpho, the top lending markets on Base. Below, we specify which markets are available, if any, for both LP assets: | Asset 1 | Asset 2 | Morpho (Asset 1) | Aave (Asset 1) | Morpho (Asset 2) | Aave (Asset 2) | |---------|---------|-----------------|----------------|------------------|----------------| | cbBTC | WETH | Both | Both | Both | Both | | cbETH | USDC | Lend | Both | Both | Both | | EURC | USDC | Borrow | Both | Both | Both | | rETH | WETH | Lend | Not Available | Both | Both | | WETH | weETH | Both | Both | Lend | Both | | WETH | wstETH | Both | Both | Lend | Both |
13. Current Baseline Metrics: The program will include 3 existing pairs (baseline metrics available as of 2/14/26) and 3 new pairs, which will be launched prior to the program: | Token Pair | TVL | 30D Volume | 30D Volume per TVL | Contract Address | |------------|-----|------------|-------------------|------------------| | cbBTC-WETH | $2,660,000 | $161,120,000 | $60.57 | [0x3f9b863ef4b295d6ba370215bcca3785fcc44f44](https://basescan.org/address/0x3f9b863ef4b295d6ba370215bcca3785fcc44f44#code) | | cbETH-USDC | Pool to be created | Pool to be created | Pool to be created | Pool to be created | | EURC-USDC | Pool to be created | Pool to be created | Pool to be created | Pool to be created | | rETH-WETH | Pool to be created | Pool to be created | Pool to be created | Pool to be created | | WETH-weETH | $16,200 | $387,000 | $23.89 | [0x1c419ac8fbaf8082eb7276fc2f243a74daf1c927](https://basescan.org/address/0x1c419ac8fbaf8082eb7276fc2f243a74daf1c927#code) | | WETH-wstETH | $74,900 | $5,720,000 | $76.37 | [0x19398851f424e03eed4b09a47f3bf5b0dd85805b](https://basescan.org/address/0x19398851f424e03eed4b09a47f3bf5b0dd85805b#code) |
14. Incentive Design: #### Incentive Distribution Hydrex incentives go primarily to liquidity providers, with traders benefiting indirectly through deeper liquidity and tighter spreads. LPs in our selected pools receive both OP and oHYDX rewards based on their share of liquidity and the tightness of their ranges, so we reward deep, active liquidity. #### Sustained Liquidity & Flywheel The aim of the 4‑week OP + oHYDX phase is to jumpstart the liquidity flywheel. OP and oHYDX incentives bring in TVL during the campaign, leading to more trading activity and fees, which in turn direct ongoing oHYDX emissions toward the best‑performing pools even after OP incentives end. The goal is for the fees to generate sufficient organic yield that liquidity stays without requiring external incentives. #### Discouraging Extractive Behavior We will utilize active controls to prevent rewarding extractive behavior: * **Wash Trading:** Dynamic fees increase costs on inorganic or repetitive volume, which makes wash trading unprofitable. * **Short‑term LP Behavior:** We monitor addresses that add liquidity only to earn incentives and then remove it before swaps. * **Mercenary Liquidity:** Due to the nature of the flywheel, oHYDX incentives will continue ensuring that rewards accrue to long‑term, productive liquidity rather than mercenary capital.
15. Milestones to unlock OP distribution: Bootstrap $3M in Hydrex LP TVL Increase
Pending$140,000
Due: May 15, 2026
At current prices ($0.19/OP), the first 40% of the grant would equate to $26,600. Combining that with a matched oHYDX allocation, we have a total of $53,200 in incentives for the first portion of the grant. We would distribute this initial allocation in a 4-week trial run across the pools described above with the following TVL goal increases: | Pair | Current TVL | 4 Week Allocation | Target TVL Increase | Target TVL | 30D Volume | 30D Volume Target | 30D Volume per TVL | |------|-------------|-------------------|---------------------|------------|------------|-------------------|-------------------| | cbBTC-WETH | $2,660,000 | $12,000 | $450,000 | $3,110,000 | $161,120,000 | $203,447,314 | $65.42 | | cbETH-USDC | $0 | $12,000 | $360,000 | $360,000 | $0 | $7,450,560 | $21 | | EURC-USDC | $0 | $7,300 | $438,000 | $438,000 | $0 | $38,502,000 | $88 | | rETH-WETH | $0 | $7,300 | $584,000 | $584,000 | $0 | $12,147,200 | $20.80 | | WETH-weETH | $16,200 | $7,300 | $584,000 | $600,200 | $387,000 | $15,485,160 | $25.80 | | WETH-wstETH | $74,900 | $7,300 | $584,000 | $658,900 | $5,720,000 | $54,344,735 | $82.48 |
16. Final Milestone for Grant Completion: Increase & Sustain $4M in Hydrex LP TVL
Pending$210,000
Due: Aug 15, 2026
With the remaining portion of the grant + matched Hydrex incentives, we have a budget of $79,800 ($39,900 OP & $39,900 oHYDX) to work with. We would more conservatively distribute these rewards over an 8-week timeframe to sustain acquired TVL and encourage new TVL at lower rates. | Pair | Current TVL | 8 Week Allocation | Target TVL Increase | Target TVL | 30D Volume | 30D Volume Target | 30D Volume per TVL | |------|-------------|-------------------|---------------------|------------|------------|-------------------|-------------------| | cbBTC-WETH | $2,660,000 | $18,000 | $540,000 | $3,200,000 | $161,120,000 | $232,594,286 | $72.69 | | cbETH-USDC | $0 | $18,000 | $450,000 | $450,000 | $0 | $10,348,000 | $23 | | EURC-USDC | $0 | $10,950 | $547,500 | $547,500 | $0 | $53,475,000 | $98 | | rETH-WETH | $0 | $10,950 | $821,250 | $821,250 | $0 | $18,790,200 | $22.88 | | WETH-weETH | $16,200 | $10,950 | $821,250 | $837,450 | $387,000 | $24,006,900 | $28.67 | | WETH-wstETH | $74,900 | $10,950 | $821,250 | $896,150 | $5,720,000 | $82,125,148 | $91.64 |
17. Additional information you consider relevant: We are an entirely self-funded, bootstrapped team operating as a public good on Base. 100% of the fees our protocol produces go to token holders. All of the team & treasury allocations are permanently locked, thus we only succeed if our protocol does. We were a top performer in Season 8, growing LP pairs to over $5M TVL from 20K OP, and we’d be excited at another opportunity to grow TVL for the Superchain!
18. I confirm that I have read and understand the Grant Policies: Yes
19. I understand that I will be required to provide additional KYC/KYB information to the Optimism Foundation to receive this grant: Yes
20. I confirm that my grant will be subject to clawback for failure to execute on Critical Milestones: Yes

Application for Optimism Season 9 - Growth Grants

Application details

Bootstrap $3M in Hydrex LP TVL Increase

Increase & Sustain $4M in Hydrex LP TVL