It’s been a decade since Bitcoin came around and since then we have seen many different kinds of projects come up. Some are working on what are pointless use cases - you have a blockchain for almost everything these days. These projects can make it seem like they are doing something miraculous and it can be hard for someone new to cryptocurrencies to be able to see through it.
That is why I’m writing these guides, so that you can narrow down you focus to the main assets and a few solid altcoins that are actually building something useful, projects that have a logical reason for its existence.
When trying to understand if a project is a solid business idea or not, you should really look at what problem it is trying to solve with the technology (and remember, not everything needs a blockchain.)
There have been several reports on how Distributed Ledger Technologies (DLTs) can foster enormous positive change in a few very specific areas. Decentralized financial services, supply chains, identity management, accounting and audition, cloud computing - this is not an exhaustive list, but one thing you’ll notice in these fields is a focus on immutability, privacy and equality.
The project I’m going to discuss today is called Project Hydro (HYDRO), which provides a comprehensive digital identity management solution through its use of the ERC-1484 protocol. While its main focus might be digital identity management, the overall platform itself offers many different kinds of solutions in a bid to offer a suite of apps ecosystem.
I will explain what Hydro is, the history of the project, the technical architecture and its most important features, use cases, milestones achieved, as well as partnerships and competing projects.
What is Hydro (HYDRO)?
An introduction to Project Hydro.
In a nutshell, Hydro (HYDRO) is about providing standards and the infrastructure for a decentralized economy. This includes everything from the use of a specific protocol, a suite of decentralized applications (DApps) and an ecosystem of partners that can leverage the solutions to their advantage.
The team has a grand overarching goal of facilitating blockchain adoption, but the path towards adoption means focusing on multiple individual milestones and technical solutions. For Hydro, this means refining the digital identity protocol and creating apps that can take advantage of that, as well as bringing third parties on board.
Hydro was launched in early 2018. Hydro was created with the vision of being “the life of a new global decentralized economy” - a very ambitious goal, but a realistic one, as you shall see, that is supported by a deep and well charted roadmap and development vision. This project sets itself apart in this way, contrasting with the many projects that make lofty goals that are unrealistic and have little to show in terms of commercial products.
An explanation of the Hydro ecosystem.
You could describe Hydro as a decentralized financial (DeFi) services platform that plugs the holes in the economy with technology.
Project Hydro was incubated by Hydrogen, a fintech company that was recognized as the Fintech Startup of the Year by KPMG and a World Changing Technology by Fast Company. Hydrogen holds an identical ethos, being a company that is building a single platform for finance that is as inclusive as possible. This is in keeping with the spirit of blockchain technology, which is to reduce the financial inequity in the world.
The team at Hydro have created a thorough roadmap that provides insight into how they plan to create that global decentralized economy. The project is divided into several phases named after different states of water, of which there are 6 phases.
The identity solutions phase, Snowflake. Source
The first of the phases, Raindrop, has seen completion. Accompanying features of this stage include iOS and Android apps, the first smart contract, and the release of the first third party API.
Several phases are currently in development:
- Snowflake: identity solutions, including the ERC 1484 EIP and DApp store release
- Ice: document management; white paper and smart contract deployment completed
- Tide: payment solutions, including 3rd party P2P payment solution and mobile apps, and Hydro remittance app
- Hail: tokenization solutions; all milestones have been met
The next phase, Mist, will see the introduction of Artificial Intelligence related solutions. It may be some time before we see development in this phase.
What Will Hydro be Used for?
The Hydro DApp Store. Source
There’s a lot to unpack here, as Hydro has a suite of applications that have been released, as well as more in the pipeline. Hydro has in its sights several kinds of applications, including remittance, B2B sales, P2P transactions, point of sale, lending, tokenization and more. If you’ve paid a little attention to trends in the cryptocurrency space, you’ll notice that DeFi plays a critical role in how the technology is transferring the global economy. This is the space that Hydro is working in.
Primarily, as I mentioned, Hydro wants to offer its digital identity management system to any platform that would like to use it. This makes interoperability much easier and developers have a seamless solution for how to get different DApps and environments working with each other.
Hydro Pay, a wallet. Source
But this is the base layer, the actual end user isn’t so concerned about how the application works, he or she only wants seamless, reliable and beneficial services. Hydro’s technological design supports its goals of decentralization, manifesting in the many DApps that are being built, including for remittance and DApp store.
Hydro Vault, a secure storage application. Source
The three DApps currently available on the Hydro DApp store are Vault, Pay and Hydro X. Hydro Pay is essentially a wallet, an P2P wallet that focuses on being intuitive. Hydro X is a remittance app and Hydro Vault is a secure way of storing funds, and includes 2 factor authentication. The functionality of Hydro X was eventually added to Hydro Pay, making the latter a more feature-rich application.
The ERC-1484 Digital Identity Standard
A simple explanation of why a new identity standard is required.
There are a few interesting things to talk about regarding Hydro’s technical design.
The most important of these is the ERC-1484 protocol, which is at the heart of the digital identity management protocol. This is different from the typical Ethereum and ERC-20 protocol you hear about; it is tailored better for a different purpose.
I won’t go into detail on the technical aspects of the ERC-1484 Ethereum Improvement Proposal (EIP), but I will give a rough high level overview on how it works. The protocol aggregates data related to digital identity and makes it compatible with existing and potential future digital identity standards.
Several other digital identity standards exist, so you may wonder why this one is any better. Think of the existence of these multiple standards as offering the same kind of obstacle that the existence of multiple blockchains brings up. It’s difficult to get these various standards to communicate with each other because they handle data in a different way.
Interoperability-focused projects are a big thing now, because industry players realize that having several standards just doesn’t lend itself very well to consistent long-term progress. There has to be a collective agreement on what communication standards will be, just like the internet in the early days.
The key idea is this: the ERC-1484 protocol is a “unopinionated identity management protocol” that introduces a protocol later in between the Ethereum network and identity applications. For a technical breakdown of what it is, visit the ERC-1484 Github repo.
A related point worth mentioning is that the team is supportive of developers - it would have to be, as developers will be central to the network’s growth - providing documentation, SDKs and plugins to help them get off of the ground. This is an underrated quality of projects. Given that developers will be the ones building the DApps that will help establish the worth of the network, it’s no small thing to be able to facilitate development.
Some of Hydro's partners. Source.
Hydro has formed several partnerships since its inception, with different partners. I’m only detailing the most important partnerships here, but you can see the full list of partners here. BTI.Live ranked Liquid as one of the top 5 cryptocurrency exchanges by volume.
Mastercard has selected Hydrogen for its Starter Path program. Source
The most notable of partnerships is the one with Mastercard. Hydrogen joined the Mastercard Starter Path in December 2019. It was one of the seven companies that was selected to work with MasterCard in order to bring their solutions to the fore. The collaboration will include “tailored programs, operational support and commercial engagements.”
The Liquid exchange and Hydro have partnered for better liquidity. Source
Next up is Liquid, the startup that’s building liquidity solutions for exchanges. I say startup, but Liquid is actually quite an accomplished company. It became one of the few companies in Japan to achieve $1 billion+ in valuation, making it one of those rare unicorns (there are only two other unicorns). So you can see the value in this collaboration.
Hydro's partner Liquid is a unicorn, having reached $1 billion+ in valuation. Source
Liquid has its own exchange, and it will be the go-to market for Hydro’s remittance app Hydro Pay. The end result of this partnership is that Hydro now has quick access to many fiat pairs and liquidity, while users of the Hydro Pay services that have been integrated with Liquid will have access to much more cost-effective remittance payments.
Ferrum.Network, a high speed interoperability network, will use Hydro's Snowflake protocol. Source
Hydro has also partnered with Ferrum Network, a project that is building the first high speed interoperability network for real world financial applications. The latter will use Hydro’s Snowflake protocol to integrate the solution into its own wallet. The benefit is that Hydro gets another player in its ecosystem, while Ferrum Network can take advantage of the decentralized identity solution for better security and verification.
Hydro will use OmiseGO's Plasma architecture to avoid scalability problems. Source
Lastly, we have a partnership with Thailand-based project OmiseGO. The latter is working on scaling solutions via the Plasma architecture and involves Vitalik Buterin as its adviser. The two will collaborate to see Hydro using the scaling solution, while OmiseGO gets to actually trial the Plasma technology.
There are few projects that are competing directly with Hydro, despite digital identity management being quite an intense application of blockchain technology. The most prominent of these projects is Civic (CVC),
The difference between Hydro and these other projects is that Hydro is actually building an interoperable, agnostic solution that all players can use - as opposed to those other projects, which are building applications that work with one specific identity standard. It’s the protocol layer that is critical.
You should also know that Microsoft itself is building a digital identity management solution using blockchain technology - that’s how big of an impact the technology is believed to have in this particular application. If the company with the world’s largest market cap is getting in on the game, then there’s something to it. IBM is also working on its own solutions.
There’s even the Decentralized Identity Foundation (DIF), a collection of entities both in and outside the blockchain space that is working on creating a unified decentralized identity solution.
Hydro’s token has a ride through the market that is typical of many altcoins. Since its availability in early 2018, the HYDRO token has seen some ups and downs. The token is currently ranked 344 on CoinMarketCap with a market cap of roughly $7.5 million.
The HYDRO token’s all time high, $0.05, occurred in May 2018, while the token’s all time low, $0.000424, occurred over a year later in November 2019. The 52 week low is the same, though the 52 week high is a little bit better at $0.002375.
HYDRO's price chart. Source
A project’s token price does in no way tell the whole story of a project, however. Just look at Ethereum, which is still a long way from its all time high of roughly $1500. Pricing is not typically reflective of a project’s potential. Instead, you should look at the long term possibilities of the project - look at the underlying “value.”
In that regard, Hydro is already doing better than many projects. In fact, it even does better than many projects that are in the top 100 which, unfortunately, is still host to many projects that are not working on realistic use cases or have not seen development progress in a satisfactory way.
Hydro is a very interesting project that is working on a major application, not just by creating the necessary collection of DApps and building an ecosystem, but also by setting the standard by which decentralized identity systems will operate. This is an effort that is thinking much more about the bigger picture, as opposed to just serving the needs of the hour.
The digital identity niche has a lot going on in terms of research and development, and has gained recognition as a use case among incumbents, so it’s worthwhile looking at projects that are working in this sphere. Hydro is certainly one of the more interesting projects here.