When you’re investing in cryptocurrencies, it’s important to look at what it is they are trying to do and whether it is a sensible investment from just a business perspective. Do we really need blockchain networks and cryptocurrencies for everything?
There are a handful of use cases which we know to be absolutely sure to be solid, which have demonstrably proven themselves to be perfect applications for Distributed Ledger Technologies (DLTs). There is no better example of this than the area of finance itself, which is where cryptocurrencies started off.
Decentralized Finance (DeFi), which now entails a broad group of financial services decentralized by DLTs, is a rapidly rising niche in the market that is attracting an incredible amount of attention. Examples of this include remittances, B2B sales, derivatives and tokenization, among many other things.
The proven importance of DeFi has led many projects to develop such platforms that provide a single point where one can access multiple such services.
The project I’m going to review today, Hydro (HYDRO), does just that, vying to be a comprehensive platform for financial services via its agnostic ERC-1484 digital identity management protocol.
What I will be talking about is the role Hydro can play in DeFi, the partnerships that it has established, as well as its price history and investment potential.
Hydro’s Parent Company Hydrogen and the Team
The Hydrogen Team. Source
Project Hydro is the brainchild of Hydrogen, a major fintech company, which was founded by Matt and Michael Kane, who respectively serve as the Chief Executive Officer (CEO) and Chief Technology Officer (CTO) of Hydrogen. The company was recognized as the Fintech Startup of the Year by KPMG and a World Changing Technology by Fast Company. Hydrogen itself is working on multiple solutions to better finance systems, and it views blockchain as an important part of that process.
Matt and Michael Kane are naturally the founders of the Hydro blockchain, one particular area of focus among Hydrogen’s multiple fintech solutions. The Kanes are accomplished in their own right.
Michael Kane, Hydrogen co-founder
Michael Kane being a former associate at Bridgewater Associates, an investment management firm that handles about $160 billion in assets, while also winning the Best of Show Finovate Winner, UK Great Tech Award Winner twice with Matthew.
Matthew Kane, Hydrogen co-founder
Matthew Kane worked as a Managing Partner at Morefield Partners, and has extensive experience in the cryptocurrency space, having built one of the first cryptocurrency investment applications.
The two also co-founded Hedgeable in 2009, a digital wealth management startup that has a $1 minimum entry price. As Chief Operations Officer (COO), Matthew was involved in design, technology, product development, and company strategy initiatives, while as Chief Executive Officer (CEO) Michael oversaw product, business development, and branding initiatives.
Timothy Allard, Hydro CTO
Timothy Allard is now Hydro’s CTO, having first worked as a Decentralized Ambassador and HCDP & Development Leader / Senior Engineer from the team. From there he proceeded to work as Lead Developer & Senior Engineer and Product Manager for the Hydro DApp store. In October 2019, he was promoted to the role of CTO. Prior to this work at Hydro, Allard worked as a software engineer in multiple companies, including Ora and the Digital Influence group, as well as digital media producer for WBZ/CBS Boston.
Mike Kane, in an interview with the LHoFT, described Hydrogen’s mission as “becoming the global financial platform of Web 3.0”. You’ve very likely heard of Web 3,0, a decentralized web, in the blockchain space before. Projects in this space are bringing truly decentralized protocols and infrastructure to the web, with the end goal of making the internet more inclusive.
But how does Hydrogen plan to do this with the Hydro blockchain? Through its ERC-1484 protocol and real-world focused DApps.
Hydro’s Digital Identity Management Protocol
A simple explanation of how the identity protocol works
Digital identity itself is a huge corner of the market, and multiple entities have been working on related solutions, not the least of which is Microsoft and IBM. By digital identity management, these entities mean giving the user - you - the ability to genuinely own your own data, and not see exploited at, say, the hands of an advertising company.
However, the means by which it does so is what sets itself apart. A major appeal of the Hydro platform is the digital identity management protocol, which makes changes to the Ethereum protocol and is better suited for digital identity management.
By integrating this function with various services, the prospect of having a more seamless economy where every service and exchange of value is interconnected, makes for a much more fair and fluid system for those who need it the most.
Hydro also has a broad suite of decentralized applications (DApps) in its DApp store that are already ready, with more on the way. This nicely brings us to the topic of Hydro and decentralized finance, where I will cover these applications.
Hydro and Decentralized Finance
DeFi investment touched nearly $900 million in January 2020. Source
Decentralized Finance, popularly known as DeFi, is a remarkable part of the cryptocurrency market. Year on year, there has been incredible growth in DeFi investment, most notably since 2017. In early 2017, the investment in DeFi was at roughly $10 million. In early 2018, that figure rose to $220 million. In early 2019, it tripled to an astonishing $650 million. It currently stands at just under $700 million.
It is in an exciting time like this that Hydrogen’s suite of apps is poised to enter DeFi. DeFi is poised for much growth and Hydrogen stands a chance to be a player that can make great contributions to the space.
Hydro's payments app, Hydro Pay. Source
The specific apps worth mentioning are Hydro Pay and Hydro Vault. Hydro Pay is a general payments and remittance focused application that allows users to execute cheaper and faster from anywhere around the world. Hydro Vault is a secure storage application for storing large crypto funds. It includes 2 factor authentication.
Hydro's storage service, Hydro Vault. Source
I think that the continuing growth of the DeFi space and Hydro’s efforts to build apps with a definite purpose set itself up well for the near future, as more incumbents begin to see the value in DeFi.
Some of Hydro's many partners. Source
Given the vision that Hydro has, it’s vital that they have a lot of partnerships, so as to get their ecosystem running. For DApp based projects, the larger ecosystem, the better and quicker it grows.
Fortunately, Hydro has a series of partnerships which speaks very well of the project. There are quite a few actually, so I won’t go over each and every one, but I will cover the major partnerships - and there are quite a few of these too!
Above is a pretty comprehensive list of partners, straight from Hydro’s own website. If you take a look at the full list on the website, it would give you a good sense of how hydro is approaching expansion, with different partners selected for different purposes according to the roadmap.
Hydro was selected for Mastercard's Starter Path program. Source
The biggest partnerships is no doubt the one one with Mastercard. Hydrogen joined the Mastercard Starter Path in December 2019, being one of the seven companies that was chosen to develop and refine its solutions, with Mastercard’s assistance. This assistance features tailored programs, operational support and commercial engagements.
Hydro and Liquid will respectively offer remittance and liquidity services to each other's platforms. Source
Hydro has also partnered with Liquid, a company building liquidity solutions for exchanges. Liquid is only one of 3 unicorn companies in Japan (having achieved a valuation of $1 billion), so that’s an incredible partner to have. Liquid’s exchange will be the chosen market for Hydro Pay.This means that Hydro will have better access to fiat pairs and liquidity, while Hydro Pay users will see services integrated with Liquid, and benefit from cost-effective remittance payments.
Hydro will use OmiseGO's much discusses Plasma solution. Source
In a move that is good for fans of the project OmiseGO (OMG), Hydro Labs has partnered with the Thailand based project. OmiseGO will see the first implementation of the Plasma protocol and itself is working on several solutions related to the space, though it probably best known for its Plasma work and the fact that Vitalik Buterin serves as an advisor.
Ferrum Network will use Hydro's Snowflake protocol. Source
Hydro has partnered with Ferrum Network, a project building a high speed interoperability network for real world financial applications, which it claims is the first such kind. Ferrum network will use Hydro’s Snowflake protocol to integrate the solution into its own wallet. With this, Hydro sees its reach expand, while Ferrum Network benefits from better security and verification through the protocol.
Republic and Hydro plan to expand DeFi adoption globally in 2020. Source
Lastly, Hydro Labs partnered with Republic Advisory Services on January 6, 2020. The partnership will see the two entities try to make DeFi adoption a global phenomenon in 2020. This will include Hydro Pay, Hydro Vault and Hydro Drive. Reportedly, Republic has raised more than $200 million for startups and is backed by Binance Labs and NEO.
The HYDRO token is currently ranked 342 on CoinMarketCap with a market cap of approximately $7.5 million. The HYDRO token’s all time high, $0.05, happened in May 2018. The token’s all time low, $0.000424, occurred later in November 2019. HYDRO is a token that is more of a long term value, at least to me, so seems like it could be reaching some new highs, at least in the long run.
Hydro's price chart. Source
Still, whatever previous price history might say, it is no indication of the future. Chainlink (LINK) is an excellent example of this. The long term potential can be ascertained from a year’s chart, so you have to look for these long term indicators. In other words, what value it provides and whether it does so in a smart manner.
On that front, Hydro does pretty well, though you should keep an eye on things as things can happen in the blink of an eye in the cryptocurrency market.
The price history of the HYDRO token does not seem compelling, but the best investors in the cryptocurrency market know that long-term potential is where the most value lies. Just like day trading stocks, short term trading of cryptocurrencies are not advised and is highly risky.
Hydro seems like one of those those projects. Granted, there are many projects which are described in this way, but Hydro backs this belief up with consistent development and a clear vision by the team. The extended list of partnerships and the expanding ecosystem only add to this.
One question that may arise in your head is whether Hydro will become the go-to solution for establishing a unified digital identity management. Among cryptocurrency projects, Hydro does seem like one of the best projects in this regard, particularly because of their wide-spread approach, as proven by their roadmap, and the fact that it is effectively bridging gaps in the traditional finance ecosystem.
As for incumbent competitors, like Microsoft and IBM, it is really hard to tell if the latter two will go anywhere substantial with it. While the other two are no doubt building interesting solutions, Hydro has its sole focus on not just building the solution, but ensuring that as many players are involved. This is something to make note of as you research this project.
If you’re one of those investors who like to put just a little bit of money in some altcoins in the hope that they will provide a significant amount of potential, then you could do much worse than HYDRO. This is a recommendation if you’re into projects with long-term value and if you want to go beyond the major altcoins.
I think Hydro is striking a great balance between the actual thing it is building and the business approach it is taking - the identity protocol direction + its approach to the market are two things that really make it stand out. By creating the infrastructure with which multiple systems can operate, Hydro is solving a deeper problem in the space.
It is working on two very big niches in the space - DeFi and digital identity. Both of these hold a lot of promise for me. I can’t think of many projects that are doing this as well as Hydro, so I have high hopes for it. Time will tell, but this is one I’m going to keep an eye out for.