Summary

1. About this Report
2. Proposal-Info
3. ANALYSIS
1. ■Impact on the Ecosystem
2. ■Governance Compliance
3. ■Cost-Benefit Ratio
4. ■Transparency and Traceability
5. ■Track Record and Credibility
4. Evaluation
5. Voting

About this Report

vonFlandern has developed a methodology to analyze and evaluate OpenGov proposals as objectively, effectively, and transparently as possible. The goal is to create clear and structured decision-making foundations for our own voting—and to make these visible to the community.

Proposal-Info

Polkadot GIGAHydration Campaign

Track: 11 | Origin: Treasurer | Amount: 5.000.000 DOT

Summary of the proposal

Core Issue

The proposer aims to allocate 5M DOT to fund DeFi incentives on Hydration to boost liquidity and adoption over 12 months.

Ecosystem Impact

It strengthens Polkadot’s DeFi ecosystem, enhancing competitiveness by attracting users and deepening liquidity.

Proposed Action

Transfer 5M DOT to Hydration’s Treasury for stablecoin (2M DOT), LP (2M DOT), and GIGADOT (1M DOT) incentives, distributed as GIGADOT over 12 months.

Expected Outcomes

Increased TVL, stablecoin and GIGADOT adoption, and enhanced ecosystem liquidity and user engagement.

■Question 1 of 19

Does the proposal measurably contribute to the long-term development, adoption, resilience, or relevance of Polkadot?

The proposal significantly contributes to Polkadot’s long-term development and adoption by enhancing its DeFi ecosystem through targeted incentives for stablecoins, liquidity providers, and GIGADOT minting, which collectively aim to deepen liquidity and attract users. The previous campaign’s success, increasing Omnipool TVL from $27 million to $73 million, demonstrates measurable impact, with current TVL exceeding $130 million. By fostering a competitive DeFi environment, it bolsters Polkadot’s resilience against market volatility and maintains relevance in the blockchain space. Success metrics like TVL growth, trading volumes, and user engagement provide clear indicators, ensuring tangible contributions to the ecosystem’s sustained growth and prominence.

Justification

The proposal builds on a proven track record, with the prior campaign showing substantial TVL and user growth. Its focus on DeFi addresses a critical area for blockchain ecosystems, as seen in Ethereum’s $13 billion DeFi TVL. Enhanced liquidity reduces trading friction, supporting adoption and resilience. Defined metrics ensure measurability, though the large funding allocation raises questions about proportionality, warranting a strong but not maximal evaluation.

Score: 8/10

■Question 2 of 19

What sustainable added value does the proposal bring to the Polkadot ecosystem in the long term, beyond the immediate project duration?

The proposal offers sustainable added value by establishing deeper liquidity pools and a larger user base, fostering network effects that persist beyond the 12-month duration. Incentives for stablecoins and GIGADOT are likely to lock in liquidity, encouraging ongoing participation. A strengthened DeFi ecosystem can attract developers and partnerships, positioning Polkadot as a leading hub. The prior campaign’s sustained TVL growth suggests lasting impact, while GIGADOT’s yield structure may stabilize DOT holdings, supporting long-term ecosystem vitality and competitiveness in the blockchain landscape.

Justification

Liquidity incentives often create self-reinforcing cycles, as seen in other ecosystems like Ethereum’s liquidity mining. GIGADOT’s yield-bearing design incentivizes long-term holding, enhancing stability. The proposal’s scale ensures significant initial impact, but sustainability depends on achieving critical liquidity mass, justifying a strong evaluation tempered by execution uncertainties.

Score: 8/10

■Question 3 of 19

Is an existing structural weakness addressed?

The proposal directly addresses Polkadot’s structural weakness in DeFi liquidity and user adoption, which lags behind competitors like Ethereum. By allocating 5 million DOT to boost stablecoin and LP liquidity, it aims to make Polkadot’s DeFi offerings more robust and competitive. The focus on HOLLAR and cross-chain assets tackles the need for stable, accessible assets, enhancing ecosystem stability. The previous campaign’s success in increasing liquidity underscores the proposal’s relevance in mitigating this critical limitation, positioning Polkadot for broader adoption.

Justification

Polkadot’s DeFi ecosystem struggles with lower liquidity compared to peers, hindering user and developer engagement. The proposal’s targeted incentives address this gap, with prior results validating effectiveness. The emphasis on stablecoins and cross-chain assets aligns with ecosystem needs, warranting a very strong evaluation.

Score: 9/10

■Question 4 of 19

Does the proposal promote interoperability, user retention, or parachain development?

The proposal strongly promotes interoperability by incentivizing Hydration’s support for cross-chain assets like ETH and tBTC via Snowbridge, facilitating seamless interactions across blockchains. It enhances user retention through GIGADOT’s attractive yields and improved trading conditions from deeper liquidity, encouraging sustained engagement. Parachain development is supported indirectly, as Hydration’s growth sets a precedent for other parachains, fostering integrations and complementary services. These efforts align with Polkadot’s interoperable architecture, strengthening the ecosystem’s overall cohesion and appeal.

Justification

Interoperability is core to Polkadot’s design, and the proposal’s focus on cross-chain assets directly supports this. GIGADOT’s yield structure incentivizes retention, while Hydration’s prominence encourages parachain collaboration, as seen in past integrations with Bifrost. The multifaceted impact justifies a very strong evaluation.

Score: 9/10

■Result category 1

Total score: 34/40 | Average: 8.50/10 (85%)

■Question 5 of 19

Does the proposal clearly fall within the scope of the chosen origin (Treasury, Tipper, Spender)?

The proposal clearly falls within the scope of the Treasurer origin, as it requests a substantial 5 million DOT from the Polkadot treasury to fund DeFi incentives on Hydration, aligning with the purpose of managing significant treasury expenditures. Submitted under Track 11, it adheres to the governance framework designed for large-scale spending proposals, ensuring proper procedural alignment with the Treasurer’s role in overseeing major financial allocations for ecosystem development.

Justification

The Treasurer origin, under Track 11, is intended for significant treasury spends, as evidenced by its high decision deposit of 1000 DOT and 28-day decision period, contrasting with smaller tracks like Small Tipper or Big Spender, which cap at 1 million DOT. The proposal’s request for 5 million DOT to enhance DeFi liquidity fits this scope, given the treasury’s 41 million DOT capacity. Its focus on ecosystem growth through liquidity incentives matches the Treasurer’s purpose, justifying a maximal evaluation.

Score: 10/10

■Question 6 of 19

Are there previous proposals with comparable content, and if so, what were their outcomes?

Previous proposals with comparable content exist, notably the June 2024 Hydration liquidity campaign, which allocated 2 million DOT and achieved significant outcomes, including an Omnipool TVL increase from $27 million to $73 million, trading volumes rising from $0.5–2 million to $2–10 million daily, and active accounts nearly doubling to 2000, demonstrating strong success in enhancing Polkadot’s DeFi ecosystem.

Justification

Referenda #560 and #561 in 2024 allocated 1 million DOT each for Hydration’s liquidity and LP incentives, respectively, with documented success in TVL, volume, and user growth. These outcomes, detailed in the proposal and external reports, provide a robust precedent, confirming the effectiveness of similar DeFi initiatives. The clear evidence of prior success supports a maximal evaluation, as the current proposal builds on this foundation.

Score: 10/10

■Question 7 of 19

Is the governance system being used meaningfully or burdened?

The governance system is used meaningfully, as the proposal addresses a critical ecosystem need with a detailed plan, clear success metrics, and a precedent of success, engaging the OpenGov framework effectively. The 5 million DOT request, while substantial, aligns with Polkadot’s goal of fostering DeFi growth and does not unduly burden the system, given OpenGov’s capacity to handle multiple parallel proposals.

Justification

The proposal’s structure, including defined metrics like TVL and GIGADOT supply, facilitates informed decision-making within OpenGov’s decentralized framework. The system’s design, with parallel tracks and a 28-day decision period, accommodates large spends without overload. While the funding amount requires thorough scrutiny, this is within OpenGov’s intended function, supporting a very strong evaluation tempered slightly by the scrutiny demand.

Score: 9/10

■Result category 2

Total score: 29/30 | Average: 9.67/10 (97%)

■Question 8 of 19

Is the requested amount proportionate to the potential or demonstrated benefit?

The requested 5 million DOT, valued at approximately $21.1 million, appears broadly proportionate to the potential benefits, as the prior Hydration campaign with 2 million DOT increased TVL from $27 million to $73 million, suggesting a larger allocation could significantly boost Polkadot’s DeFi ecosystem. However, the absence of precise quantitative targets for TVL growth or user acquisition introduces uncertainty, and the substantial 12.2% of the Treasury’s funds demands exceptionally robust outcomes to fully justify the scale of expenditure.

Justification

The 2024 campaign’s 5.45x TVL return per dollar spent ($46 million TVL increase for $8.44 million) indicates that 5 million DOT could yield a TVL boost of around $115 million, potentially elevating Hydration’s TVL to $245 million. This would enhance Polkadot’s DeFi competitiveness, crucial in a market dominated by Ethereum’s $13 billion DeFi TVL. However, diminishing returns are possible, and the lack of specific projections for key metrics like user growth or trading volumes weakens confidence in proportionality. The significant allocation requires clear, outsized benefits, supporting a strong but cautious evaluation.

Score: 7/10

■Question 9 of 19

Is the budget framework reasonable compared to similar proposals?

The budget framework for the 5 million DOT allocation is reasonable when benchmarked against similar DeFi incentive programs, such as Avalanche’s $180 million Rush initiative, but its scale, 2.5 times larger than Polkadot’s prior 2 million DOT Hydration campaign, raises concerns due to the lack of a granular cost breakdown, limiting transparency and accountability for such a significant expenditure.

Justification

Polkadot’s 2024 Hydration campaign, with 2 million DOT, set a precedent for effective DeFi incentives, achieving significant TVL and user growth. The current proposal’s larger scale aligns with the ecosystem’s growth and competitive pressures, and its 0.33% of DOT’s total supply compares favorably to Avalanche’s 1.36%. However, the high-level allocation (2 million DOT for stablecoins, 2 million for LPs, 1 million for GIGADOT) omits detailed distribution plans or operational costs, a critical oversight for a 12.2% Treasury spend, warranting a tempered evaluation.

Score: 7/10

■Question 10 of 19

What specific added value does the Treasury or network gain in return for this expenditure?

The Treasury and network gain a fortified DeFi ecosystem through enhanced liquidity, increased user engagement, and strengthened network security, as the incentives for stablecoins, LPs, and GIGADOT minting drive trading volumes and lock DOT in productive assets like vDOT, fostering both immediate growth and long-term stability in Polkadot’s competitive positioning.

Justification

The prior campaign’s results—TVL growth to $130 million, daily trading volumes of $2–10 million, and 2000 active accounts—validate the potential for significant DeFi expansion. Stablecoin incentives ensure transaction stability, LP incentives reduce trading friction, and GIGADOT’s yield structure encourages staking, enhancing security. These outcomes align with Polkadot’s goal of rivaling Ethereum’s DeFi dominance, offering tangible benefits that justify the expenditure, supporting a very strong evaluation.

Score: 9/10

■Question 11 of 19

Were cheaper alternatives considered?

The proposal does not address cheaper alternatives, focusing solely on Hydration’s proven effectiveness as Polkadot’s liquidity backbone, which, while strategically defensible given prior success, overlooks potential cost-saving options like diversifying funds across multiple DeFi projects or implementing a smaller, phased allocation, raising concerns about cost optimization for a 5 million DOT expenditure.

Justification

Hydration’s 2024 campaign, with a 5.45x TVL return, supports concentrating resources on a high-impact project, mirroring strategies like Uniswap’s focused liquidity mining. However, the absence of discussion on alternatives, such as supporting other protocols like StellaSwap or a reduced initial allocation with milestones, is a significant omission for a 12.2% Treasury spend. This lack of transparency about cost-efficiency options, critical for such a large sum, justifies a moderate evaluation.

Score: 6/10

■Result category 3

Total score: 29/40 | Average: 7.25/10 (73%)

■Question 12 of 19

Is it clearly communicated how and for what purposes funds will be used—including KPIs, milestones, metrics?

The proposal clearly outlines the use of 5 million DOT, with 2 million DOT for stablecoin incentives, 2 million DOT for liquidity provider incentives, and 1 million DOT for GIGADOT minting, aimed at boosting Polkadot’s DeFi ecosystem over 12 months. It specifies metrics such as Total Value Locked (TVL), trading volumes, HOLLAR supply, and GIGADOT supply. However, it lacks specific numerical targets or milestones, relying on vague goals like “significant growth,” which reduces clarity and hinders precise tracking of outcomes.

Justification

The allocation to three initiatives is well-defined, and metrics are explicitly linked to each, showing intent to measure impact. The prior campaign’s metrics provide context, but the absence of quantified targets for this proposal limits transparency. Without milestones, such as quarterly TVL goals, stakeholders cannot fully assess progress. The clear purpose and metrics warrant a good evaluation, but the lack of specificity lowers the score.

Score: 6/10

■Question 13 of 19

Are budgets, timelines, and work packages clearly specified?

The proposal clearly specifies a 5 million DOT budget, allocated as 2 million DOT for stablecoin incentives, 2 million DOT for liquidity provider incentives, and 1 million DOT for GIGADOT incentives, to be distributed over 12 months. The execution plan includes fund transfers to the Hydration Treasury and conversion to vDOT and GIGADOT. Work packages are broadly defined as the three initiatives, lacking detailed sub-tasks, which slightly limits transparency.

Justification

The budget breakdown is precise, and the 12-month timeline is explicit, aligning with the proposal’s scope. The execution steps are outlined, ensuring traceability. However, the work packages are high-level, missing granular details on implementation, which could enhance accountability for a $21.1 million expenditure. The clear budget and timeline support a strong evaluation, tempered by the broad work packages.

Score: 8/10

■Question 14 of 19

Are there success criteria for later evaluation?

The proposal lists metrics for evaluation, including TVL, trading volumes, HOLLAR supply, and GIGADOT supply, but does not provide specific success criteria with numerical targets or thresholds. The goal of “significant growth” is vague, making it challenging to objectively assess outcomes later, which undermines the ability to conduct evidence-based evaluations of the initiative’s effectiveness.

Justification

Effective success criteria require measurable, specific goals, as seen in the prior campaign’s $50 million TVL target. The current proposal’s metrics are relevant but lack defined benchmarks, such as percentage increases or dollar amounts, leading to subjective interpretations of success. This significant gap, especially for a 5 million DOT spend, justifies a moderate evaluation, as traceability is compromised.

Score: 5/10

■Question 15 of 19

Is documentation or reporting planned?

The proposal indicates documentation through dashboards tracking metrics like TVL, trading volumes, active accounts, and XCM transfers, enabling real-time monitoring of the initiative’s progress. However, it does not specify formal reporting schedules or detailed plans for periodic updates, which could limit comprehensive stakeholder oversight for a $21.1 million expenditure.

Justification

Dashboards provide a robust mechanism for ongoing transparency, allowing stakeholders to track key metrics continuously, a practice aligned with industry standards. The lack of a formal reporting schedule, such as quarterly reports, is a minor shortfall, as real-time data partially compensates. The planned documentation supports a strong evaluation, slightly reduced by the absence of structured reporting commitments.

Score: 7/10

■Result category 4

Total score: 26/40 | Average: 6.50/10 (65%)

■Question 16 of 19

Have the proposers or involved organizations made verifiable, traceable contributions to the ecosystem?

Hydration, linked to the proposer "lolmcshizz," has made substantial contributions to Polkadot’s DeFi ecosystem, notably through its Omnipool, which increased TVL from $27 million to over $130 million since 2022, and supported native stablecoin launches like USDT and USDC. These impacts are traceable via on-chain data and dashboards. While "lolmcshizz" lacks individual contribution records, their association with Hydration ties their credibility to the organization’s proven track record of enhancing ecosystem liquidity and user engagement.

Justification

Hydration’s contributions, including a TVL surge and daily trading volumes of $2–10 million, are verified through Polkadot Wiki dashboards and the 2024 campaign’s results, which boosted active accounts to nearly 2000. The proposal details these achievements, corroborated by external sources like the Hydration Newsletter. The proposer’s anonymity limits individual traceability, but Hydration’s verifiable impact supports a very strong evaluation, slightly tempered by this gap.

Score: 9/10

■Question 17 of 19

What projects have been successfully implemented so far?

Hydration has successfully delivered the Omnipool, achieving a TVL of over $130 million, stable pools, xyk-pools, the HOLLAR stablecoin, and a decentralized borrowing platform launched in November 2024. The 2024 liquidity campaign, funded with 2 million DOT, increased TVL to $73 million by December 2024, demonstrating Hydration’s ability to execute impactful DeFi projects that enhance Polkadot’s ecosystem functionality and user adoption.

Justification

The Omnipool’s growth, stable pools, and xyk-pools are documented in the proposal and external reports, with the borrowing platform, a fork of AAVE v3, adding advanced lending capabilities. The 2024 campaign’s success, detailed in the CryptoSlate article, confirms Hydration’s execution strength. These projects have driven measurable outcomes, like increased trading volumes and user engagement, justifying a very strong evaluation for their successful implementation.

Score: 9/10

■Question 18 of 19

Are there publicly accessible references (e.g., code repositories, publications) or community feedback supporting the proposers’ credibility?

Hydration’s credibility is backed by open-source GitHub repositories under Galactic Council, with the hydration-node showing active development, and publications like Polkadot’s blog and Decrypt articles highlighting their DeFi contributions. Community feedback on X praises Hydration’s achievements, though some raise concerns about the 5 million DOT allocation’s transparency. The proposer’s limited public profile, confined to X activity, slightly reduces individual credibility.

Justification

The GitHub repository, with 180 stars and 82 forks, reflects robust development, while Polkadot’s blog and media coverage validate Hydration’s impact. X posts show community support, balanced by allocation concerns, which are objective but not central to credibility. The proposer’s minimal public references, despite active X engagement, warrant a strong evaluation, tempered by the need for greater individual transparency.

Score: 8/10

■Question 19 of 19

Is the team capable of delivering the promised outcomes?

Hydration’s team, managed by a community-elected council, has proven its capability through the 2024 campaign’s success and ongoing DeFi innovations like the borrowing platform. The proposal’s plan to leverage existing infrastructure for stablecoin, LP, and GIGADOT incentives aligns with their expertise. Despite the proposer’s unclear individual role, Hydration’s technical and governance strengths suggest they can deliver the proposed liquidity and adoption outcomes.

Justification

The team’s delivery of the Omnipool, HOLLAR, and borrowing platform, backed by active GitHub contributions and council governance, demonstrates technical and operational competence. The proposal’s alignment with Hydration’s capabilities supports confidence, though the 5 million DOT scale introduces execution risks. The proposer’s limited transparency slightly lowers assurance, justifying a strong evaluation.

Score: 8/10

■Result category 5

Total score: 34/40 | Average: 8.50/10 (85%)